What Does the Future Hold for the Venture Capital Industry?

What Does the Future Hold for the Venture Capital Industry?

Like any business industry the venture 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

David 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 changed.” David 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 compete 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 America.

Change Is the New Normal

David 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 the trends and decisions of the most successful VC companies one can stay on top of the changes and continue being successful.

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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

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