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Venture Capital – What’s in Store

If you are a venture capitalist you are not going stop investing, even in what appears to be a pending economic slowdown.  At least that’s according to the four investors who took part in a panel discussion put on by the German American Business Association.  The message could be taken as good news for startups looking for funding.  Suggestions for what’s hot included fintech, cybersecurity, anything involving Artificial Intelligence that helps with things like human resources and inventory as well ideas that will save on labor costs.

GABA invited the four VC leaders to its annual VC Capital Investment Thesis, offering participants a chance to hear “what’s hot and what’s not.”  Ankita Vashistha, a partner at StrongHer Ventures who helped lead the Saha Fund and Thorns Capital offered cybersecurity as one of her top interests for 2022.  “We can work from anywhere.  Talent can work from anywhere.”  So, tools and infrastructure are hot right now and so startups offering help with security stand a good chance of attracting new funding.

Cybersecurity is also one of Steve Goldberg’s top pics for funding.  The partner at Finistere Ventures told the group anything cybersecurity related is a good bet for funding.  “Things are tough right now,” he says, but VCs are ready to invest because “businesses still need to run” even in an economic downturn.  He points to AI enhancements to standard enterprise software involving human resources or inventory are a good bet for his company.

Point72 Ventures Operating Partner Eva-Maria Olbers says 2021 was a very unusual year, pointing to VC funding that was off the charts.  She sees “a more natural and more sustainable trend” emerging in 2022.  What’s more, investing will continue.  “VCs will always be looking for avenues and for investments,” she said.  With the world opening up as the pandemic wanes, she is optimistic, in part because “we are getting to meet our founders in person.”

The economy is definitely slowing according to Martin Tantow, a partner at the behemoth VC firm Pegasus Tech Ventures.  He brought a “high-level view” to the panel, saying there was a significant downturn in evaluations in the first quarter of the year after the highest valuations ever at the end of 2021.  He’s seeing continued downward pressure in the second quarter, but “the best startups get started in downturns.  This coming downturn is not a negative thing.”

“If you have a good idea, go for it” says Goldberg.  The other panelists seemed to all agree, including Olbers who says, “Overall, an optimistic lens going forward.”  Part of the issue here is that venture funds are typically 10-years long and longer.  A downturn lasts only so long, Goldberg says, and with investment periods lasting three years “there’s no way to stop investments and wait for things to change.”  

The author:  Henry Mulak is a journalist and teacher working out of Silicon Valley.  A member of GABA since 2018, he has worked from both Germany and California over a career spanning four decades.  He moved from Berlin back to his home state in 2013 and now focuses on the tech sector, including AI and Machine Learning.

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