One topic that’s on every venture firm’s mind is the declining state of the economy, and how it will affect both existing portfolio companies and potential new investments. The consensus seems to be that the investment pace will slow down and that good deals will be priced more attractively. Also, firms are beginning to think about their capital allocation strategy (how much $ for new investments vs existing investments) and how they may alter their deal sourcing and screening process.
One thing that I’d like to hear people talking more about is how we as an industry can get more creative in the types of deals we’re doing and the opportunities we’re pursuing. For example, there are some great secondary market opportunities out there and although there are secondaries firms that focus on those types of deals, there is no reason that more traditional VCs couldn’t play in that space. Or maybe there are some undervalued startup company technology assets and intellectual property that could be aggregated under one roof and operated as a new company. I’m also curious as to how alternative venture models that were born prior to this market downturn (like Betaworks, for example) will fare in this choppy market.
I don’t know the answers and as you can tell, I’m just thinking out loud. However, I think that necessity will probably breed some innovation as VC firms try to figure out their next move and explore some paths that are slightly untraditional. I’ll keep my eyes peeled…
Related articles by Zemanta
- What impact will the credit crunch have on venture financing for startups?
- My Thoughts On “Startup Depression”