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Ask HN: Why do VCS see market opportunity in dev tools?

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Ask HN: Why do VCS see market opportunity in dev tools?

#1

Post by as90 »

This trend has no stopping it seems. Every dev tool startups are getting funded.

Some of these startups are simple clones of existing proprietary services offered by AWS and other providers. (Like Cognito / Auth0)

Why VCs are betting on this market? What is the opportunity to build a huge business here for a new startup, beating reputed players like AWS, Auth0 etc? What is the conviction of VCs here that these new startups will build a $100M business?

I'm confused.

Also, despite getting a lot of pessimistic comments on the future of such startups here in HN, they seem to raise further rounds (Series A, B) and even building a stable business.

I feel like VCs are better at spotting something huge in this space, than the actual users (I mean developers) who feel pessimistic. Lol.

Re: Ask HN: Why do VCS see market opportunity in dev tools?

#2

Post by ozymandias_kok »

The investors I know who are most interested in it either come from a non technical background and buy into unprovable but interesting sounding theses that rarely resonate with me as a practitioner, or are deeply technical and over anchor on their own experiences. Very rarely are either right.

Re: Ask HN: Why do VCS see market opportunity in dev tools?

#3

Post by re-thc »

> Every dev tool startups are getting funded.

> beating reputed players like AWS, Auth0 etc?

Maybe your view of "dev tool" is too broad.

Identity shouldn't count as a dev tool. Perhaps security. It can be used to help manage end users. AWS isn't a "dev tool" either.

There's no 1 answer as we're mixing in a lot of things. VCs will see things differently depending on what it is...

Re: Ask HN: Why do VCS see market opportunity in dev tools?

#4

Post by as90 »

re-thc wrote: post #3

> Every dev tool startups are getting funded. > beating reputed players like AWS, Auth0 etc? Maybe your view of "dev tool" is too broad. Identity shouldn't count as a dev tool. Perhaps security. It can be used to help manage end users. AWS isn't a "dev tool" either. There's no 1 answer as we're mixing in a lot of things. VCs will see things differently depending on what it is...

ok then let's narrow down to "Authentication/Authorization infrastructure" products like Auth0, AWS Cognito etc.

There are atleast 5-6 startups who came up to this space in the last 3-4 years (after the acquisition of Auth0 by Okta for some $6B).

And whenever such startups launch their product here in HN, most devs are like, what is the need for another product like this.

Re: Ask HN: Why do VCS see market opportunity in dev tools?

#6

Post by jstx1 »

VCs have no idea what to do with their money, on the other hand potential founders gravitate towards dev tools because it's a space they know well. It's not necessarily that they're seeing value (not saying that there isn't value there either).

Think of it as

[startups skewing towards dev tools] >> [clueless VC] >> [many dev tools startups get funded]

This actually works even if they aren't clueless - they can only respond to the opportunities presented to them and that input sample will be biased.

Re: Ask HN: Why do VCS see market opportunity in dev tools?

#7

Post by namaria »

as90 wrote: post #4
re-thc wrote: post #3

> Every dev tool startups are getting funded. > beating reputed players like AWS, Auth0 etc? Maybe your view of "dev tool" is too broad. Identity shouldn't count as a dev tool. Perhaps security. It can be used to help manage end users. AWS isn't a "dev tool" either. There's no 1 answer as we're mixing in a lot of things. VCs will see things differently depending on what it is...

ok then let's narrow down to "Authentication/Authorization infrastructure" products like Auth0, AWS Cognito etc. There are atleast 5-6 startups who came up to this space in the last 3-4 years (after the acquisition of Auth0 by Okta for some $6B). And whenever such startups launch their product here in HN, most devs are like, what is the need for another product like this.

I think there's some selection bias. There's a huge number of startups getting funded each year, it's a multi billion dollar industry. Do you have data showing a disproportionate amount operating in auth tools were funded recently or are you just going by whatever news reached you lately?
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