What Does the Future Hold for the Venture Capital Industry?
By Alan Olsen
Like any business industry
capital industry is subject to ebbs and flows, which means changes are
bound to occur. Trends come and trends go and those who are able to identify
the newest and latest trends the earliest tend to be the most successful at
what they do. At GROCO, we work and
associate with many of the nation’s top venture
capitalists. Every venture
capitalist is different but they often share similar ideas and answers to
the questions we pose. I recently spoke with David
Silverman, a Partner at Crosslink
Capital, and we discussed the venture capital
industry as a whole. During our discussion I specifically asked David
what trends he sees now that will affect the future of the venture capital industry,
as we know it?
Buying Decisions Have Changed
said he sees the VC industry
at a hinge right now and that that “hot hinge is that the buying decisions have
fundamentally changed. So what’s interesting is that several tailwinds have
explained that one of these changes is that computational powers are
practically free now. What used to cost tens of millions of dollars can now be
accessed by young people with a credit card who can compute with AWS, Microsoft
Azure or Google and have access to all the competition power in the world. “The
second piece which is interesting is corporate
America, actually the corporate
world, is completely re-architecting there IT stack. So we’re seeing as venture
capitalists the opportunity to go sell in completely new solutions across
everything from the hardware all the way through the application in corporate
Change Is the New Normal
said that the third interesting piece of the puzzle, which is much different
from the norm, is that the decision makers have finally changed. Back in the
80s and 90s CIOs were your customer, but that has changed and now developers
are your customers. David
said they make different decisions and how you get to them is also different.
He also said that the rate of change and the pace of change are fundamentally
different. “We’re living in a world where everything is being re-architected.
The buyers are different and the software and methodology by which people buy
things have fundamentally changed. So it’s a flywheel which is moving very,
very fast and it creates opportunity across the whole spectrum of the kind of businesses that we back.”
Keep a Close Eye on the Trendsetters
There’s little doubt that the venture capital
industry will continue to experience change, just like any other industry.
The fact is almost any industry has
to change or it risks becoming stagnant or even worse, irrelevant. By following
and decisions of the most successful VC companies
one can stay on top of the changes and continue being successful.