VC Investments and Exits: Know thy trends

paidContent.org has a new Social Media Deals Report out, and the summary is very interesting:

VC’s are investing in a pretty diversified fashion, but M&A (buyouts) aren’t so diversified.  Obviously, there are some pretty good reasons for this disparity….most importantly that VC’s are trying to be ahead of the next wave, not investing in the current one.   So, it’s fair to say that VC’s see more exits in “mobile”, “content” and “software/tools” categories in the future.

When I look at my own portfolio, here is what I see:

The two companies I have created, and sold, are in different categories.  DaytradeTeam is in the big “services” category, while mytrade could fall under both “social networking” and “tools & software”. 

The companies I’ve invested in (thanks to Howard Lindzon) aren’t that much different:

Lifelock, which is by far the biggest winner so far is a pure services play. 

vSocial has smartly moved from tools/software and media creation/sharing to service…something desperately needed among corporate video customers.

Adaptive Blue is software/tools and is way ahead of the curve…

TubeMogul is interesting that it’s a bit of both…softare/tools and services. 

Disqus is a software/tools play that I’m really proud of as both a customer and investor.

Bottom line….I don’t think services EVER go away.  People want their lives made easier and despite the promises of technology, people still do that job the best.  

I see mobile growing to 7-10%  of M&A within 5 years, and I think content stays stuck near flatline mostly because the barriers to doing that right just keep dropping and dropping.  Tools and software should stay about where they are right now, and social networking will almost surely drop in terms of M&A as those software/tools companies give greater capability for potential buyers to do it themselves. 

It’s a great report and a must-read for VCs, Angels and entrepreneurs alike.  Knowing trends is much more important than having brilliant ideas, because if you’re against the trend, your idea won’t matter anyway.