The BABC Northern California hosted its 7th Annual “Funding, Exits and IPOs” event in Menlo Park on February 28nd 2018. The panel, made up of esteemed Silicon Valley Venture Capitalists and leading fintech journalists, gave their predictions and insights to over 80 guests in attendance. The panel consisted of Rebecca Lynn – Partner, Canvas Ventures, Steve Goldberg – Operating Partner of Venrock, Mitchell Kertzman – Managing Director, Hummer Winblad Venture Partners, and Bill Reichert – Managing Director, Garage Technology Ventures, and was moderated by the West Coast Editor of the Financial Times, Richard Waters.

Richard Waters first addressed the big tech IPOs that were coming up, Spotify and Dropbox. The panel had a healthy discussion over the long awaited offerings, and their viability as ventures. They held some reservations about Spotify because of the problems they have dealing with record companies. Although they agreed that Dropbox held some potential because of the future growth of the technology, noting that it has more potential than comparable cloud technology from the likes of Google and Microsoft. The discussion then turned towards some of the trends in the current market, they noted that the market is comparatively subdued to a few years ago when there was a wave of investment in ‘unicorns’. Mitchell Kertzman summarized the discussion in noting that although less deals were being made, roughly the same amount of money was being invested, and so we are seeing a trend of bigger deals being made.

The panel also discussed the recent trend developing of Asian money being invested into American companies. The panelists discussed the massive inflow of capital from China, and noted that they are willing to overpay in order to get a toe hold in American tech companies, and noted that despite the volume of money the investments are relatively unsophisticated. The panel expressed some concern that the trend could potentially imbalance the investment ecosystem as it may affect the ability of American companies to compete with the capital that Asian investors are willing to invest, and noted that although the offers might be higher, the quality of investor and what they may bring to a company is likely significantly lower. The panel later fielded a question from an audience member that provided a fortuitous example, as he told the panel of an offer received from an Asian investment company that was well in excess of other offers he had received, and asked the panel for their opinion on what impact this might have. Mitchell Kertzman addressed the question and advised that CEOs should be careful that investment is going to benefit their company in the long run, as a short term boost in valuation does not guarantee a successful company in the future.

Richard Waters then asked the panel for their opinion on the current state of affairs in Silicon Valley, noting the dominance of the ‘big five’ technology platform companies that are currently commanding the market. Rebecca Lynn expressed that in some ways she is not worried about these companies as they tend to buy innovative technology rather than produce it themselves, Steve Goldberg echoed this sentiment, noting that most companies are not good at acquisitions, which actually creates opportunities for venture capitalists. Richard then moved the discussion on to tax reform, and how Donald Trump’s new tax plan might affect the venture capital climate. Richard Waters asked if the money freed up by the reform might spur a boom in tech acquisitions, and encourage those who were not investing to make the leap. The panel expressed some skepticism over the effect that the reform might have, as they saw no reason to believe that the reforms will necessarily free up significant new investment. Bill Reichart summed up the discussion when he said that ‘the guys getting money already had money’ and argued that corporations having more to invest will not equate to more investment.

The discussion then turned towards some of the trends in tech development, namely cryptocurrencies, Blockchain and machine learning. The panel agreed that ICOs (Initial Coin Offerings) were hugely problematic, as they held significant potential to become vehicles for fraud, with Rebecca Lynn noting that despite the semantics that these companies use they should be viewed as securities. The panel then moved on to a healthy debate over blockchain. While Mitchell Kertzman saw blockchain as an incredible innovation, in which he sees huge potential for uses in database technology, Rebecca Lynn quipped that it was slower and more expensive, but conceded that she saw a number of applications for the technology in banking and data. 

Moving on to machine learning, Richard Waters asked the panel how they assessed the potential to invest in machine learning technologies and what the applications of the technology might be. The panel expressed some skepticism over the importance of Machine Learning, noting that the maths behind it is not new, but rather the real development has been in moving the capabilities of hardware forward in order to deal with the demand of machine learning algorithms. 

The panel then fielded a number of questions from the audience regarding a number of topics, including their take on the UK investment climate, and how they viewed the potential for investment in foreign countries; the lack of investment in female led companies. 

We would like to thank all our panelists and attendees, as well as our Presenting Sponsors: HSBC, Platinum Sponsors: CCW Business Solutions, and our Gold sponsors: Carr McCellan and Invest Northern Ireland for making this a wonderful event. 

You can check out some of the photos from the event here