Venture capitalists can’t afford to be complacent about changes coming to their business, Mark Suster told general partners at Thomson Reuters’ Venture Alpha East conference in Boston earlier this month.
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“I would say the next 10 years look phenomenal for venture capital,” said Suster, a partner at GRP Partners. But “the market expects more than money these days. I think that is a major shift in our industry.”
Suster argued that disruption – the very thing VCs expect from their portfolio companies – has begun to reshape the venture business. Forward-thinking VCs are using their operational experience in creative ways and raising their public profiles through blogs and social media, he said. Their greater public personae and more active portfolio company participation helps to differentiate them in a consolidating industry, he noted.
The result is a shift in how deals are sourced and a crumbling of the old-boy networks that once led top portfolio companies to a small group of established firms, Suster said.
Leaders in this emerging world include Andreessen Horowitz, First Round Capital, Google Ventures and True Ventures, Suster said.
The smartest of them are creating platforms to connect portfolio companies in value-added networks and link them with business opportunities, he added.
With capital concentration on the rise and the number of active venture firms now fewer than 100, by some estimates, VCs need to think differently, Suster said. If they do, “in my mind, it’s actually morning in venture capital.”
Photo: Mark Suster of GRP Partners gives a keynote address at Venture Alpha East, part of Thomson Reuters’ PartnerConnect conference, in Boston on April 4, 2013. Photo by Jared Kuzia for Thomson Reuters