Speakers at the Kellogg Private Equity and Venture Capital Conference consider the next big investment opportunities
As business leaders survey the damage left behind by the economic crisis, venture capitalist Kevin Efrusy believes that what is left in the rubble are the foundations of the next economic boom.
“There’s a cycle in our business and it’s about 14 years,” Efrusy said, addressing attendees at the 2011 Kellogg Private Equity and Venture Capital Conference. “Every boom starts out being built on the remains of a prior city. That’s what starts the cycle.”
Efrusy, a partner with Accel Partners, gave the venture capital keynote address Feb. 9 at the University Club of Chicago. Dean Sally Blount introduced Efrusy and welcomed 300 students, alumni, faculty and industry professionals to the conference, which carried a forward-looking theme, “Value Creation in the New Decade.”
Predicting the future of investment means understanding the cycle, Efrusy explained. There is always a bottoming of the market, followed by periods of firming and acceleration, which then free-falls again to the bottom. Most money is made in a very short period — over about three years in a 14-year cycle.
“The only way to do well is to see the pattern,” he said. “Serendipity plays a huge part in our business. To say we knew it all along isn’t really true. Lightning does strike in our business; understanding where it is likely to strike is key.”
Recognizing the pattern has become second nature to private equity keynote speaker John “Jay” W. Jordan II, who noted that this is his fifth cycle.
“We’ve sort of been there, done that — we manage the cycles,” said Jordan, chairman and managing principal of The Jordan Company. “There are some times when we do nothing and some times when we have a flurry of activity. We had a fairly robust year in 2010, and in 2011 and 12, we look to have extremely active years.”
As for where lightning could strike in the future, Jordan said his firm is interested in food, water, education, healthcare and energy services businesses, particularly in emerging markets like China, India and Vietnam.
Other conference highlights included panel discussions on opportunities in emerging markets, the future of mobile technology and a younger perspective on private equity.