by PricewaterhouseCoopers and the National Venture Capital Association.
What gives these industries the edge? Scott A. Shane, professor of entrepreneurial studies at Case Western Reserve University in Cleveland, and author of The Illusions of Entrepreneurship (Yale University Press; $26), suggests four reasons: business models focused on selling to other businesses and the government; relatively high barriers to entry as a result of patentable technology or technical know-how that provides new businesses with sustainable competitive advantages; continued alignment with economy-shaping global trends; and change that allows new businesses to get a foothold in markets and challenge the status quo. “Research shows that when put together, these characteristics help new firms in these industries out-compete other firms,â€ Shane adds.
Hard cash in software
“Software has almost become like air,â€ says Ken Wasch, president of the Software and Information Industry Association in Washington, D.C., speaking of the ubiquity of computer code. “So many industries have software as the core component of their products–from electronics to assembly lines, automobiles, even sneakers.â€
Its functionality across industry lines, low startup and overhead costs, and scalability have made software the darling of venture capitalists. “You write a piece of software once, and from one location you can duplicate and deploy it to stores all over the country,â€ says John Taylor, vice president of research with the National Venture Capital Association.
Partly in response to piracy concerns, but also an indicator of the pervasive reality of the Internet, software distribution is moving to an on-demand, utility-based model, which is what Proclivity Systems offers. “Instead of breaking the shrink-wrap on a CD, you’re accessing your new software online through a vendor’s server,â€ explains Wasch. “The support infrastructure has changed.â€
Wasch says opportunities exist for businesses offering help-desk and tech support services as well as software coding for cell phone content and other Web-based applications. Other opportunities lie in the development of educational software accessible to students via their phones and/or iPods. Wasch adds, “Internet security and applications that increase efficiency, reduce operating costs, and streamline business processes will always have a market.“