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Reflections on 2018: Jim Andelman, Bonfire Ventures

Editor's note: All this week, and into the start of next year, we'll be featuring reflections on 2018 from notable investors, entrepreneurs, and others from Southern California's technology community. You'll be able to browse all of those contributions here. Here's Jim Andelman of Bonfire Ventures. Happy Holidays!

What was the biggest lesson you learned this year?

Strategic investors can be such a double-edge sword. On the one hand they can provide meaningful validation, and investment can support a deeper business relationship that significantly helps the startup. But as employees of another corporation, it’s not uncommon for interests to diverge and for the Strategic investor to add complexities and challenges that founders must deal with. We’ve learned the right and wrong ways to structure that relationship to maximize the potential gain and minimize the potential pain.

What was the biggest news for your firm in 2018?

We had great news in 2018 from the companies we’ve invested in and supportive over the years. Prevoty was acquired by public company Imperva for $140M, and Rentlytics was acquired by public-company RealPage for $64 million. We led the Seed round at each company, so it’s especially gratifying to see those founders rewarded for so much hard work. In addition The Trade Desk, which went public in 2016, grew its market cap from just under $2 billion at the beginning of 2018 to slightly over $6 billion today. We’re pleased to be a part of one of SoCal’s greatest VC-backed successes.

Within Bonfire, we added Brett Queener to our team this year. Brett is a good friend we’ve known and worked with for years. With over a decade in leadership roles at high-performing SaaS companies like Salesforce and Smartrecruiters, I think it would be a challenge to find anyone in SoCal with stronger operating chops for B2B software companies. His addition has been a great benefit to us and to the founders we serve.

Are there any technology innovations, gadgets, devices, software, that you found most interesting in 2018?

Scooters, scooters everywhere! It was entertaining to be at the (geographical) epicenter of that phenomenon. Within our areas of focus, applied machine intelligence really took hold this year and we saw a slew of great businesses that are really driving incremental value for their customer using AI combined with well-considered application software.

Finally, what's your prediction on what will be most important thing for the technology industry in the coming year?

The big question is whether there will be a downturn in 2019, and with what degree of severity. I started as a VC in the Bay Area shortly before the Internet bubble popped in 2000, and it was an otherworldy experience after the crash. World’s best place to buy very lightly used Aeron chairs and Porsche Boxsters! We also made it through the ’08 downturn, which was less severe to tech but much more broadly felt across industries. We are currently enjoying the longest bull market run in history, and so many people in the startup ecosystem have never really experienced a big correction. If it happens, it will fundamentally change the landscape, and many won’t be equipped to handle it. But it can be an incredible opportunity for those who are.

Jim Andelman is co-founder and Managing Director at Bonfire Ventures (www.bonfirevc.com), the leading seed VC firm in Southern California focused on B2B software. Jim has spent his entire career in and around enterprise software, and has been a VC for 18 years.