Rice Business Report September 2019 September 2019 Rice Business Report | Page 34

Rice Business Report September 2019
Circular Patterns in Venture Capital and Angel Investing: Interesting Trends and Tips
By Alicia Castillo
Continued from page 27…..
And the funding process has become more interesting and complex.
5. As both entrepreneurs and funders become more comfortable navigating many op-
tions of funding startups or grownups, new funding options are emerging: there is better
knowledge about crowdfunding, cryptocurrencies, hybrids (safes/convertible notes),
and SFI-types (can we call this special funding instruments?). Capital suppliers are bor-
rowing mechanisms from SPV, SPE, and SVI. I can't wait to see what new options sprout
of this.
All of these recycling and repurposing has an impact on ROI and capital markets
6. Cycles are longer: It takes longer to climb a larger mountain, especially if, along the
way, there have been some quasi-exits, pivots, more and larger rounds. This is having an
impact on the way we negotiate funding going INTO the firm, because there is light at
the end of the tunnel, but the tunnel is getting much longer. Combine this with the un-
certainty of how investors get OUT. Again, this is an area ripe for disruption and I can't
wait to see new options emerging. With longer cycles, the return on investment decreas-
es, so firms are pushed into finding new and disruptive ways to excite investors and
NEW investors who supposedly are more risk-averse and adventurous, but in reality are
reckless
Longer roads need more resources,
But the supply of capital does not exist in a vacuum
7. Public markets are shrinking, and investors -especially institutional investors- are navi-
gating through a rollercoaster of political insanity. Mostly derived from the surprising in-
terest in protecting borders than in having healthy global economies, financial and eco-
nomic illiteracy is permeating the political arena where decisions are reckless and finan-
cial managers are focusing on reducing stupid (gasp) risks instead of creating and sup-
porting new wealth.
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