Professor Raiton’s Inside Perspectives: Entrepreneurship, Creativity, Innovation

The founder of Rembrandt Venture Partners offers predictions for next year and advice for entrepreneurs seeking funding

by Karen E. Klein
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What’s on the horizon for venture capital investing? The founder of one Menlo Park (Calif.) firm predicts conflicting trends in 2008: the demise of a number of VC firms and healthy growth for others, especially those focused on the high-tech, biotech, and green-tech sectors. The founders of Rembrandt Venture Partners focus on early-stage companies with unique propositions and significant “unfair advantage” over their competition. General partner Richard Ling spoke to Smart Answers columnist Karen E. Klein recently about the future and how entrepreneurs might go about capturing his attention. Edited excerpts of their conversation follow.

Your firm has been around since 2004, you’ve invested in 19 companies, and you’ve returned all the capital from your initial fund. So you guys are doing well. But what do you see happening on the broader venture capital landscape in 2008?

We think there’s going to be continued shrinkage of VC funds out there. A lot of them started in the late ’90s, and they popped up solely to take advantage of the Internet bubble. Since the average VC signs 10-year contracts with its investing partners, many of them are reaching that deadline now. They will have difficulty raising new money if they haven’t had an exit or returned much capital in the last year.

We also think there’s a growing trend among smaller VC firms where they are reducing the size of their average fund, shortening their capital cycle from four years to two, and raising new funds more frequently.

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