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[500 STARTUPS] Venture capitalists brace for correction in 2018: Premoney

PUBLISHED : December 07, 2017 - 10:56

UPDATED : December 07, 2017 - 10:56

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[THE INVESTOR] SAN FRANCISCO -- Lower returns, globalization and artificial intelligence are among the top trends venture capitalists expect in 2018, according to industry gurus at the 500 Startups’ PreMoney conference in San Francisco on Dec. 5.

Opening the event, Mark Suster, managing partner of Upfront Ventures -- the oldest and largest VC firm in Los Angeles -- said that overfunding and new capital moving into the market will likely depress returns. 




By new capital, he was referring to how funds from countries outside the US, and that from corporate VCs helped by low-interest trends -- are heating up the VC market. As examples, he mentioned Japan’s SoftBank and China’s Alibaba.

“(Softbank’s) Vision Fund, a US$100 billion fund, is the equivalent of some 400 Series A venture capital funds,” Suster said, adding that as the market gets saturated, returns will inevitably go down.

At the same time, more international startups will gain significance, according to participants at the conference.

Felicis Ventures founder and managing partner Aydin Senkut said that global companies are incredibly important for his firm: Its first IPO was from a company out of Ottawa in Canada, while its most valuable company is Dutch and its fastest-growing company is Australian.

Venture investors, therefore, have to embrace talent from other places, said Canvas Ventures co-founder and Partner Rebecca Lynn.

Both are on this year’s Midas’ List of top 100 VCs.

AI was also on top of the agenda. About 85 percent of VCs surveyed by Upfront in January this year rated it to be “more interesting” than other areas. As for cryptocurrency, another hot topic, opinions were mixed, with some fretting about the lack of regulations, while others were worried that large markets may regulate themselves out of business.

Meanwhile, inclusivity was frequently mentioned at the conference.

Founders Fund Partner Cyan Banister singled out ageism as a key issue the industry has to tackle.

“I am completely against the idea that a 45-year-old can’t have a new and original idea. They don’t lack energy,” she said, adding that a 75-year old founded a standing wheelchair company. “Entrepreneurs come in all forms. They are young and old,” she said.

During a session on inclusive investment, Stephanie Palmeri said female founders should not be constrained to work with only female VCs.

“If we invest only in people who look like us, we’d be in trouble as an industry. That’s really one of the reasons why we are in trouble as an industry,” she said.

More information on this year’s Premoney is available at http://sanfrancisco.premoney.co

By Park Ga-young (gypark@heraldcorp.com)

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