Marvin Liao Interview and insights on Venture Capital and where its headed

Recently, I discussed venture capital with Marvin Liao, Partner at 500 Startups, and one of the leaders of Silicon Valley's tech sector. Marvin and I have known each other since 2012 and we discussed how VCs look at startups, what has changed and what they consider to be most important. I agree with Marvin's approach. AltaIR uses similar tactics to evaluate a Startup's ability to deliver. Marvin delivers some insights into what the next big thing is going to be.
1. What has changed in the last 5 years in the venture space how VCs approach investment?
I definitely think at least in the early stage VC, we're seeing tonnes of competing startups emerging in every single category. This has lead to VCs becoming better at understanding of business models & how deeply they look at metrics. Having said that, because of this, we're seeing VCs have their investment driven a lot more by traction & thus becoming more conservative. ie. very few VCs are investing in idea stage or if they are, its with small scout cheques.
2. Most VCs are now becoming more accelerators than just VCs — do you think this trend is set to continue?
Yes, it seems there is growing trend toward this and will probably continue due to ignorance of just how tough it is to run a good accelerator program. (and how challenging & expensive it is to run a good one).
3. Which sectors will show the most growth in the next five years in your opinion?
I am still very bullish on SaaS & Enterprise focused software startups in general. Also believe the Internet of Things space on B2B side is promising (particularly as how it will affect manufacturing). Ultra bullish on Synthetic Biotech sector.
4. In your view, what does a company have to do, to get noticed by an investor? What makes it stand out? What do you look at personally?
Growth whether in users or revenue in a clearly large & emerging space clearly makes a startup stand out. I may not like the space but you can't argue against the numbers. :) Having said that, I personally look at the team & how well they articulate the problem & market they are tackling, how deep their understanding of the customer is & how they view competition. More importantly how they will differentiate themselves versus their competition.
It was a real pleasure discussing current and future trends with Marvin and I am grateful for his time. I will be continuing with my thought leadership posts and will share more insights from the investment space from top industry players as well as my own opinion.