In a recently released document, vc Mark Suster, Managing Partner at Upfront Ventures, analyzed the state of the art of the vc industry.
The report, called “It’s morning in VC – Disruption in our Industry- What Does it Mean for VCs and LPs?“, starts with a rearview at what has happened since 1995, with the dot com boom bringing too much money pouring to vc, new players entering, the overcapitalization of startups, and the consequent highly reduced number and value of exits.
But today the world is different. Some numbers? 2.4bn people are Internet connected globally, there are over 1bn mobile users, there is a strong pressure to disrupt traditional sectors (e.g. education, healthcare, defense), while the number of vc funds raised has come back to the pre dot com boom levels with less than 100 players operating.
In the meantime, the capital to start a company decreased with many more sources available (angels, crowd, incubators, vcs) and, while the infrastructure phase is still dominated by the Silicon Valley, several companies have succeeded in monetizing the web far from there, which resulted in a major number of funds thriving in other geographies as well.
According to Suster, the new morning for the vc is mirrored by a new wave of funds reinterpreting the industry in a more participative way. It means not only picking the right startup and participate in board meetings 3 or 4 times a year but also create a structure to help entrepreneurs thrive in the current competitive landscape. A modern vc firm should recognize the importance of participation as well as the potential of peer lending with the creation of platforms featuring summits, workshops, market research, in house tools and resources and blogging and marketing services.
Suster blogs at Both Sides of The Table