If there can ever be said to be a re-birth in the Venture Capital industry it has to be now. However, the modest recovery of the economy after recession has not been witnessed in the VC industry in equal measure.
To better understand the ins and outs of this mismatch, our interest in venture capital trends will take us to the ‘hot’ sectors that have been actively involved in the movement of Venture Capital in the recent past. It is also correct to say that these are the industries that have caught the eye of Venture Capitalists and they include energy, cloud computing, technological innovations like social media and on-demand devices like tablets and their applications; commonly referred to as apps. Even though Venture Capital funding in a general sense is declining, there are substantial increases in global funding especially towards technology ventures.
There is no question that investment in technologies that facilitate the switch to resource efficient and economical management of resources, is becoming a major consideration for Venture Capital investments. The fact that Venture capital continues to play an active role in spurring innovation and creating jobs as entrepreneurs discover and create new opportunities, makes it an integral part of the economy and this will only continue to grow. To proof of this is that more corporate investors are looking at Venture Capital firms as a new opportunity for investment. We all agree that innovation is the key to establishing a competitive advantage and corporate firms are going all out to be sustainable. The greatest challenges facing the VC industry going forward are the modest to slow returns and limited liquidity. There is a clear bifurcation which is good for the industry as only good deals are advanced and in turn better returns can be realized.
In conclusion, funds will continue to be available for firms which have registered respectable returns and make good decisions with their businesses. What we should expect in the long-run is a vibrant industry characterized by new innovation, technology and loads of new entrepreneurs. There will be less funding from these“larger” Venture Capital firms as more and more private Investors get involved. Dynamic firms willing to invest in different sectors across different regions are likely to gain the most in terms of returns as they will be spreading their risk. What is in it for entrepreneurs? Since Venture Capital firms are stable investors in the equity economy, there will always be unending support for outstanding business ideas from them, but there is also an opportunity for smaller companies on a more local level getting the funding they need from this new batch of private investors. This will lead to job creation, new innovations and the eventual recovery of the economy.