I have observed many sides of the venture capital industry: venture capitalists deciding which firms they should invest in, investment bankers assisting startups to raise funds and entrepreneurs raising venture capital funding. I have some views of what is likely to happen to the venture capital.
My main observations are:
Venture capitalists must create and structure their investment companies to add value to the start-ups far beyond the cash invested.
The big VCs will continue to grow and new VCs will continue showing up to invest at the earliest stage.
Lower valuations, more stable teams, cheaper salaries and access to regional pools of talent such as local industry corporates and universities make investing in provincial locations attractive.
New York, London and Silicon Valley will dominate the venture capital industry for many years to come.
The most important point about the venture capital future is that VCS will be required to add value. To raise capital, venture capitalists will need highly differentiated strategies. Without a differentiated strategy, it will be hard for VCs to raise a VC fund. The VC will also miss out the finest deals and fail to become great.