We’re not quite yet in the new year, but this is my final Friday Letter of the year.
That is not to say Venture Capital Journal is done delivering news and content. We have fresh stories planned for the next few weeks and we’re hard at work preparing news and features for 2022. I urge you to check in on our morning VCJ email newsletter each weekday, and continue to visit our website.
But as we wind down 2021, I was thinking of the Friday Letter before Thanksgiving last month in which I recapped my considerations for the story of the year. Now indulge me as I present my predictions for the venture community in the next year.
This past year we’ve written stories about such organizations as Allocate and Oper8r, which help emerging managers learn best practices and connect them with LPs. I also recently spoke with the co-founders of Recast Capital about their fund of fund operations as well as their educational program for emerging managers.
Spoiler alert: That story is coming out in January. These firms and the services they provide will be a key metric for potential LPs in 2022. After all, since virtual meetings are now commonplace, LPs undoubtedly will look favorably on any emerging manager who has gone through a program from Oper8r or Recast. I’m not saying it will replace due diligence, but it could open doors to a meeting for a young partnership or help Recast Capital secure an LP commitment.
The past year has seen a lot of progress when it comes to diversity in VC, which includes gender diversity and more people of color joining or launching their own venture firms. Another spoiler alert, our annual Rising Stars feature in January showcases a number of these diverse individuals, including many founders of firms, who are rising up the venture ranks. As one VC said to me this week, a lot of work remains to be done, and I expect diversity will continue to be a top story line in 2022.
US-based venture fundraising has likely already surpassed $100 billion. It’s another record year for an asset class that a few years ago was looking at $40 billion as a ceiling. The question is how much higher will it go, or will it recede? Deal activity is also high and mega-deals of $100 million or more constitute a majority of deployment. That kind of robust investment activity is going to require more capital.
So I’m taking the over on this bet. I expect 2022 will set another high watermark for venture fundraising in the US and worldwide. We’d have to see a catastrophic event to derail the momentum of the past year.
Are these predictions spot-on or toothless?
Let me know what you think. You can ping me up at firstname.lastname@example.org to have an email convo or a virtual chat. I’m already scheduling meetings in 2022.
In the meantime, I hope you all stay safe and sound. Happy Holidays, Merry Christmas and a Happy New Year!