- Emerging managers matter. First-time venture funds and emerging managers (which the article defines as the first four funds of a given general partner) provide LPs with opportunities to obtain strong returns as well as new approaches to investing. I completely agree with this view, and over 10 years ago wrote an article that appeared in the Venture Capital Journal on how emerging managers could attract LP capital.
- LPs may slow their investment pace until some of the unicorn valuations moderate. The article indicates while unicorns - VC-backed companies with valuations over $1 billion - have posted impressive paper returns, on the whole most of these returns are unrealized. The article also discusses the recent slow down in the number of funds successfully raising money in the past couple of quarters and suggests that LPs may pause on fund investing until the unicorn valuations moderate.
- The investing barbell suggests that more VC funds will invest in the "middle." The article points out that many VC funds are being raised to invest in the very early stages and in the very late stages (creating a barbell), leaving few funds investing in the middle. The article suggests that more VCs will raise money to invest in this middle area in 2016.
- Geography still matters in the earliest stages. In most cases, VCs will want to invest in early-stage companies that are physically close to the location of the VC fund (there are exceptions to this). However, once a company achieves "escape velocity, international relevancy with product/market fit locked in," geography matters less and VCs will invest in these companies no matter where they are located.
- LPs will become more transparent. The article points out that many LPs are blogging today, and that this trend will help LPs become more transparent, agile and able to provide more value to the VC ecosystem.