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Editor's Note: Our annual Vator Splash Spring 2016 conference is around the corner on May 12, 2016 at the historic Scottish Rite Center in Oakland. Speakers include Tom Griffiths (CPO & Co-founder, FanDuel), Andy Dunn (Founder & CEO, Bonobos), Nirav Tolia (Founder & CEO, NextDoor), Mitch Kapor (Founder, Kapor Center for Social Impact); Founders of Handy, TubeMogul, VSCO, Vinted; Investors from Khosla Ventures, Javelin Venture Partners, Kapor Capital, Greylock, DFJ, IDG, IVP and more. Join us! REGISTER HERE.
At Vator Splash Spring on May 12, we will be holding a series of panels on the state of the current venture capital landscape, including one called, "With the market slide, what’s the outlook for venture?" where we will ask top VCs to give us their view on not just what's happening in venture, but what they think the rest of the year will look like.
The panel will be moderated by Jules Walker, Venture Director at KPMG, and will feature Tianxiang Zhuo Managing Partner of Karlin Ventures; Jules Maltz, Partner at IVP; Alex Rosen, Partner at IDG Ventures; and Erik Rannala, Partner at Mucker Capital.
So far, things have been a little grim for venture this year.
In the U.S., startups raised $13.9 billion in the first quarter, a 25 percent decrease in funding compared to Q4 2016, and a 21 percent drop year-to-year. In all, there were 883 VC deals, a six percent decrease from the previous quarter, and 12 percent drop from Q1 2015.
The numbers are bad enough that venture capital funding hasn’t been this hard to come by since 2014.
I asked each of the panelists to give a preview of their thoughts on what venture will look like from here on out.
Jules Walker: "The amount of dry powder available for investment is still at a high level. Innovative start-ups doing cutting-edge work will continue to get funded, it may just take longer for the check to hit the account due to extended diligence periods."
Erik Rannala: "So far, this year looks very different than last year for venture-backed startups raising funding. The market has clearly turned and fundraising has gotten much harder. The bar has gone way up, and capital is not flowing freely the way it has been for the past several years. Everyone needs to adjust to the implications of this 'new normal' for their businesses. Founders should not assume there is more funding around the corner. They need to ruthlessly manage burn and chart a course toward self-sufficiency. I don't see this situation changing dramatically anytime soon."
Jules Maltz: "2016 should be a strong year for new investments. Valuations have moderated, non-traditional firms have exited the market, and underlying company fundamentals remain strong. While total deal volume should decline, the quality of investment opportunities is increasing."
Alex Rosen: "The early stage VC market remains very active, despite the hiccup in the beginning of the year. I expect it will get tougher by the end of the year, but right now we're seeing lots of good companies getting funded"
Tianxiang Zhuo: "Innovation in tech is happening faster than it ever has. I remain very optimistic about venture as there continues to be an exciting opportunity for us to accelerate this innovation through intelligent use of capital."
(Image source: oaklandscottishrite.com)
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