Changing Nature of Venture Capital

Good stuff from my tireless and prolific friend Mark Suster on the changing nature of venture capital:

The venture capital industry has changed over the past 5 years in ways that I believe will be lasting rather than temporal change. We are in the process of our own creative destruction with new market entrants and new models of innovation at the precise moment that our industry itself is contracting.


When the dust settles, although we will have fewer firms, each type well end up more focused on traditional stage segments that cater to the core competencies of that firm. The trend of funding anything from the first $25,000 to funding $50 million at a $1 billion-plus valuation is unlikely to last as the skills and style to be effective at all stages are diverse enough to warrant focus.

I will argue that LPs who invest in VC funds will also need to adjust a bit as well.

via peHUB » Mark Suster: Understanding the Changes in the Software & Venture Capital Industries.

Some recent venture data from CalPERS here.



  1. It seems that VC's right now are prone to repeating the same trends they have been repeating for the last 5-7 years. "Cost of business has come down!" or "the cloud is the awesome!"

    When every VC is repeating the same trends, from years upon years back.. that trend is run out.

    I don't think LP's will adapt to accommodate crazy new micro-VC structures, instead I think web/cloud as a VC sector is past its prime and nearly fully done as a early stage sector. Lot of rehashing of the same old arguments, not a lot of new arguments or themes in web-VC land these days.