I think “help and advice” is where venture/angel capital most clearly differentiates itself from private equity – “founder risk” is a significant component for the first group, yet tends to be removed by the second group. So it is probably inevitable that venture/angel will continue to carve out that support niche, even when dealing with business ideas that aren’t terribly capital-intensive:

The 3 successes your example cites are all Facebook/iPhone games. That won’t surprise anyone watching this sector. Yet these businesses typically only need financial support for short-term cashflow. 3-6 months of development by “3 guys in a garage”. Add a few months between customers appearing and yielding cash.

(As an aside: This is where “high street” (local business) banks should be. It just requires analytics/accounting that move at light speed. It is possible that someone like Facebook will eventually realise a role as a micro-financier – although the transition from a high-risk tech’ startup to minimal-risk (erm) banking sector would be tricky. This becomes very interesting given their ability to internalise value within their platform. In effect, their own currency and economy. And at some point after that, a quasi-corporate state emerges, that controls the activity of more value-generating people than most sovereign territories.)

I see incubators (and similar) more as schools. Communities of like-minded people, as much as places of training. Logically this is where venture/angel capital goes once capital isn’t needed. Yet it’s also a cross-over point between the public and private sectors. In the US, a “train now, pay later” (where only the successful pay) model might work. In the UK there’s a tendency for government to intervene and “do it for free”.

Of course neither matches the underlying technological change: The possibility that yesterday I was a hobbyist, and today I need to know how to run a business with a million customers. Cost control by the end of the week, managing decline within the month. The type of business cycle that would normally take decades.

We’re constrained by a fundamental truth: That humans evolve a lot slower than the technology. Humans are probably what limits the “technological singularity” I implied in the article.

Instead, there’s potential for a “we’ll run your business for you” service sector: A variation on contracting out or establishing franchises. It’s a lot more viable once you consider that most of what generates value is now intangible. Except that a good intangible idea still needs to be both protected and sold. The “English” system of rights protects yesterday’s good idea poorly. Rather, it stresses the creation of large pieces of property, which the “peasants” can work on. Maybe King John lacked foresight?

Perhaps intervention shouldn’t be rapidly teaching people to run businesses at all? Rather focus on making it far easier to protect less significant properties than is currently the case – and then allow other people or services (who are already good at that stuff) to make money from that property. Not the complete answer, and raises a lot more problems, but it points to a potential area of activity that isn’t immediately obvious.