Venture capital isn’t dying; it’s evolving, says Kellogg grad

10/25/2008 - Skeptics may write off venture capital as an industry that can’t scale or that its model is dead, but Suzanne King ’95 disagrees, noting that the business is transforming.

King is a partner in New Enterprise Associates, a Baltimore-based venture capital firm where she specializes in information technology opportunities and manages the organization’s marketing and investor relations area. She spoke to Kellogg School students Oct. 22.

“We believe the industry is evolving from a cottage industry to a real industry with a real infrastructure,” King said. “It is a growing force in the economy.”

With venture capital reaching a peak during the dot-com era, King said that industry now is splitting into two types of businesses: boutique firms and large firms who have a diversity of investments. NEA, she said, falls into the latter category. Competition will squeeze out the middle firms, she predicts.

Also, big innovative firms are no longer centered in Silicon Valley or Boston, as they were was when King joined NEA in 1995. Now, she said venture capitalists are investing in companies around the world, including in China and India. NEA has two offices in China and one in India.

“We’re finding innovation everywhere,” King said. “If you don’t adapt to that, you’ll miss great opportunities.”

With more than $8 billion in committed capital, NEA is one of the largest venture capital firms globally. The company focuses on the industries of information technology, energy and healthcare.

Although NEA is conceived as a large venture capital entity, King said she and her colleagues ultimately are looking for good ideas, helping those small companies grow from a paper-napkin conception to an initial public offering.

“We want to change the world in the way we play and the way that we work,” King said.

King’s presentation was the kickoff to the Kellogg School’s Venture Lab and Buyout Lab courses.

Buyout Lab is a quarter-long internship that provides students the chance to experience the daily workings of a local fund and allows them to assist with deal selection, due diligence and investment efforts. Venture Lab works similarly in that students design projects in conjunction with Kellogg professors and actual venture capital firms. King’s presentation was sponsored by the Heizer Center for Entrepreneurial Studies.

“I’ve been a big fan of financial history and looking at where we come from and where we are going,” said Mitchell Petersen, the Glen Vasel Professor of Finance, who co-teaches Venture Lab with Assistant Professor of Finance Yael Hochberg. “Suzanne has the history in that she comes from a firm that has been in the industry for a long time,” added Petersen. “She started there when it was small and she can talk to changes in the industry and how the company managed that growth to their current state.”