By Phil Wickham, Kauffman Fellows
Venture capitalists, like the entrepreneurs they finance, never sleep. They are always searching, moving, evolving. The same is true for VC educators.
So, after seven years as CEO and president of the Kauffman Fellows Program, a Silicon Valley-based nonprofit that develops the next generation of VC leaders, I am handing off some of my administrative duties. The energetic Jeff Harbach, Kauffman Fellow (Class 16) and executive director of the Central Texas Angel Network, will take over the role of president.
As CEO, I will remain and focus on our alumni network of some 370 VCs, and use their combined vision to help the industry rise to the challenge of what comes next after the recent blast of startup activity in technology, biotech, and other fields. Even though the occasional cold snap in the market (and, yes, we might be having one today) can bring an early frost to a crop of new companies, the driving force of innovation is unstoppable.
Much has changed in the VC world since I came to the Kauffman Fellows Program in 1995, but what is more astonishing is the future of venture capital. Imagine a VC industry more multicultural, global, creative and much, much bigger than it is today. Imagine a $200 billion industry, four to five times larger than today, in 20 years.
For most U.S. companies, research and development expenses are 1 percent to 4 percent of revenue. In our $18 trillion economy overall, we only spend a small fraction of 1 percent of revenue on R&D. Technology is remaking every industry. That’s a lot of capacity for venture capital to grow.
Changes in the VC industry will be about more than than just size, however. The face, and the faces, will change.
When Kauffman Fellows launched in 1995, it was within an industry that was predominantly white, male and focused on technology. Yet our first class that year was 21 percent women and 8 percent African American. And we have worked to build on that spirit of diversity over the past 20 years.
In our first six years, 1995 through 2000, only 15 Fellows were women. In the past six years, there have been 59. The number of African American Fellows has doubled (from 6 to 12) and Hispanic Fellows have increased from 0 to 33.
None of our Fellows in our first six years were from outside the United States, either. Now they make up more than half of our enrollment, and many are focused on developing nations.
The future for technology companies, which traditionally have benefited the most from venture capital, remains enormous. But to reach the next leg of growth in venture capital more broadly, we also need to look much farther afield for opportunities than we have in the past.
While everyone can agree that diversity is the right thing to do, it’s also the greedy thing to do. Industries besides information technology, financial technology, and biotechnology are also ripe for disruption and rebirth. And VCs need to look beyond the Valley. We see tremendous opportunity for hyper-growth in markets as diverse as Cuba, Nigeria and the Palestinian territories.
Bottom line: All of these changes are a big part of why we are restructuring Kauffman Fellows at the very top. The future of venture capital is about human capital.
Phil Wickham is CEO of Kauffman Fellows, a Silicon Valley-based leadership program for venture capitalists and innovators.