Predictions for 2015

Predictions 2015

Oil shock

This was a surprise in the last part of 2014. It will peter out eventually. But shale and other extraction systems that were started during cheap money and high oil prices will not be stopped, but instead will operate at a continual loss until no longer able to run. The money lost by operation will be less than the money loss if they did nothing. So the extraction w Should ill continue, and cause a supply glut for longer than currently expected.

 

Fossil Fuel is transportation and petro-chem feed stock, it is not electricity. Thus the 'energy' conversation I've been seeing are a little mis-guided.

 

Immigration policy

As far as new legislation goes, it's a mess. However, new interpretations of current law will probably occur. Some folks are going to be unhappy, but it is a slow way to accommodate and adapt to changing conditions. Being stagnant is a guaranteed way to be wrong.

 

Cleaning of the banking system

I'd like to see it happen, I don't think it will in 2015. If it does, it will be painful, unpleasant, and I don't know if many folks will withstand the challenge.

 

VC changes in LP/GP agreements

Nakedcapitalism has a good series on the issues created by GPs on LP agreements. Will these continue? Probably. It's hard to see big changes unless someone (government) steps in. But given the amount of enforcement seen to date, it seems unlikely to see a marquis conviction of fraud/abuse that will shut down the system.

 

Different funding structures

The classic seed -> Series A -> series B works well when there is a mature equity market.  But if there is a problem with an exit, the first thing to do is close off the initial rounds of financing.  In times without a mature or reliable equity market, I expect to see more royalty based deals.  One where x% of top line revenues are used to provide some equity like returns, and not provide an over burdensome payment stream to the start-up.  Deals done overseas in emerging markets can provide a history of experience and issues in this type of deal structure.  I do expect to hear more of these deals being done in 2015 on the angle side, not as much in the VC arena.