Imagine a $200 Billion VC Industry

Plants growing in a series of coin jars

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 WickhamVenture Capital Journal CoverThe following excerpt was a guest column by Kauffman Fellows CEO Phil WIckham in the Venture Capital Journal. Phil Wickham is CEO of the Kauffman Fellows. Phil was in the Charter Class of the Kauffman Fellows Program, serving his fellowship under Ed Kania at OneLiberty Ventures in Boston, and was founding Vice-Chairman of the KF Board. Prior to joining the CVE staff, Phil served as a General Partner at JAFCO America Ventures and at Copan, based in Munich, Germany. In his venture career, Phil made over 30 investments, including Twitter, Ikanos, Web Methods, Com21, and Trilibis. Phil received his BSME from the University of Arizona and his MBA from Rensselaer. He serves on the boards of Trilibis and Lawson America.