Over the years, Trinity Ventures has racked up many exits for its limited partners.
Through deals in consumer brands like Starbucks and Zulily and enterprise companies like TubeMogul and New Relic, the Menlo Park-based fund has found repeated success, but as it retrenches with a pared-down investment team and a much smaller new fund, Trinity’s investors have some thoughts about what lies ahead for the venture capital community.
As the firm’s partners consider what’s in store for 2020, they emphasize that entrepreneurs will have to focus on public policy; blockchain will experience a renaissance; a recession is coming and the accessibility of data and an aging global population will continue to reshape healthcare markets.
The firm is currently in the process of closing what would be its smallest fund in years, a $250 million investment vehicle, first disclosed in a filing with the Securities and Exchange Commission in July. That fund, as first reported by Crunchbase News, is the firm’s most modest vehicle in nearly 20 years; the last time Trinity raised less than $300 million was in 1998.
Even as it invests from a smaller vehicle, the team is still putting capital to work in deals like the human resources-focused technology startup, Cultivate; the interbank payment company, Baton; Squire, a payment and booking management platform for barbershops and salons, and Valtix, an enterprise security company.
For Patricia Nakache, an investor in companies like Turo, Care.com, and ThredUp, understanding regulation and public policy will have to become part of the job for budding entrepreneurs and big companies alike.
“CEOs will add public policy to their job descriptions, as consumers desperate for change and frustrated by Washington’s gridlock look to business leaders for progress,” Nakache says. “Even previously apolitical big company CEOs will reluctantly oblige, determining that stepping outside the traditional boundaries of business to address popular topics like gun safety and climate change is worth the risk if it helps to stave off populist, anti-business momentum.”
Financial technology has been a big focus for Schwark Satyavolu, and the Trinity Ventures partner sees plenty of storm clouds on the horizon for entrepreneurs next year. “In late 2020, the long-dreaded recession will inevitably begin. During that period, many direct-to-consumer fintech startups will face a David-and-Goliath battle for survival as they compete against brand-name, deep-pocketed consumer firms,” says Satyavolu. “Startups that haven’t achieved scale by that time will see their chances of surviving as standalone businesses (without being acquired) dwindle.”
Driving that recessionary pressure will be a reckoning forced by the two largest debt pools currently drowning American consumers: the $1.5 trillion student debt overhang, and the $4 trillion personal debt load U.S. citizens are carrying.
In an era of recessionary pressures, Satyavolu actually sees promise in the foundational technology behind the alternative currency boom.
“Now that the hype cycle is gone, blockchain is finally getting interesting,” says Satyavolu. “Whereas in years past the fundamental building blocks hadn’t yet been created, we’re just beginning to see the initial emergence of infrastructure that has the potential to at long last enable blockchain to begin by the end of 2020 to live up to the early hype. Specifically, over the next decade Bitcoin may emerge as the gold standard of digital currency, and sovereign currencies may begin to get reissued as digital currencies, likely beginning in countries like Singapore and Sweden.”
Finally, in the multi-trillion dollar healthcare industry, Trinity’s resident expert Ajay Chopra believes accessibility of useful data and a rapidly aging world will have the most implications for the dynamic and evolving industry of tech-enabled healthcare.