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What’s the Deal? – VC Part I
by Jack Beuttell -- December 26th, 2012

re. venture capital, crowdfunding, and cleantech

November was marked by dozens of on-campus company presentations, “office hours” sessions, and networking events.  These were matched by the weekly exodus of my classmates to New York and Chicago for interviews.

Fortunately, I’ve escaped much of this pressure by virtue of my career choice, away from consulting, investment banking, and general management and towards something arguably riskier.  I’ve set my crosshairs on venture capital (by extension of my focus on entrepreneurship), an industry that is so comparatively small and selective that there are probably only a handful of summer openings in any city in any given year.  On the one hand, this makes life easier because I won’t be flying to New York every Friday, and I don’t have to return to campus two weeks early for interviews.  More likely, it makes the search process more complicated and potentially disappointing.

Mark Heesen, President of the National Venture Capital Association (NVCA). Credit: TechPolicy, Creative Commons-licensed.

So before exams closed out last week, I drove halfway to Raleigh to listen to Mark Heesen, President of the National Venture Capital Association (NVCA), deliver his “State of Venture Capital” address to an audience of about 100.  It was an hour-long survey of major trends in the business and external forces affecting the industry, with a little forecasting sprinkled in.

The best thing about someone like Mark is that he’s not hobbled by any partisan interest or political privacy, which means you get an honest, unadulterated view of things.  And given that Mark has run the 40-year-old, 400-member organization since 1999, it’s reasonable to think he knows what he’s talking about.

Here are the highlights:

Stats & Trends:

  • The number of national venture-backed IPO exits in 2013 is expected to hold steady at about 50-55.
  • The number of national venture-backed acquisitions in 2013 may decrease, but their quality should be higher than in the last couple of years.
  • There are mixed opinions out there on the impact of crowdfunding on venture fundraising, but it’s generally a positive thing for small entrepreneurs focused on consumer products

Government Influence:

  • The “fiscal cliff” is a big concern for investors.
  • Tax policy is even bigger; if the capital gains tax advantage is erased, with it goes the incentive for sensitive angel investors.  The Obama administration doesn’t grasp this.

Hot Sectors:

  • Life sciences remain interesting, especially with the backing of the National Institute of Health.
  • The IT sector is strong and attractive to investors, in part because investors can expect to realize their return faster than with other investment types.
  • Excitement in cleantech about revolutionizing energy has been tempered by more realistic, but very attractive, businesses that address incremental change.  Radical change will come later

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