Raman Khanna, a partner with Onset Ventures, says hardware is cheap these days, which is why he's looking to invest in companies that can find a way to apply user data for advertisers in ways that also address privacy concerns.

"If you look at Google today, I don't think their IT manager can  tell you how many systems are off line. But it doesn't matter because their uptime is 100%" thanks to their massive number of servers and an operating system that guarantees if one server fails, traffic is routed to another.

On the other hand, Beebo was worth $800 million to AOL because they have so much data about their users.

"It's a new frontier," says Khanna. 

He's especially interested in startups trying to solve the problem of how to give doctors access to patient medical records online in a way that keeps the patient in charge of the data. 

"I'm looking into that area but haven't seen anyone doing it who's blown me away. If you know someone who's doing that, have them get in touch with me," says Khanna.