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As an entry level VC, I find myself relying heavily on social networking technologies to get my job done. I have spent the better part of the last couple of years building my LinkedIn network, and leverage it on a daily basis to gather information about companies or to reach individuals within those companies. Generally, I have found people are very open to chatting about their work and industry, and are also generous with their time.
If LinkedIn or Facebook did not exist, I would have a much harder time doing my job. In fact, I am very curious how entry level VC’s in the pre-social networking boom world would get access to the kinds of experts they’d need to conduct good due diligence. My guess is that they’d need to rely more heavily on the partners’ networks and on analyst firms such as Forrester, Gartner, GLG, and Corporate Executive Board.
We may never get to a point where the analyst firms are completely disintermediated by social networking technologies, but slowly, as the tools to mine data and expertise from social networks grows, I have to think the analyst firms and proprietary database providers like Dow Jones or Thompson will start to see profits decline. I haven’t seen or heard of any partnerships between folks like LinkedIn and the analyst firms or the Thomson’s of the world. However, it would strongly benefit the research and analyst shops to modify their business models to be more accepting of an increasingly ‘crowdsourced’ world.
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