Series F - Issue #45: The Future of Venture Capital

Revue
 
👋🏻 Happy Sunday! This is Series F, a (hopefully) insightful weekly curation of the latest development
Revue

Series F

February 11 · Issue #45 · View online
The Future of Venture Capital

👋🏻 Happy Sunday! 
This is Series F, a (hopefully) insightful weekly curation of the latest developments dictating the future direction of the venture capital industry.
A lot of interesting stuff to cover this week, so let’s get to it! 🚀
Curated by @neilswmurray

Upsetting the Apple Cart 🍎
“Ohanian says his focus for 2018 is to roll out software that will automate some investment decisions. This may also increase deal flow diversity and help founders gain access to the firm’s network more efficiently.”
Why this matters?
- The argument often put forward by VC software proponents is that by taken human bias out of the decision making process, more diverse founders will be able to secure capital. Social Capital are a strong example of this, having backed 42% female and majority non-white founders so far. Although Ohanian had been quoted this week talking about the importance of this, it seems strange that he was unaware of this (according to the article). Still, clearly this is a strong fit for his ideals, so it makes sense on this level.
- Ohanian’s main argument though is that “venture is so technologically backwards”. That’s a hard point to argue against, although it is worth noting that in addition to Social Capital, there are a fair number of firms who have started to put technology at the forefront of their investment processes, a couple of firms that jump to mind are InReach Ventures and EQT Ventures (this is a good article mentioning both)
- Still, the majority of these firms utilising technology in this way are largely using it for pipeline purposes, not for decision making. It’s fair to say that we will continue to see more and more VC funds adding this to their lockers, but I struggle to see more than a handful becoming full-stack in this regard, from scouting to investment.
- Why’s that? Because investment is still a relationship game. Building a company takes more than just money, it takes emotional support, human connection and understanding. And this foundation starts to be built pre-investment and assists the decision making process. Taking this out of the equation removes the very bedrock of VC investments. 
- TL;DR: We are safe for now 🤖
Due Diligence 📚
1. A new private equity firm called Think3 has been founded with $1 billion in backing with an aim of buying SaaS startups, giving them either $500,000 (with no equity) or $1 million (with equity) in funding to do so. It will aim to spend between $5 million and $30 million on these startups ~> Think3 is a new $1B fund that wants to buy up SaaS startups so founders can go out to build again
2. Investors are becoming increasingly aware that opportunities also exist outside of Silicon Valley 😝 ~> The founder of AOL and the author of ‘Hillbilly Elegy’ are touring the country with a $150 million seed fund for startups in overlooked American cities
3. Interesting research on how accelerators are crucial to the growth of startup ecosystems, most notably in contributing to larger base layer of startups and increasing their chances of raising funding ~> Are Accelerators the Secret to Building Truly Great Startup Hubs?
4. Will crypto hedge funds go the same way as ICOs and become a misused get-rich-quick investment strategy? The Fate of Crypto Hedge Funds
5. More doesn’t always mean better: “Put a bit cynically, more capital doesn’t lead to more people taking risk in early-stage companies, it leads to a greater number of lemmings piling in on fewer, similar things” ~> Is It Easy to Raise Early-Stage Capital?
6. Fred Wilson proposes that the future of seed investing can be found in the past, advocating the benefits of syndication  ~> Splitting The Deal
Always Be Closing ☕️
All feedback and opinions welcomed: @neilswmurray or neil@thenordicweb.com
Through my Angel Fund, I invest in the most ambitious pre-seed Nordic startups. If you’d like to know more about the European or Nordic startup scene then I’d love for you to reach out. And if you know any companies you think I should be talking to, then don’t hesitate to let me know! 👍🏻
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