For most people in Silicon Valley, the first high-profile angel investor who comes to mind is Ron Conway. Ron has invested in 40 startups this year, about 140 in the last two years and more than 500 in the last 15. (Watch a separate "lessons and advice" video on his Vator profile).
His notable investments include Google (worth $215 bln), Ask Jeeves (now Ask and acquired by IAC for nearly $2 bln), PayPal (sold to eBay for $1.5 bln), Good Technology (sold to Motorola), Opsware (bought for $1.6 bln by HP), Brightmail (acquired by Symantec for $370 mln), Digg (for sale), RockYou, AdMob and StumbleUpon (bought by eBay for a reported $70 mln). To this end, Ron’s outlook is worth heeding, if not just taken as encouragement for entrepreneurs, such as myself, who are trying to build ad-based businesses in the face of what some feel is a looming recession. (Alan Greenspan pegs the chances at 50%). “I don’t agree that people should be panicking about the number of ad dollars available,” Ron said to me earlier this month at the AlwaysOn Venture West Summit, where he was on a panel discussing what angels want.
Ron was responding to my question about whether owners of content sites should fear a downturn and sell themselves to the highest bidder. (Check out some companies on Vator relying on ads). It’s my sense that there is definitely nervousness in the air as many hot properties consider whether they should sell while they’re ahead. As I thought, Ron believes that the Internet advertising budgets will be less hit or even immune to any downturn. Besides if marketers become penny pinching, they'll likely be inclined to put their ad spend toward mediums they can track. And, there's no better place for pay-for-performance advertising than online. If anyone should panic, it’s the companies relying on newspaper, television and radio dollars.
Indeed, as Vator managing editor John Shinal pointed out in an earlier post, U.S. ad spending was essentially flat in the first nine months of this year compared to the same period a year ago. Newspaper ads dropped 5% to $19.2 billion while television and radio both fell nearly 2% to $46.4 billion and $8 billion respectively. Internet advertising grew 17% to $8.38 billion. Notice how Internet spending surpassed radio spending!
Ron thinks that Internet advertising will continue to see fast growth over the next three to five years. Now, it’s not as if companies in the media space will all grow to be Google, MySpace, YouTube and Facebook, but there’s a lot of mergers and acquisitions opportunities to provide liquidity, according to Ron, who sees a flurry of them next year.
I agree. Well, I’m not going to give away our entire interview. So, take a look. Ron's not worried about a recession for ad-based companies, are you?