Top 10 Trends in Venture Capital for 2016


BENGALURU: Startup companies with a potential to grow need a certain amount of investment. Wealthy investors like to invest their capital in such businesses with a long-term growth perspective. Such investments are risky as they are illiquid, but are capable of giving impressive returns if invested in the right venture, reports Inc.  

So if you are raising money for a startup or keeping an eye on your own investment, here are a few major trends in the Venture Capital landscape for 2016.

1. Upsurge in Corporate Deals

To inspire their innovation process, numerous corporations are opting to invest their money in small companies, not only for the pure financial returns, but also to get rewarded in many other ways. For example creating stronger suppliers, putting control levers in their industry, testing products, de-risking innovation, and engineering less expensive acquisitions.

2. Increasing Incubators and Accelerators 

Popularly one among the many updrafts, corporate sponsorship has been held responsible for the rise in incubators and accelerators. According to a recent MIT study of accelerators, initial stage dollars flow more aggressively, and indirectly lift their regions economically. There are an estimated 2,000 incubators across the U.S., with more opening almost weekly.

3. Initial Heated Competition will Rise for VCs

The best among the investors, like Andreesen Horowitz and Google Ventures are denying indulging in any early stage deals because “small investments do not move the needle for their huge funds.” This would further force smaller, relatively unknown funds work harder to make recognition for themselves in 2016.

4. A Steady Rise of Funds

The year 2015 saw a steady rise in funds, which still continues to increase. With so many new funds reporting friction raising money, there is a possibility of new funds launched in 2016 to sit a smidge above those rose in 2015.

5. Increasing Focus on Investor Education

Even if venture is performing well for many investors, a few of them might not be educated on the asset class, and look at it with a wary eye. The old-school passive methodology “set-it and forget-it” days of investing in the major venture funds are practically over. In order to help their clients benefit more in 2016, family offices and wealth managers will step up to navigate the changing capital currents. Also, considering the fast evolving venture landscape—various investors will lean into their regional or local economy and find fantastic fits in their own backyards.

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