Boom-time ‘on the floor’ at NVCA event

The glitzy appearance of singer and businesswoman Jennifer Lopez lifted a boom-time NVCA VentureScape conference in San Francisco last week. Yet the talk among many of the speakers and delegates was how sustainable the roaring successes of the last few years in the technology sector were.

The mood was one of tempered optimism, with the dominant feeling being that current valuations reflected over-exuberance, but also that any correction would not hit the sector as hard as the fall-out from the collapse of the dot.com bubble. 

Roger Altman, executive chairman of advisory firm Evercore, said: “Companies in the social media and the internet sectors are very highly valued and at some point there will be a correction given valuations in the sector. This will probably be a fairly sharp correction as usually corrections are fairly sharp. Yet I don’t think we will see a repeat of the breadth of the 2000 collapse.”

The audience heard from two sets of the new kings of Silicon Valley – angel syndicates and a panel comprised entirely of unicorns – start-ups which have achieved a greater than $1bn valuation.

The angel panel talked about the disintermediation of the venture capital industry and how capital had largely turned into a commodity in Silicon Valley at earlier rounds. Their bet was one of the biggest successes for VC in the future, would be bringing venture capital to international markets. Dave Morin, co-founder of social network Path, said: “We were lucky to have a front-row seat into Asia, through Path.” He said venture firms would do well to go more heavily into Asia and other markets, for despite the region’s fast growth, the absence of available capital for start-ups was “extreme”.

The unicorn executives made the case that their business models were changing their sectors so much that their own company valuations were justified. One also added that valuations were probably not their most important concern when fundraising. Aaron Vermut, chief executive of Prosper, a peer to peer lending company, one of the three presenting unicorns, said: “I really believe in the value added model of venture. I have taken a lower valuation for the right partner in the right deal more than once.” 

Given the change going on in the venture capital sector, the NVCA was also keen on reforming the industry. Lopez’s appearance at the event was symbolic of a wider theme within the trade body’s meeting of trying to promote inclusion, with a break-out session dedicated to the topic, while the trade body also ran a side session for corporate VCs. 

As the technology sector continues to boom it will be interesting to see how these disparate trends develop, and how robust such appetite for change will remain should harder times set in again.