The Intersection of Running a Micro VC and the Future of Technology in 2023

The Intersection of Running a Micro VC and the Future of Technology in 2023

In the ever-evolving world of venture capital, running a micro VC fund can be both rewarding and challenging. As someone who has experienced the highs and lows of this industry, I've learned several valuable lessons over the past year. Interestingly, these lessons align with some key trends and developments that we can expect to see in the technology landscape in 2023. Let's explore the common points and insights that emerge from these two seemingly unrelated topics.

Lesson 1: The High Failure Rate of VC Funds and the Need for Diligence

One of the first things I learned is that most VC funds are failures. Just like startups, the majority of them will not even achieve 1x returns. This highlights the importance of doing thorough homework before deciding to start a fund. To gain valuable insights, it's essential to engage with experienced micro VCs and learn from their experiences. Talking to at least 10 micro VCs can provide a broader perspective and help you make informed decisions. This diligence is crucial because starting a fund without proper financial stability can have detrimental effects on your personal life. Micro VCs often have a limited budget for running their companies, and most of the funds need to be used for investing rather than personal expenses. It's important to be prepared for the financial implications and potential sacrifices that come with this career path.

Lesson 2: The Challenge of Bootstrapping and the Need for Strategic Investments

Bootstrapping a micro VC fund can be incredibly challenging. While you may not receive a significant salary, you are also limited in your ability to make money outside of your work. Additionally, most fund managers invest a portion of their own capital into the fund. This further highlights the importance of strategic investments and capital calls over a period of time. Understanding the financial dynamics of the industry and making strategic decisions regarding investments can greatly contribute to the success of a micro VC fund.

Lesson 3: The Quest for Profitability and the Benchmark of Success

Profitability is a key goal for any VC fund, and the "3x return" benchmark is often considered the gold standard for profitability. Outperforming this benchmark is an indicator of excellence in the field. However, achieving profitability requires a deep understanding of the market, strategic investments, and the ability to identify high-potential opportunities. Being aware of this benchmark and striving to exceed it can significantly impact the success of a micro VC fund.

Lesson 4: The Emergence of Augmented Reality (AR) and Apple's Role

Looking ahead to 2023, one of the most anticipated developments in the technology landscape is the launch of Apple's augmented reality (AR) headset. This launch has the potential to transform the computing platform and drive significant venture funding into the AR sector. While AR may not immediately become a mass-market hit due to its expected high price point, the presence of dedicated Apple hardware could accelerate its adoption. This highlights the importance of staying informed about emerging technologies and their potential impact on investment opportunities.

Lesson 5: The Changing Landscape of Advertising Giants and the Rise of Challengers

Over the last decade, advertising giants like Google and Facebook have dominated the internet landscape. However, in 2023, we may see these giants face more aggressive challenges. The advent of AI in the search design space and the vulnerabilities of social media giants create opportunities for new challengers to emerge. Understanding these market dynamics and identifying potential disruptors can provide valuable investment insights.

Lesson 6: The Geopolitical Significance of China's Access to Semiconductors

Another crucial trend to watch in 2023 is China's access to high-end semiconductors. The U.S. has made aggressive moves to curtail China's access to this critical technology. The response from China and its leader, Xi Jinping, will shape the geopolitical landscape. Observing how this unfolds can provide insights into investment opportunities in the semiconductor industry and related sectors.

Lesson 7: The Need for Regulation in the Crypto Industry

The crypto industry is at a turning point in 2023. The numerous collapses and instances of fraud and unethical behavior have highlighted the need for regulation. The deployment phase and widespread adoption of crypto depend on implementing better rules to ensure the safety of customer funds. Striking the right balance between regulation and innovation will be crucial for the future of the industry. Understanding the global nature of crypto and observing international policies can provide insights into the regulatory landscape and its impact on investment opportunities.

Actionable Advice:

1. Conduct thorough diligence before starting a micro VC fund. Engage with experienced micro VCs and learn from their experiences to make informed decisions.

2. Make strategic investments and understand the financial dynamics of the industry. Consider the implications of bootstrapping and the importance of capital calls over time.

3. Stay informed about emerging technologies and market dynamics. Be aware of potential disruptors and invest in sectors that show promise for growth and innovation.

In conclusion, running a micro VC fund requires diligence, strategic investments, and an understanding of market trends. By connecting the lessons learned from running a micro VC with the trends expected in the technology landscape of 2023, we can gain valuable insights for navigating this dynamic industry. Being aware of these common points and taking actionable advice can contribute to the success of micro VC funds and investment decisions in the years to come.