Potomac Tech Wire 2014 Venture Outlook

What happens when Paul Sherman, Editor and Chief of Potomac Tech Wire, invites five Venture Capitalists from Washington DCs most active Venture Firms on stage to review the past year and predict coming trends? A crowd of 300 people gather to network, learn and be amused. Thanks to deft interviewing by Paul Sherman and fabulous quips from a couple of the VCs the crowd was not disappointed.

On December 19th, 2013, people gathered to hear the imparted wisdom of:

  • Harry Weller, General Partner, New Enterprise Associates (NEA)
  • Tige Savage, Managing Partner, Revolution Ventures
  • Don Rainey, General Partner, Grotech Ventures
  • Arun Gupta, Partner, Columbia Capital (Do VCs without twitter handles invest in Coal Mines, and Steam Driven Ships?)
  • Thanasis Delistathis, Founder and Managing Partner, New Atlantic Ventures (NAV)

Harry Weller

  • There is an interesting conflict between accelerators angels and VCs. These accelerators and angels seem to be creating a us versus them world, particularly in the valley.
  • Seed stage is good for VCs. It’s creates a petri dish and I get to see what grows before I invest. But understand there’s a lot of bacteria in a petri dish.
  • There is a lottery element in the seed round. Like Uber, low odds, huge returns.
  • Batting  average is better for enterprise and the slugging percentage is better for consumer.
  • East Coast Deals – Deals that are 50 miles outside Silicon Valley are considered East Coast Deals.
  • Growth hacking means your growth is not organic or sustainable. It’s artifical.
  • The crash of 2000 killed many of the Mutual Funds that invested in IPOs. Now the funds that buy IPOs are so large that they require bigger better companies to make sense for big fund to invest which results in signifactly raising the revenue and profitability bar of companies going public.

Arun Gupta

  • Government regulations, like Sarbanes Oxley, have made running a public company painful and difficult which makes acquisition a more attractive liquidity event. Acquisition has become more desirable due to lower cost and freedom to operate.

Don Rainey

  • Interesting investment themes, Business Intelligence for the Small to Mid-Size Business (SMB) market, digital identity & wallet, and software to improve email efficiency and manage email fatigue.
  • Early stage valuations, are floating up and it’s probably a net good thing,  Angels are irrationally driving up valuations causing some valuation dissonance.
  • Two years ago you could go public at a modest size and now it’s much later.

Thenasis Delistathis

  • It’s easy to start a company but it’s expensive to scale. I’d rather invest at the A round after the seed round money was used to validate the company could scale.

The VCs were asked about the most overused terms and business models in 2013:

  • Curated Market Place
  • Media companies that must build an audience before they’re viable
  • Big Data
  • SaaS,
  • We’re going to sell the data
  • Growth Hacking, Just frigging grow your business
  • Transaction based business models

Biggest surpise of the evening was Harry Weller out-quipping raining quip champion Don Rainey by almost a 2 to 1 margin. Looking forward to next years rematch.  I’m rooting for you Don.

Thanks Paul Sherman for putting on a great event. I can’t wait until the next one.