“It has been said that democracy is the worst form of government, except all those others that have been tried” – Winston Churchill.
At the Upfront Summit this past week there was an electric interview of Fred Wilson led by well-researched and artful Dan Primack of Fortune Magazine that ended up making news. The newsworthy moment was when Fred expressed his view that companies like Uber should go public. The video of the interview will be available this week and I will talk more about it then because the interview covered so many great topics
Is it a bad thing when public stocks get eviscerated (given USV has a few that have)?
Why could blockchain be a foundational technology that yields many great companies?
Do you need to be technical to be a great VC?
Why AI is an important technology and investment area
And there was a great discussion about generational change at Venture Capital firms handled so well by Benchmark & Sequoia and how Fred is thinking about it.
But back to the blockbuster – Fred’s emphatic response that founders have a responsibility to go public and that liquidity is good for all stakeholder (employees, investors & the company). I agree whole-heartedly with Fred. But I’d also like to add one further thought. I actually believe being public offers a long-term competitive advantage for the best run companies (and Darwin deals with those that aren’t meant to be special long-term).
The reason I enjoy reading so much about history & politics is that I find it gives you more context for thinking about organizing principles in life. One such brilliant book was
“This is the year the tortoise may gain on the hare.”
There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system.
But these data points are often lagging indicators and perhaps a better barometer of the future would be to gather data on VC perceptions in the market right now. Of course sentiment can swing wildly with new information but I set out to take the pulse of the market as we enter 2016.
[note: to follow realtime conversations & engage with me on Facebook you can follow me here: https://www.facebook.com/msuster ]
State of the Market
The full presentation & data can be downloaded on SlideShare.
Let’s start with some basic data most people know.
5 years ago I sat at our annual meeting bored beyond belief. It wasn’t just that I have ADD making boring meetings excruciatingly painful – it was that the format was tired, unimaginative, uninspiring and not very useful. We did what many VC funds did – we presented our annual results, we stood up and talked about our portfolio companies, we invited a few to also present and then we had dinner & drinks at some posh restaurant.
I have been evangelizing to founders for years to be more thoughtful about how startups update investors and run board meetings so I would be pretty hypocritical if I wasn’t willing to try and be more effective myself.
So I decided to change up our format a bit. Here’s a short sample of what we now do.
I’ve been spending a lot more time on Facebook as a blogger than I ever did. So I thought it was worth explaining why. And I’m going to cross post this entire post on Facebook as an experiment rather than just posting a link on FB and trying to drive people to my blog.
If you want to follow me on Facebook I’m here.
So if you’re reading this on Facebook (or on my blog!) and want to subscribe to my newsletter you can click here.
We all have our Facebook experiences based on life stages that we joined. Some people complained that they had too many connections and it was no longer relevant. These are mostly people who joined in college or their early 20s and FB sort of became like LinkedIn – the place where you were connected to too many people you didn’t really know. Others had very few connections and they used it to share personal information.
I was always more the latter. I signed up for Facebook before many – in 2005 – when I first moved back to the US.
Mitu Network is the largest digital media company for Latinos in the US and also targeting Mexico and South America. Founded in Los Angeles by Latinos to address the growing demand for short-form online video for Millennials it is probably single-handedly improving the diversity of the tech industry as the employee base is overwhelmingly Latino and proud.
And maybe that openness is what has attracted many on the management team of other ethnic groups of Chinese, Iranians and the like? And also why today Mitu attracted $27 million in funding from AwesomenessTV (DreamWorks/Hearst), WPP, Verizon and Upfront Ventures.
The first generation of short-form online video companies seemed to be a bit of a land grab as online video companies were mostly “horizontal” in that they produced video of nearly any genre that could drive views. The company that I invested in – Maker Studios – became the largest and covered video games, music, comedy, women’s life style, mom’s, animation and the like.