TLDR:
- Venture capital firms may need to rely on private equity and secondaries for exits in the near future.
- Mark Suster of Upfront Ventures predicts that venture firms will use secondaries to exit holdings due to challenges with IPOs and M&A.
Mark Suster, a partner at Upfront Ventures, discussed the future of venture capital firms at Fortune’s Brainstorm Tech conference. Suster highlighted the challenges facing startups in the current IPO market, with only 74 companies going public on U.S. exchanges in 2024. As a result, Suster predicted that venture firms would turn to secondaries to exit their holdings, as illustrated by a recent deal made by Sequoia Capital.
Suster also emphasized the importance of private equity as an exit market for venture capital firms, especially given the influx of newly created unicorns in recent years. This shift towards emulating private equity practices may be necessary for the industry to adapt to changing market conditions.
Additionally, panelists at the conference discussed the valuation of AI companies, with opinions ranging from overvalued to undervalued. Despite differing views, there was consensus that AI remains a critical area for investment, with potential for extreme value creation in the future.
In conclusion, the future of venture capital firms may involve a shift towards emulating private equity models, utilizing secondaries for exits, and continued investment in AI companies with high growth potential.
