Upfront LP Survey of the Venture Capital & Startup Industry

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LP Survey Results
January 2017
1
Mark Suster, @msuster
Chang Xu, @_changxu

LPs continue to be optimistic about the venture capital
asset class
2

3
The mood of LPs over the past 5 years has gotten consistently more
optimistic about venture capital off of a low period ...

4
We have seen a steady recognition over the past 5 years by LPs that there is a
need to find new managers to drive alpha ...

5
Perhaps the biggest shift we’ve seen is the increasing focus on LPs in co-
investments and in fact some LPs now speciali...

6
LPs believe that a large correlating factor driving our industry is large pools of
capital chasing higher yields due to ...

7
LPs expect to continue to fund the venture industry at a relatively stable pace over
the next 3 years, which should mean...

LPs do believe VCs need to slow down our pace
8

9
LPs have noticed the “valuation creep” in venture-backed companies and
have some concerns about burn rates and financial...

10
VCs have been shortening the cycles in which they raising money from LPs,
which also has LPs a bit concerned.
Source: U...

LPs expressed that they are discerning
about which VC managers they fund
11

12
Compared with a year ago there are far fewer bears amongst LPs - likely driven
by a sense that the industry has gotten ...

13
And most LPs we’ve spoken with over the past 5 years have now
acknowledge that the seed stage of the venture market is ...

14
Traditional A/B round venture capital is still the most favored part of the venture
industry but LPs acknowledge they n...

15
LP dollars still go disproportionally to large funds that end up doing later stage
investing but this is also the stage...

How did LPs feel about
Trump — before the
inauguration?
(of course we had to ask)
16

17
Prior to the inauguration LPs didn’t seem overly concerned about the
economic & political environment.
LPs 10%32%32%24%...

18
But on point issues LPs did express concern about areas that may affect
underlying investment opportunities.
China rela...

19
LPs seem concerned about Trump’s impact on social issues with 1/3rd
“concerned or deeply worried”
LPs 15%19%35%30%1%
Ri...

20
The majority of LPs we surveyed were clearly anti-Trump.
Q. How do you personally feel about a Trump presidency?
Source...

21
However, most LPs didn’t think the Trump presidency will have a major
impact venture capital.
LPs 15%69%12%4%
Very bene...

Appendix
Annual Upfront LP Survey Participants
82 respondents in January 2017
73 respondents in January 2016
22

2017 LP respondent demographics (I)
23
Fund type
0
10
20
30
9
2
5
12
34
20
Fund size
0
10
20
$0-250M $250-750M $750M-1.5B ...

2017 LP respondent demographics (II)
24
Position
0
20
40
60
Partner / MD Analyst to Principal
21
60
How long has your ﬁrm ...

2016 LP respondent demographics (I)
25
Fund type
0
10
20
30
9
445
23
28
Fund size
0
10
20
$0-250M $250-750M $750M-1.5B $1....

2016 LP respondent demographics (II)
26
Position
0
20
40
60
Partner / MD Analyst to Principal Blank
1
18
54
How long has y...

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