This article is based on my conversation with Ashu Garg, General Partner at Foundation Capital

Asha Garg solves the Rubiks Cube at 11. He confessed that on Confessions of a Futurist with Sanjiv Goyal, he is a sucker for romcoms and crying in movies. Being human, I think that ultimately makes us who we are, and that’s why I do what I do.

I asked Ashu to tell us what he thinks about the future of venture capital and some sober predictions about innovation trends for the next fifty years. Ashu has been a partner at Foundation Capital since 2008, where he promotes entrepreneurship; he is one of the leading venture capitalists of silicon valley.

Why does so much money go to startups?

Ashu tells us that venture capital accounts for less than 1% of the asset class if we look at the economy more broadly. But it seems like there’s a lot of room to grow. So far this year, venture capitalists have invested $300 billion and minted 22 unicorns. It is still a fraction of money invested in the stock market. 

The tech boom was led by the largest companies in the space, with Apple hitting a valuation of more than $2 trillion in August for the first time and Amazon and Google cresting $1 trillion. In the private markets, their smaller counterparts followed suit, particularly when it came to later-stage funding. Late-stage venture capital, which includes Series C and later rounds, grew 8 percent year over year. Private equity in venture-backed companies grew even more, at 73 percent year over year.  – Recent Crunchbase Article 

Growth is driven by the role of technology in the global economy. Technology and software are integrated into the majority of products and systems. By 2030, this will be ten times higher than it is today. Technology will continue to take a larger share of the economy. The venture will also play a role in other areas of innovation, including health and food.

What about investment risk?  

The risk model works best when you have a high-margin product with a high degree of defensive capability over a long period. 

• The technological revolution has only just begun. The industry is only fifty years old, and the vast majority of innovation has occurred in the last twenty years. We expect the pace of innovation to accelerate.
• There will be a massive innovation trend in this decade. Shareholders expect companies to outsource rudimentary everyday tasks to machines to increase efficiency and free up time and resources. Automating manual tasks will free people to focus their energy on things that add value.
• Technology is changing every aspect of life as we know it. Many of these technologies are still in beta, imperfect stages; things like video conferencing and self-driving cars will generate many more ancillary opportunities.  

Where are we going?

• Every wave of innovation goes back a hundred years, and you see giants emerge. A hundred years ago was steel. Fifty years ago, we saw a vast telecommunications company emerge. Twenty-five years ago was a massive cable company, and now we see search and cloud companies. The next wave of innovation will produce its giants.
• The Internet has proved not only a great connectivity tool but also a great equalizer. It evens out the playing field in terms of skills and opportunities. It is easier than ever today to get an idea off the ground, find a team, build a product and start a business than ever before. The world has become a place where we have more freedom about where we live and work and how we live or work.

The problem is that our natural resources are scarce. We are far from spending most of our time and energy on survival basics, i.e., the elephant in the room when we talk about the future is climate change. I believe that it is precisely through technology, we will solve problems of the future. 

I believe the world will be a lot better than it was a hundred years ago. And I think it will be better for most people than it is today.

Question? 

It is a question that drives our actions, and we ask ourselves this question not once but several times a day. The question is what is good and what is great. 

Self-confidence is crucial to an entrepreneur’s attitude. Self-confidence is what builds everything from there.

The element of being an entrepreneur is not the vision. It recognizes who you are and where you want to go, but without a vision on which to build, there is no question. Without vision, you perish. It acknowledges the process that accompanies a transformative metamorphosis. It recognizes the growth, openness, and sacrifices needed to achieve the desired result.

Entrepenurer must be prepared to do everything necessary to be successful and know what is required. A certain sense of determination and quiet strength comes from an internal decision to move in the direction of your vision. You have to be prepared to take risks that you would not otherwise have taken.

What does an investor want?

VC needs to see an intensity in their commitment to doing what is necessary to succeed. He says that no matter how much or how little money is in their account, he is looking for a hungry leader willing to do what is needed and succeed. Are you are ready to give everything to be successful.

Passion is a prerequisite for entrepreneurship, but without conviction, it is worth nothing. Passion is a lifeline but can only be channeled into something tangible with conviction.

Too many entrepreneurs are entangled in their suffering and history due to their past or other peoples’ past. History repeats itself again and again, but with a twist.

Do you have passion with conviction?