Silicon Valley investor reveals where the ‘smart money is going’ | #reInvent

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You can’t kick off a startup without money, and if you’re starting a technology company in Silicon Valley, you’re going to need quite a bit of the green stuff. That’s where the venture firms come in — to separate the “pie in the sky” PowerPoint presentations full of promises and hot air from the real-life business ideas that pass the test of consumer enthusiasm.

Nick Sturiale, managing partner at Ignition Partners, joined John Furrier (@furrier) and Stu Miniman (@stu), co-hosts of theCUBE*, from the SiliconANGLE Media team, during AWS re:Invent, held in Las Vegas, NV. They discussed what venture capitalists look for in a potential investment, as well as how traditional industries cannot get complacent in the digital marketplace.

What startups are hot?

Regarding the much-vaunted enterprise cloud push, Sturiale said his company spent a lot of time evaluating the white spaces, the gaps between the known quantities; those are the areas that offer investment opportunities. “Traditionally, we were a heavy infrastructure investor; we’re now investing in apps, machine learning; industries that will take technology to the next level of where it needs to go,” said Sturiale.

Furrier asked about Splunk, a SaaS startup famous for its run from “nothing” to “Silicon Valley’s darling.” Splunk Inc. went from machine data to a powerhouse; Sturiale agreed, and said, “It staggers me to think, [Splunk] was a three-person company in our office.” Furrier wanted to know if there was a particular thing that Sturiale looks for when deciding to invest in a startup.

“The fundamental premise of doing a startup, is creating something so unique that if it goes down, the user screams … at the end-user level, if you do something and the hair stands up on the back of their necks, there’s probably a business there,” said Sturiale.

If you’re an industrial company, reinvent or die

Sturiale pointed out that traditional industries have research outposts in Silicon Valley, such as WalMart, American Apparel, and car companies, because they’re worried a new app is going come along and disrupt them, maybe render them obsolete, much like what Uber is doing to the transportation industry.

“Imagine Uber, applied to other industries; that’s going to happen in the next five years. The ability to scale, the ability to collapse workflows that today are open; I think we’re in the beginning of a Renaissance,” said Sturiale. He said that the history of innovation goes from: “Why would I ever need that?” to “How did I ever live without it?”

He made the point that if you’re a company and you’re not reinventing your business model, right now, you’re going to be toast. He gave the example of GE, which has gone from selling jet engines to selling jet engines with services. GE saw the market changing, and it changed to fit the market, Sturiale pointed out.

Watch the complete video interview below, and be sure to check out more of SiliconANGLE and theCUBE’s coverage of AWS re:Invent(*Disclosure: AWS and other companies sponsor some AWS re:Invent segments on SiliconANGLE Media’s theCUBE. Neither AWS nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo by SiliconANGLE