Venture Capital: Partying Like It’s 1999?

February 5, 2020

The last decade has been very good for venture capital. Returns have improved markedly and are now largely outperforming buyouts. Investments and exits are at all-time highs. Can the party last?

We tend to think so. Despite the excesses of the tech market and the parallels to the dot-com bubble, risk-reward in VC has actually improved. We believe the rise of software and SaaS as a business model explain why: they tend to offer high margins, recurring revenues, and opportunities to apply artificial intelligence to monetize data. There are more investment strategies than ever for LPs to consider.

We expect software to continue penetrating other sectors of the economy. This growth opportunity and the resiliency of the SaaS business model should enable VC to outperform, powering the IPO, M&A, and buyout markets in the process.

John Coelho and Brian Borton provide an overview of trends in venture capital and growth equity, discussing some of the risks and merits of this increasingly global asset class.

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