2005 Outlook: Predictions –

On Disclosure

“2005 will be the defining year for the venture capital industry’s relationship with public-entity investors. Unnecessary information disclosure policies will have significant public policy and economic consequences for those LPs who fail to acknowledge the requisite level of confidentiality for their GPs to be successful with their portfolios.”
Joe Aragona, Austin Ventures

How VC Performs

“There will be some exciting investments in highly innovative spaces in 2005, ones that will make a permanent impact on the U.S. economy. Yet some of the most compelling new companies may be the ones you don’t hear about for some time.”
Jim Breyer, Accel Partners

Telecom Rings Again

“The telecom market will pull a Rip Van Winkle and awaken from its years of slumber. Having skipped a full generation of technology, the market will rebound in earnest.”
Chad Waite, OVP Venture Partners

Picture This

“The volume of photos, videos, music and other digital content will continue to grow exponentially, and businesses that can help users easily find, purchase, enjoy and protect the files that matter most to them will see big opportunities.”
Joanna Rees-Gallanter, Venture Strategy Partners

IPOs

“2005 will be a very strong year for technology IPOs, building on the rebound we saw in 2004.”
Jay Hoag, Technology Crossover Ventures

“The IPO bar will remain high for emerging venture-backed companies. But acquirers have not forgotten the lessons of 1999 and 2000: Do not overpay.”
Pascal Levensohn, Levensohn Venture Partners

Making Deals

“Most funds will continue to miss opportunities, refusing to pay a premium for the best deals. Talented entrepreneurs will begrudgingly take VC when absolutely necessary and a handful of innovations will find a viable large niche.”
Jared H. Kopf, Clarium Capital Management

What To Bet On

“Biometrics and fingerprint recognition will emerge as an exciting new end-user technology in 2005.”
Alessandro Piol, INVESCO Private Capital

“China. Period. Consumer electronics and wireless are going to be huge in China.”
Lip-Bu Tan, Walden International

“VCs will continue to look further afield from traditional IT opportunities. We will see increased investments in material science, energy, and other areas historically under-represented by VC.”
George Abraham, SAS Investors

Did You Say Jobs?

“2005 will bring a new spotlight on venture capital, and not just because of FOIA or Sarbanes-Oxley. The general public will become more aware of venture capital, because of the bridge it provides from innovation to job creation. And as politicians know, it’s all about jobs, jobs, jobs.”
Thomas Gephart, Ventana Capital Management

Exit Here

“The majority of exits by VC-backed semiconductor startups will be in the consumer area.”
Jim Jones, BA Venture Partners

State Funds

“I expect to see an increase in the availability of venture capital over the next five years, spurred by multiple state fund initiatives and an overhang of venture dollars in the top 10 markets.”
David Mann, Spring Mill Venture Partners

“Performance of the private equity market usually follows the stock market. Since 2004 was an up-and-down year for the market, private equity will have a similar flavor in 2005.”
David J. Reuter, LLR Partners

Size Matters

“Deal size probably won’t increase substantially, given that many new funds are smaller than their predecessors. But there will be more cash flowing into the market, and it will be good news for very young companies.”
Dennis Dougherty, Intersouth Partners

“Venture capitalists must find new segments growing at a faster rate than the GDP.

Is biotech the answer? Either that, or VCs will have to outperform the GDP through shear brilliance.”
Bill Stensrud, Enterprise Partners Venture Capital

The Internet

“Venture capital firms will continue to be attracted to established Internet companies, particularly those companies that have proven business models and have demonstrated profitability and positive cash flow.”
Walter G. Kortschak, Summit Partners

Everything Else

“We will catch Bin Laden. Barry Manilow wins comeback performer of the year. And venture outperforms buyouts in 05.”
Ashton Newhall, Montagu Newhall