Venture capital exploded in 2014, with bigger deals and more eye-popping valuations than anytime since the dot-com boom. So what happens next, and which opportunities will define 2015?
We asked several venture capital investors to reflect on the past year and give us their outlook for the next 12 months. Next in our series is Katherine Barr, a founding partner at Wildcat Venture Partners. Ms. Barr talks about what technology is changing automation across all industries, the hope of VCs keeping cool heads in their investing and the need for more talk about challenges faced by venture-backed startups.
What surprised you the most about 2014?
Aside from the huge amount of venture dollars raised and the massive influx of new entrepreneurs starting companies, the biggest (pleasant) surprise of 2014 was the pace at which data analytics, machine learning, artificial intelligence and robotics are changing the game and “unlocking trapped value” in terms of optimization and automation across all industries. Key areas of innovation I’m looking at include: retail and commerce (e.g., logistics, omnichannel analytics), consumer technologies and work-force innovation more broadly. The resulting time and cost savings as well as new functionality and product and service capabilities that are emerging were (and will continue to be) mind-blowing.
What do you think will be the biggest challenge for your part of the industry in 2015?
With all of the venture dollars now available, I hope that the venture industry as a whole keeps a cool head and backs the best companies that are truly innovating, at realistic valuations, avoiding a “house of cards” scenario for the industry as a whole. We will continue to look for entrepreneurs building companies with clear and highly scalable business models who want to partner to build industry-leading companies.
What is the biggest misconception about the venture industry, and how can VCs change that in 2015?
A lot is written in the media about the positive news related to massive up rounds, high valuations and exits, which is great and what we all work tirelessly to achieve.
However, I wish that everyone involved in the venture industry–investors, entrepreneurs, advisers–would also provide a more balanced perspective on the “hard stuff” that tends to be much less openly or publicly discussed. This includes issues such as: replacing a co-founder or executive; when and how to bring on more seasoned executives to the team, often over-top of loyal but less seasoned employees; dealing with a down round following mis-execution, a market shift or a prior round with a valuation that was too high, etc. We work hard with our entrepreneurs through both the celebrations and the challenges of startup life, and want our entrepreneurs to be as prepared as possible to face the inevitable ups and downs.
Less seasoned entrepreneurs (and even some seasoned entrepreneurs who have never had to deal with these kinds of issues before) could be better prepared with a realistic view from the entire ecosystem of how to deal with some of the challenging scenarios that can arise in venture-backed companies.