The Future of Venture Capital – A White Paper

This blog was worth of reading. I really need to share these thoughts with you.

The true rock stars of this industry are the entrepreneurs not the VCs. A good VC knows how to seduce them.

The main point about the future of venture capital is that VCs must add value. To raise capital VCs need a highly differentiated strategy. They can either be a dynasty raising fund eleven or fund fifteen like a Sequoia or NEA or they must have highly differentiated value added strategies and roles in the market. Absent a solid differentiated strategy, VC manager teams will struggle to raise a VC fund. Absent a differentiated strategy a VC will miss out on the best deals and fail to become one of the greats. Even if some VC team manages to raise capital in order to get into the best deals, they will need to climb to the top of a crowded heap of VCs trying to get their fund money into the very best deals at sensible valuations. Almost anyone can overpay. Make no mistake – CEOs of the top startups have a choice of which investors to take money from.

Any decent VC firm must have at least one true and experienced entrepreneur as an active general partner running the fund. The days of the European investment banker turned VC by simply removing his tie and putting on grandpa blue jeans are numbered. How can they succeed at getting into the very best deals? Simple – add value to each deal. Demonstrate that value when trying to invest into the deal everyone wants to get into.

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