What are your expectations from the limited partners?
Returns! I think 2010 and 2011 will be the years when LPs will look at returns from the VC funds. The good news is that if markets remain healthy, we should see some attractive exits. Exit options continue to revolve around IPOs and trade sales; depending on the sector, one of the other may have higher feasibility.
How do you see the fund-raising scenario changing?
I see an improvement in the early-stage venture funding scenario. I think it will improve from the lows of 2009, but might not reach as high a level as it touched in 2007 and early 2008.
Which sectors look promising?
Technology sector will continue to attract a substantial portion of VC, but other sectors like education, healthcare, consumer services, among others, will get their share.
Has the slowdown affected valuations and deal sizes?
At Series A level, valuations have been reasonable all through and did not fall much. Growth stage valuations was under pressure, but good companies continued to attract rich valuations there as well. Aggressive valuations on growth-stage companies will continue in 2010, unless the markets suffer tremendously.
Will the focus on managing portfolio firms shift to new investment targets?
Running an investment business is about striking a balance between the two, and I believe experienced fund managers will continue to do so.