IT, including computer, software, internet, dot com boom etc, has made hundreds of millionaires in Silicon Valley over night since 1980s. Till now, this fairy tale still continues, but the source is drying up. Although, venture capitalists are trying digging in biologics, nano science etc, but they have to confess: it is really hard to find a real chance, which will be successful like the Apple, Microsoft, Yahoo, Ebay, Google, and Youtube again.
So, where is the next chance for Venture Capitals?
Let's see how a Venture Capitalist picking a project firstly.
Venture capital is one kind of private equity capital typically provided by professional, outside investors to new, growth businesses. A venture capitalist (VC) is a person who makes such investments.
When a new company is built up, it always needs money to grow. For many companies (especially for those new companies based on high-technology), seeking venture capital firms is always the first option. The founders of the company generally will write a business plan that shows what they will do and what they think will happen to the company in the future (such as how fast it will grow, how much money it will make, etc.). The VCs read the plan, and if they like what they see, they will consider investing money in the company. The first round of money is called a seed round. And the VC who invests seed capital is so-called "Angel". Normally, a company will receive 3 or 4 rounds of funding typically, before it is going public or getting acquired.
The NASDAQ crash and technology slump that started in March 2000 shook some VC funds significantly by the resulting disastrous losses from overvalued and non-performing startups. Since 2005, the revival of a dot com-driven environment has helped to revive the VC environment. Today, the VC environment is still hot, but bubble is bigger and bigger in dot com boom. For seeking new profitable and safe investing target, VCs start to withdraw from dot com boom and focus at a new industry: FOREX Automated Trading Software.
FOREX - The Foreign currency Exchange market is by far the largest financial market in the world. The average daily trade in the global FOREX markets exceeds US$1.9 trillion (Source: the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2004, and published in March 2005). For comparison, the biggest stock market on the Earth - NYSE Group (The New York Stock Exchange), has a daily trading volume of approximately $86.8 billion (Source: NYSE Group, Inc. 2006). FOREX has a 18.4% average growth rate per year since 1989. It offers trading 24 hours a day, five days a week, non-stop over Internet.
But, in this huge market, as the story goes, at least 90% of new FOREX traders lose all their money within their first 3 months of trading. Why? Most losing traders who inquire about FOREX trading are quite intelligent, they just lack the right tools, the "Secret Weapons" to win. They are not beaten by other traders, they simply are beaten by themselves, by humans' weaknesses.
To overcome these terrible weaknesses of humans, people have developed many methods. One of them is called "Automated Trading". Automated (or Automatic) Forex Trading means to trade Forex (Foreign Currencies) using some trading systems, programs, software or robots (on Metatrader MT4 platform it is called as Expert Advisors - EA), without needing a human to physically trade. An automated trading system is a group of specific rules and parameters, governing entry and exit points, having the ability to both generate signals and execute trades automatically. An EA is an automated trading "robot". Robots can beat human beings' world champion at chess games, likewise, EA robots can triumph over human traders at FOREX trading.
The practical experience shows that a high quality automated trading system always guaranties some kind of financial success for its owner working on Forex market. The latest fact is: in the Automated Trading Championship 2007, a world competition, all participants use EA robots, the champion won 1204.75% profit, the runner-up won 450.42%, and the third place won 299.45%, just within 12 weeks.
Isn't that amazing?
For Venture Capital firms, FOREX Automated Trading Software is still an undeveloped gold mine. Look at these:
# 1. It combines Software, Internet Technology, and Finance together. There are three "golden elements" in one project. This concept is rare.
# 2. In dot com boom, many VCs just burn money and get nothing but meaningless so-called "eyeball rate". FOREX Automated Trading Software industry is quite different. It makes money by itself!
# 3. Many venture projects are just a kind of "concept" or "idea", no real products at all. Company founders just try to sell this empty "idea" to VCs, and VCs try to sell this story to stock buyers in stock market. But FOREX Automated Trading Software industry is real and ripe. VCs even can confirm these software's results, records and performances in real time, for example, via RSS Feed, before they decide to put money in the company.
Who can invest in this area first, who will be the king of VC in next decade.
