I think that it's actually a return to sensibility.

'Venture capital' is a term which has been loosely used for any half-pot idea with a funny sounding name and no revenue model. More like fantasy adventure capital.

We saw a whole raft of adventurers hoping to create internet businesses with no revenue model, relying solely on the ability to get eyeballs. The fantasy was bound to end. Businesses make profits, eventually, they at least have a revenue model.

It doesn't take a rocket scientist to realise that there were just too many crazy optimists out there thinking that any half baked idea could eventually generate revenue through participating in the search ad machine. The public is fickle and the same attractive newness that draws consumer eyeballs to the latest fad is the same quality that eventually takes them away to another, unless it's more than a fad and provides real benefits to customers. If there is no revenue model, it's hard to work out who the customers are. That is part of the problem that Google is wrestling with now and it is reflected in their share price. Who are their customers? The people who search or the advertisers?

I look forward to seeing investor funds directed at real businesses with real profits and real customers (not just 1 or 2 potential customers) when they get back into it after this 'readjustment'. Investors will still be there and good startups will always find the money, but those VC investors might be a lot more discerning as to where they put their money.

I'd be the last one to try and stifle innovation, but really, much of what we have seen hardly qualifies.

The real business world has too long been seen as the poor cousin to cyber space. We need investment in the real world to make our daily lives better and generate real value for society, and investors, rather than just adding to the cyber-fantasy.

As for the internet, it will always be there and people will always use it, but probably not as much nor in the same way that they currently do.

You just have to look at social networking sites to see that the majority are stagnating, because they don't really provide anything useful except a place to park some family/friend photo's and most people are too busy getting a life to spend endless hours exchanging trivia with strangers. Some will be successful, but only because they make life, communicating, business or learning easier.

I'm looking forward to a bit of post-crash rationality in the markets and that goes for the VC market too.

I suppose that we've seen something similar in the financial industry with all the fantasy cyber-instruments which suddenly evaporated.

Give me substance. Give me a revenue model. Show me who the customers are.

p.s. An interesting statistic - The Internet Systems Consortium, Inc. (ISC) has released its latest website hosting report which shows that there is around one active domain for every 10 humans ~600,000,000. Wow, there's a lot going on out there. Id be interested to see how many are 'real' domains and not just adsense ad hosting sites. There are also an awful lot of domain name speculators out there. I'd imagine we'll see a reduction in that next year.