“A quick look at tech stocks so far in January 2016 reveals Box trading nearly 30% below its IPO price; hardware company GoPro down more than 40%. Square and Twitter have lost about one-fifth of the value on their share prices. ” Reported Forbes, amidst a flurry of media excitement about the pending Venture Crash at the end of the last quarter of 2015. Quick to respond was Andreessen, reportedly saying “I’m not aware of any VC who pays attention to any quarter to quarter data at all,” followed by Salent, saying “VC is a heavy rubbernecking industry with maybe 20 really independent thinkers. If you look at what drives true venture performance, it’s the folks who will consistently invest over a cycle.”
On a recent trip to San Francisco we had the chance to meet some of the VCs ourselves and although confident and clearly reiterating the fact that there is ‘no obvious slow down’ – the pressures on getting the timing right for investment had heightened. Some reflected back with a rather tortured look – “I don’t know how, but we missed Uber”. If you are a late stage investor then catching the bus for a higher fee, but nearer your home is part and parcel of the game. For those who like to get a seat on the gravy train early, it’s never good to be late to the party. “Series A will continue to happen. It’s Series A to B that is really tricky. Series C and beyond – it’s just a lot of money, ” said Accel Partners. With many VCs also hugely influential in their own right, they have slowly become the ‘influencers’ themselves – the people heralded as being able to provide accurate trend expectations and valuable insight into tomorrow’s next big thing. VC influence aside, all roads, as you would expect from a communications stand point, led back to content. Said Christina Lee from KPCB, “It’s less about messaging and more about the content strategy these days and crisis is something all start-ups under estimate. The need to protect your brand in its formative stages.”
Similar to the north and south of the river divide in London, there’s also a perception that divides the UK and US markets when it comes to VC funding. Silicon Valley has the reputation for investing in non-revenue models, literally ‘throwing money at innovative ideas’, whereas London has the reputation for needing initial revenue models before engaging. However, what unites both is the entrepreneur wanting the dream and the VC having, in many cases, the power to co-collaborate and convert that dream into reality. Regardless of a slow-down which journalists would love to see, disruption is only digging its heels in as a generation of millennials grow up with a completely different landscape. High street banks are now payments via mobile, we don’t meet, we tweet and we record our life in instant visuals. They call this ‘Instagram’. We have blockchain challenging the payment world while social emojis are connecting the emotional world. So, for the moment, while our world changes at pace – the Venture Crash seems to be very much, on hold.