Friday Letter: Exits and talk of a correction from our Dallas conference

Reflections from our PartnerConnect Texas event and what investors are thinking about.

It’s been a hectic week at Venture Capital Journal, especially for me.

I’m in New York as I write this, and earlier this week I was in Dallas for our annual PartnerConnect Texas event at the Fairmont Dallas Hotel with more than 100 LPs and GPs from the venture and private equity communities.

At the event, I moderated a keynote discussion with Anurag Jain and Frank Mycroft. Jain is co-founder with Ross Perot Jr. of Perot Jain, a Dallas firm that invests in early-stage tech companies. Mycroft is co-founder of Booster, which provides gasoline delivery services and was “incubated” by Perot Jain and has grown considerably, having raised $90 million in total funding.

At the end of the second day of the conference, I also interviewed four great minds on the state of venture capital: Greg Bohlen of Union Grove Venture Partners, Mike Dodd of Silverton Partners, Professor Ken Wiles and Brian Smiga of Alpha Venture Partners.

Here are some of my impressions of the event, from the panels I attended and moderated as well as my networking chats with people, minus the attributions, as per our Chatham House Rule.

Exits and IPOs in particular were a big talking point at the event. Many believe we will see more unicorns launch public offerings next year, although those exit events are not what they used to be. As one attendee said to me, “IPOs have become the new down round in venture.”

Folks also predict seeing an increase in direct listings next year. We’ve had two this year, Spotify and Slack, and there’s certainly a lot of chatter about companies exploring the option. So what’s the over-under bet of direct listings in 2020? One advisor told me his guess is five.

There was lots of bubble talk, as in when the bubble will it burst and how bad it will be.

How close are we to the end of the up cycle? One speaker said it feels we are in the sixth inning of a nine inning game.

As another speaker said, in regards to predicting a recession, he knows someone who has predicted 14 of the last two recessions. Yes, I know that doesn’t add up. Indeed, everyone says bad times are coming, and one day they will be right in their prognostication. Even a broken watch is correct twice a day.

In regards to terms and conditions, I heard an LP say that the good managers typically don’t negotiate terms. And those who are willing to negotiate generally don’t perform as well. As a result, the LP said they are seeing more open funds – or firms that raise a little – showcase their strategy with a few investments, and then return to finish the fundraising process.

There was lots of talk about fundraising and how 2019 is going to be another record year for the US venture community. This makes a lot of people nervous, on the LP and GP sides. Mega-funds, in particular, keep getting bigger, and I know of another mega-fund that is announcing its $1 billion close next week (stay tuned for my story mid-week).

As one public pension LP said, regarding fundraising: “I’ve seen too many things go wrong. Incentives are skewed. In looking at the mega-funds, we may miss out on other great funds. The infrastructure seems impractical.”

Another LP who backs venture funds is seeing a lot of seed managers crop up. And what do they look for when investing in seed managers?: “We want to see if they have relationships with the entrepreneurs.”

For emerging managers, what is the best way to get a meeting with an LP? One LP said use a placement agent. It mitigates the risk to the LP. “We love placement agents. We know they know the VCs and they know the market.”

Another LP added, “If a placement agent brings a bad recommendation, then that’s rude and we’ll never talk to them again.”


At the end of the second day, the closing keynote was from Kenneth A. Hersh, president and CEO of the George W. Bush Presidential Center. Again, because of the Chatham House Rule, I can’t disclose what he said.

But his direct take on politics and investment activity had us all happy that cocktails were served immediately after his speech.

We would love to hear from you about your outlook for 2020 and beyond, as well as what story ideas we should pursue and anything else venture-related. You can reach us on our contact page.

You can also leave us an anonymous tip on our website by clicking here.

I’m based in the San Francisco Bay Area and happy to meet folks in person.