The Future of Venture Capital

This article is written by Jeremiah Uke, a Contributor Author at Startup Istanbul.

Andrew Romans is a General Partner at Rubicon Venture Capital, he is also CEO and General Partner at 7BC.VC, he has great experience working with startups and aiding them to raise funds from venture capitalists, he is also the author of books: “Masters of Corporate Venture Capital” and “The Entrepreneurial Bible to Venture Capital”. Andrew was present at Startup Istanbul 2016 and he gave an insight into what the future of venture capital is.

With a lot of years of experience in venture capital and having helped a good number of startups raise funds from venture capitalists, Andrew was able to set up his own personal venture capital fund with his friend, Rubicon Venture Capital, while speaking at Startup Istanbul 2016, Andrew believes that the future of venture capital is adding value, the limited partners (investors in venture capital), the general partners (venture capitalists who invest in startups), and the portfolio companies (startups), usually the limited partners that conventionally back the asset class like pension funds, or insurance companies do not want to have interactions with the portfolio companies or startups, they just want to invest into the venture capital fund, therefore the venture capitalists are forced to hire talents to push value into the startups.

The really good companies get venture capitalists compete over who will invest in them, therefore venture capital must add value, while interviewing a venture capitalist, Andrew found out that the venture capitalist belongs to 39 boards of directors, and spends most of his time trying to get of the boards and transfer his responsibilities to someone else, Andrew believes this method is flawed and it is not scalable when one person does all the venture capital work.

Rubicon allows investors to invest in their fund without interfacing with startups, Rubicon raises money from a mix of angel investors, family offices, corporations, and some passive limited partners. Rubicon can tell one of its startups to work with a family office who can carry out distribution in 20 markets in Turkey, this would drastically increase sales which means more money for all parties.

The future of venture capital is “add value or go away” because bringing cash is simply not enough, resources owned by investors should also come to play and be used in ways that will help startups grow and not leaving them to scale in isolation. The most important thing for an entrepreneur is choosing a good co-founder and team, after that, the next most important decision is getting the right network of people around the startup.

Entrepreneurs need to ask the question “what am I missing?”, because cash is not always what a startup needs to succeed, finding key people to do the most important things should be top priority for an entrepreneur, these people do not necessarily have to be employed, they can be brought into the team as an advisor or an investor.