Over the last few years the nature of these risks have changed in big ways. When you are investing in software product development, you never know if you can make the technology work. Previously, financial risks were always very high because capital was hard to come by. But that's simply not true anymore. While last year's record may stand, others are pushing their money onto the table to get in on earlier stages of the action, including investment bankers and new angels.
Market risks are there in both cases.
Who the competitors are and where they are in their development process are just as big of factors to be considered today as they were a decade ago. A few years ago it was no problem putting together a team for these hot, new companies and the risks in that area were limited. Today, Siegelman says, the Silicon Valley service companies are hollow. If a company is not a high technology company they are not able to staff their enterprises. The University of Washington's School of Business is recognizing that it has to do something to address this problem of staffing technology-based companies.