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2016, an Opportunity for VC’s

In a recent post Shai Goldman talked about how 2016 is already off to a rough start in the public markets and how oil prices and US stock markets will be affected.

He went on to say “I expect 2016 to be similar to 2009 in terms of how the private market (venture world) will be impacted.  I suspect that many VCs are going to pull back this year, mainly to focus on existing portfolio companies in order to get them another round of equity/debt financing (aka oxygen) and/or help them get to an acquisition (or soft landing).

That being said, some VCs are going to be opportunistic and make MORE investments in 2016 vs 2015.  In down markets, VCs can get more ownership in companies since valuations drop due to supply/demand dynamics.  Many VCs will tell you that in order to generate 3x+ fund returns, entry valuation price / ownership % is critical.”

He then went on to mention that from 2008 to 2009 the top VC’s who increased their Seed & Series A investments pace were Founders Fund, First Round Capital, True Ventures, Accel Partners, Venrock and Bessemer.  It doesn’t surprise me to see some of the top funds in the world able to find high quality deal flow during a downturn.  I expect the same to happen this time IF Shai is right and markets continue to slow.

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