Fred Wilson on the Future of Venture Capital

Fred Wilson on the Future of Venture Capital

Fred Wilson thinks that Venture Capital is changing -- in 25 years, VCs may not have any assets under management.


Last night, Sarah Lacy asked Fred Wilson 'The Thiel Question' - something that Peter Thiel commonly asks prospective investments: "What do you believe that very few people agree with you about."

Wilson's answer was that in the venture capital market, there ultimately wouldn't be a need for VCs to ever have funds.

Today, VCs raise money from Limited Partners (LPs), who trust the VCs to use that money to invest in companies that will have amazing growth over the next 3-10 years and deliver a good return on investment.

The VCs primary value provided is to source and structure the deal and then provide ongoing advice and guidance to nurture the investment. By contributing money to the VC Fund, the LP is simply betting that the VC will be capable of sourcing and structuring deals and then nurturing them to success.

Storing Limited Partner money in their bank account, just waiting to invest it is inefficient for VCs. Instead, VCs should be able to submit, on a platform like AngelList, the investment terms, company overview, and personal commitments. Once it's up, we can easily let the market provide the money ad hoc.

Wilson's right, this future seems logical and inevitable. In fact, AngelList is already starting to successfully provide this type of disruption in the seed investment market via their Invest Online feature.

As a new angel investor, I've joined this market at a very interesting and disruptive time in it's life. As Naval Ravikant would say, "we're witnessing the unbundling of advice, control, and money."

In a world where advice, control, and money become unbundled -- the money will become a commodity chasing those with the best reputations for success.

Therefore, the Fred Wilson of 2040 will want to focus primarily on giving great advice and helping guide the company responsibly from his perch on the board.

Fred Wilson said he thinks this change will happen decades from now, but, it's already starting to happen for very early-stage investing. This won't happen quickly, but expect to see more and more "out-there" experiments.

If you are interested in early-stage investing one day, it's worth noting that building your expertise and brand will matter significantly in the future. It's why entrepreneurs will pick you today and it's why money will follow you tomorrow.

Photo:  Some rights reserved by Joi

Your body’s full of stuff you no longer need. Here's a list.

Evolution doesn't clean up after itself very well.

Image source: Decade3d-anatomy online via Shutterstock
Surprising Science
  • An evolutionary biologist got people swapping ideas about our lingering vestigia.
  • Basically, this is the stuff that served some evolutionary purpose at some point, but now is kind of, well, extra.
  • Here are the six traits that inaugurated the fun.
Keep reading Show less

Lessons from the Roman Empire about the danger of luxury

Are we enslaved by the finer things in life?

Credit: Public domain via Wikipedia
Personal Growth
  • The Roman writer, Tacitus, argued that the Roman Empire was built by enslaving conquered people who became accustomed to fine living and luxury.
  • Technology today has become so essential to our daily lives that it seems impossible to break free of it. It's as much a cage as a luxury.
  • Being dependent on a thing gives it power over you. To need something or someone is, for better or worse, to limit yourself.
Keep reading Show less

Supernova 2014J

Credit: NASA.gov
Surprising Science
  • There was a massive die-off of marine life 359 million years ago, and nobody knows why.
  • A new study proposes that the Late Devonian extinction may have been caused by one or more nearby supernovae.
  • The supernova hypothesis could be confirmed if scientists can find "the green bananas of the isotope world" in the geologic record.
Keep reading Show less
Surprising Science

Despite social pressure, boys and girls still prefer gender-typical toys

Fifty years of research on children's toy preferences shows that kids generally prefer toys oriented toward their own gender.

Quantcast