Investing Notes From The Upfront Summit (2018)

It is probably my favorite “big” tech conference of the year. Every year, in late January, hundreds of VCs and LPs make the trek to Los Angeles for The Upfront Summit, hosted by the team at Upfront and their local sponsors. If Twitter is the best mechanism for measuring the pulse of the VC ecosystem online, then The Upfront Summit is the best mechanism for doing so in real life. Looking back on my notes from 2016 and 2017, it is clear the show for 2018 was notably different.

And with that framing, here are my quick notes from this year’s event. From my vantage point, both consuming the content on stage but also from the chattering outside in the hallways (and on the production lots at Warner Brothers), The Upfront Summit 2018 was marked by three “C’s”:

1/ Culture – Usually the first day of the event is devoted to inside baseball in the VC and LP market. There was zero of that this year, with the exception of a few panels on crypto and a panel featuring investment team members from The Softbank Vision Fund (more on those below). Instead, the majority of the content at the event was directed toward the broad issues of racial and gender diversity and inclusion in the startup tech world. Going a step further, much of this content was provided in an actionable manner. The culture story in the world of VC and startups was clearly the biggest storyline of 2017 and it was interesting to see Upfront set the agenda with action-oriented content for the 2018 show.

2/ Crypto – There were a lot of panels and great videos on crypto. It’s common to hear a VC say “I’m short-term bearish but long-term bullish” on this space. That was true at this event, too. The panels this past week covered nearly every topic that will touch VCs — the future of ICOs, infrastructure in crypto, regulatory environments, how traditional VC funds will treat tokens, and how entirely new funds are being formed as “crypto-native” vehicles. If I were to find the median opinion here among the crowd of VCs and LPs, I’d say it is a topic feel pressure to learn immediately but to act on not necessarily right now — but when the time is right for them.

3/ Confusion – Without the inside baseball VC & LP content on stage, most of that chatter was subordinated to the hallway, naturally. Usually, on stage, folks will talk about the typical issues — the long time to exit, lack of liquidity, increasing number of funds, established funds getting bigger, and so on and so on. For whatever reason, The Upfront Summit team pushed those off for a year, which upon reflection was — in my opinion — a savvy move. LPs this year face some interesting “re-up” decisions and one interesting demarcating line I heard from them was $300M as a fund size — a good number of LPs believe in smaller funds, and when folks graduate above $300M fund size, they get worried. On the other hand, many LPs in the established funds are afraid to “get off the bus” for fear of never being let back on. In 2018, it is VCs but also LPs who are in limbo — there are ICOs which cut into the early-stage seed & A market already, and at the other end, we have “The Softbank Effect,” a sort of praying mantis who can clip off a portfolio darling ahead of a liquidity moment. The network has correctly identified these new dynamics but has yet to find the right framework to combat or play along with these forces. That is the confusion I’m talking about, and perhaps 2018 and beyond will be a hunt for those solutions.