Trends Watch: B2B SaaS Venture Investing

EisnerAmper’ s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Dougal Cameron, Managing Director, Golden Section.

What is your outlook for VC investing?

VC investing is cyclical like all other sectors. Right now, the cycle is deleveraging. My outlook is that new funds will be difficult to raise which gives a premium in selection opportunity to the existing funds. The later stage companies will find a tougher environment to get the same valuation treatment. This will work through later stage VCs with asset write downs which will further hamper new fund raises. As a result, firms that won’t have write-downs and that have funds will have a huge advantage in the coming buyers’ market.

Where do you see the greatest opportunities and why?

The greatest opportunities lie in focusing on seed stage where the firm can help the company navigate the now different macroeconomic and market environment. Much of the information online that founders’ access was created during the upcycle from 2012 to 2021. 

What are the greatest challenges you face and why?

The greatest challenge is that later stage funds will be much more discerning on funding amount and valuation. These changes will impact all VC firms that rely upon third-party markups to give investors confidence. Returns will drop and lengthen. This is an existential problem for many seed stage investment strategies.

What keeps you up at night?

What keeps me up at night are the unqualified deals and funds that rocket through the high net worth world and tarnish the entire category. We see it all the time. The investors inevitably over invest given the risk and, when the asset prices adjust, write off the entire category. This problem is solved over time with greater transparency from fund operators.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.