Tuesday, September 29, 2015

Why private markets are where public markets were circa 80's | VatorNews

Prediction: Explosion of new VC funds will fuel growth in assets under management to the trillions.
Lessons learned from Entrepreneur Bambi Francisco Roizen

I was recently asked to give a presentation about the state of venture capital to a group of mainly public-market investors. Given the frothy environment, the first thought would be to talk about Uber and the hyper-inflated valuations at the pre-IPO stages.

I’ve seen the market get ahead of itself too many times. As we are in a six-year bull market, supported by near-zero interest rates, this time is one of those times.

Yet what is more interesting than the forthcoming correction is the proliferation of the new venture funds, and the broadening out of the investor base in private companies through these funds.

While there’s been a lot written about the emergence of micro VCs - sub-$50 million funds, mainly because it's cheaper to start companies enabling and often requiring funds to be of smaller size, I will take it one step further: It’s just the beginning.

Today, the percent of US households that own equity in venture-backed companies that are still private is probably under 1%. It’s not surprising. Historically, the percent of US companies that have raised venture capital has been under 1%

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