Southeast VC

What's on the Mind of Venture Investors?

Mark Heesen, president of the National Venture Capital Association is coming to Chapel Hill, NC this Thursday to talk about "The State of VC." He will talk about the venture landscape and recent investment activity and where things are heading in '07.

The event is co-sponsored by CED. I'll be there. So will some of my partners.

There will be a Q&A and networking afterwards. The event is FREE, but advance registration is required. Just email Annie at CED, let her know that you read this and would like to reserve your spot.

Google's Plans in NC

Google will be investing $600 million to build out a data center in Lenoir, NC. The tax incentives to make that happen are expected to be over $100 million. They also acquired Skia, a tiny graphics software startup in Chapel Hill back in December 2005.

All of this follows my November 2005 post about Google setting up an office in North Carolina.

Novak Biddle Venture Partners, Jack Biddle - VC Predictions 2007

Web 2.0 and Google Both Collapse; Institutional Investors Realize Investing in an Important Space Isn't the Same Thing as Actually Making Money

(note: this is the fourth and final post of a series of VC predictions for 2007)

By Jack Biddle, Novak Biddle Venture Partners

1st Half 2007

1. The web 2.0 advertising model collapses when people realize that Google is every bit as smart as they are cracked up to be...and don't have a nickel of EXCESS margin left for their 'partners.'

2. Google collapses when Advertising Inc realizes 'bots' are accounting for most of the page views...and bots don't buy stuff.

3. Institutional investors realize that 'participating in an important space' is not the same thing as actually making money...and they don't like losing money, which they are now doing in spades.

4. Shortly after.... VC's have the same cathartic revelation. Between their grasping for air they repeat the phrases 'long term...patience...long term...patience'...while LP's repeat the phrase 'T Bills are positive...T Bills are positive."

Here is What VCs Face the Second Half of 2007...

Old school becomes fashionable again.

1) If this was easy, everyone would do it

2) When everyone does it, its too easy

3) When its too easy, no one makes money

So my prediction is that the smartest people on the planet will continue to beat each others brains out to no net good end for another 2 quarters, until being a doctor, or a lawyer, or an investment banker is hands down the coolest and most lucrative gig.

When venturing is about money, no one makes a dime. When venturing is about pioneering, because pioneering is cool, a lot of innovation takes place.

My prediction is that by the end of 2007, people won't venture for profit. They will venture to do really cool things, because they can.

And 10 years later... the best of the best will get paid despite the fact they had the time of their lives.

Kepha Partners, Jo Tango - VC Predictions 2007

Splintering of VC Firms; Seed Stage Companies Continue to be Under-served

(note: this the third of a series of 4 VC predictions for 2007)

By Jo Tango, Kepha Partners

1. Web 2.0 growth slows: On-line advertising price points have started to flatten as has ad volume. The last time this happened in 2000, it created a massive correction in revenue, and hence, expectations and valuations.

2. Splintering of VC firms: More individuals and sub-groups will spin out of established venture platforms to start their own firms. I predict that in 2007 1 major Boston firm will completely splinter, as will 2 Silicon Valley firms.

3. Increased segmentation of VC landscape: two distinct segments will continue to emerge among VC firms. There will be "venture bankers" who pursue late-stage opportunities and legitimately try to fill the void that Summit and TA have created when the latter started pursuing LBOs.

There will be a sub-group of "venture builders," who continue to focus on early stage.

4. Seed-stage/start-up opportunities will continue to be under-served: Even among early-stage venture firms, seed deals are a small minority of the opportunities. Even the early-stage firms have significant capital under management, which forces them towards larger deals.

Sigma Partners, Roger Krakoff - VC Predictions 2007

Tech IPO Market Returns; Web 2.0 Takes on Real Definition and the Internet Emerges as a Replacement for TV

(note: this is the second of a series of 4 VC predictions for 2007)

By Roger Krakoff, Sigma Partners

1. Wireless will continue to increasingly become the focus of computing. Faster networks, more powerful phones with better screens and keyboard/inputs will permit a further separation from traditional desktop (even laptop) computing. On the consumer side GPS enabled solutions will increasingly power smart social and shopping applications that will enrich the consumer experience.

2. Web 2.0 will begin to take on real definition. The promise of a new programming and computing paradigm called Web 2.0 will begin to take commercial shape as many of these start-ups emerge from incubation to challenge existing vendors in a wide variety of markets including content management, collaboration, e-learning, desktop applications and even some traditional enterprise solutions.

3. The Tech IPO market returns. Mnay more technology companies than have been the case in the last few years look to go public. The forces behind this are clear. More than a handful of firms have been patient growing their revenues well in excess of $100m now realize the best potential return to their stakeholders is an IPO / Wall Street is anxious for new issues to represent / With a public currency companies can "roll-up" markets to achieve true $1 billion scale.

4. Big Media will become aggressive in response to the many start-ups looking to take their turf. Seeing the incursion of aggressive early stage as well as new fangled internet media companies like Google and Yahoo, traditional media companies will look to aggressively buy capabilities and graft on new capabilities to their business models rather than risk becoming irrelevant.

5. The Internet emerges as the replacement for the traditional TV. With the potential to have millions of channels on the Internet AND each and every one of us can now become an over the air producer of content the Web becomes the new broadcast network. Big TV broadcasters fear this but it is the genie out of the bottle. Go long this one...

6. Open Source/SaaS/VOIP all continue to be important on an accelerating pace...Just don't get in their way or watch out!!!