By Chantel McGee
Google, Facebook and other big tech companies “are making it really hard for smaller internet businesses” to compete, Lead Edge Capital partner Nimay Mehta told CNBC on Tuesday.
“The platform internet businesses are sucking up a lot of oxygen out of the room. Facebook, Google, the big internet companies, they are making it really hard for smaller internet businesses to be able to build distribution,” he said.
Mehta said larger companies have such a strong hold on the market that it’s nearly impossible for small consumer internet companies to build audiences. “You see it with Snapchat today. Instagram Stories has taken off like a rocket ship. It leaves question marks on whether Snapchat will reaccelerate growth, and [Instagram is] a business as big as Snapchat,” he said.
The dominance of tech giants in the space has also made things more difficult for investors. “The internet is tougher,” said Mehta. “There’s a lot of capital sitting on the sidelines, and all of us are looking for great ideas and places to put our money.”