Following up on my year in review post, here are a few things I’m looking forward to in 2011.
1. Big M&A and IPO Activity. 2011 will build off the growing momentum in the exit markets from 2010. Some large scale Internet properties are poised to go public, and there will be a frenzy of buying activity in a few hot sectors.
My predictions? We’ll see one or two (or more) group buying companies get bought. Either Living Social or Buy With Me will likely go for a big number, and you might see some more modest exits among some of the fast followers or variants in the space.
We’ll also see a big exit or two in the evolving display ad space – probably one of the DSP’s (Appnexus, Dataxu, MediaMath, etc) or one of the emerging exchanges like AdMeld or Rubicon. Finally, we’ll probably see more consolidation in Ecommerce among the private sale powerhouses. It will be exciting to watch.
2. Super Angel frenzy will cool and the best seed stage investors will cement their leadership. I think we’ll see some rationalization in the seed space as many companies run into challenges raising their series A’s (although many great companies will raise money successfully).
This will do a few things. First, we’ll see some rationalization on prices at the seed stage as investors demand that they are compensated for their risk. Second, we’ll see more thorough diligence in seed deals and fewer cases of rounds without a strong lead (which is not bad for entrepreneurs, as I’ll explain in a future post).
Third, folks who are dabbling in seed investing just because it’s “hot” will likely pull back. All these will help this evolving market adjust, but it won’t be a dramatic “bubble bursting” kind of thing. Markets adjust all the time, and the total amount of institutionalized seed capital is so tiny relative to the total venture market that I’m a long term bull on seed focused micro-VC.
3. The Boston Startup Community will really start humming. I think we’ll remember 2011 as the year that the Boston startup community really started to shine again (at least within the sectors I focus on). But it will be the result of efforts taken over the last three years from everyone involved in this ecosystem.
I’m basing this from my own “on the ground” experience – as I’m seeing more great product oriented founders that are digital natives, more repeat entrepreneurs that are serious about mentoring others, and more ambitiousness overall among entrepreneurs and investors.
Full disclosure – I am a seed stage investor based in Boston.
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