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AngelList Braces for Rainy Days as Startup Seed Funding Falls

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Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#71

Post by logicallee »

ci5er wrote: post #60
logicallee wrote: post #26

this is absolutely ridiculous. there is next to no seed funding in existence. Let me tell you how the seed market for startups is: imagine you had a orchard, right, but instead of apples it grew dollar bills, and you just had to water them or they wouldn't grow. Under this scenario a guy with acres of dollar-tree bills could not get funding to water them with some kind of farm equipment. That's the state of the start…

Your claim is ... what exactly? I'm not disagreeing - I'm just not following. That revenue is hard to come by for startups? That seed money for revenue-less company is getting more difficult for startups to raise? If so, where? In the US? In California? In Europe? I've never dealt with any structured seed funds, but high net worth individuals that like to kick-start startups still appear to be active in the US...

>Your claim is ... what exactly?... That seed money for revenue-less company is getting more difficult for startups to raise?

That there is next to no seed money in existence, for companies, regardless of whether they are making money, and anywhere in the world (including California which by a large margin has the best funding climate for seed rounds.) That if you sum up the total amount of seed money it is next to nothing.

As an exercise you could try to add up the sum total yourself, and you will see it is next to nothing.

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#72

Post by ci5er »

logicallee wrote: post #71
ci5er wrote: post #60

Earlier quoted context omitted.

Your claim is ... what exactly? I'm not disagreeing - I'm just not following. That revenue is hard to come by for startups? That seed money for revenue-less company is getting more difficult for startups to raise? If so, where? In the US? In California? In Europe? I've never dealt with any structured seed funds, but high net worth individuals that like to kick-start startups still appear to be active in the US...

>Your claim is ... what exactly?... That seed money for revenue-less company is getting more difficult for startups to raise? That there is next to no seed money in existence, for companies, regardless of whether they are making money, and anywhere in the world (including California which by a large margin has the best funding climate for seed rounds.) That if you sum up the total amount of seed money it is next to n…

I guess you're mostly right. From a 2014 point-of-view. Seed funding in 2014 was abnormally high. Amateur hour levels of high. 2015 didn't pulled back much from that. I think that the market is showing some prudence given that we could well see the apocalypse of the unicorns any day now.

The various data sources I have access to (CB Insights, et al), tell me that it's down, but not gone. The fact of this article (AngelList's rainy day fund) means that people are starting to prepare for stormy weather. A storm that has not hit yet - but people are skitterish.

Tactically, on the ground, I haven't seen much pull back, but I'm not in CA or NY. And I prefer to get cash-flow positive ASAP, so I might be a little less sensitive to it than others.

Thanks for your response: you raise interesting points (esp. your linked EU funding scene thread - that was interesting) and digging into this will provide some necessary weekend diversion.

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#73

Post by logicallee »

ci5er wrote: post #72
logicallee wrote: post #71

Earlier quoted context omitted.

>Your claim is ... what exactly?... That seed money for revenue-less company is getting more difficult for startups to raise? That there is next to no seed money in existence, for companies, regardless of whether they are making money, and anywhere in the world (including California which by a large margin has the best funding climate for seed rounds.) That if you sum up the total amount of seed money it is next to n…

I guess you're mostly right. From a 2014 point-of-view. Seed funding in 2014 was abnormally high. Amateur hour levels of high. 2015 didn't pulled back much from that. I think that the market is showing some prudence given that we could well see the apocalypse of the unicorns any day now. The various data sources I have access to (CB Insights, et al), tell me that it's down, but not gone. The fact of this article (Ang…

I was not making a year-over-year relative statement. 2014 levels also were next to zero. (Every year is next to zero.) I am making a much wider statement.

I asked you to sum up all seed funding in existence: what number did you get? (This is the number that I call next to zero.) It doesn't matter what year you pick.

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#74

Post by ci5er »

logicallee wrote: post #73
ci5er wrote: post #72

Earlier quoted context omitted.

I guess you're mostly right. From a 2014 point-of-view. Seed funding in 2014 was abnormally high. Amateur hour levels of high. 2015 didn't pulled back much from that. I think that the market is showing some prudence given that we could well see the apocalypse of the unicorns any day now. The various data sources I have access to (CB Insights, et al), tell me that it's down, but not gone. The fact of this article (Ang…

I was not making a year-over-year relative statement. 2014 levels also were next to zero. (Every year is next to zero.) I am making a much wider statement. I asked you to sum up all seed funding in existence: what number did you get? (This is the number that I call next to zero.) It doesn't matter what year you pick.

Fair enough.

Since the rise of of on-demand data centers and software eating the world, Series A is the new Series B, and they expect some commercializable prototype (MVP) and customer traction before they'll talk to you.

So, even though Series A used to be called "Early stage" financing, I'm not sure it's fair to include it in what we used to call early stage any more.

So, to your question: sticking with angel/fund/corp seed, I don't know - maybe $10B or so in the US? You're right - that's pretty tiny. VC as an entire asset class is pretty tiny in the grand scheme of things (certainly very tiny for the amount of press it generates).

I'll take a look into the data this weekend, but I would guess that I'm in the ballpark of a binary order of magnitude with that guesstimate. Close enough to zero to make scrounging for it painful, I agree.

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#75

Post by logicallee »

ci5er wrote: post #74
logicallee wrote: post #73

Earlier quoted context omitted.

I was not making a year-over-year relative statement. 2014 levels also were next to zero. (Every year is next to zero.) I am making a much wider statement. I asked you to sum up all seed funding in existence: what number did you get? (This is the number that I call next to zero.) It doesn't matter what year you pick.

Fair enough. Since the rise of of on-demand data centers and software eating the world, Series A is the new Series B, and they expect some commercializable prototype (MVP) and customer traction before they'll talk to you. So, even though Series A used to be called "Early stage" financing, I'm not sure it's fair to include it in what we used to call early stage any more. So, to your question: sticking with angel/fund/…

So I would agree that $10B in seed funding is next to zero, and yes, that is my point, however I think you are overestimating it by a (decimal) order of magnitude, and that is worldwide. I think worldwide there was less than $1B in seed funding in any year. That should be easier to falsify if you can do so! I would be interested in your data sources or methodology if you succeed in showing this.

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#76

Post by ci5er »

logicallee wrote: post #75
ci5er wrote: post #74

Earlier quoted context omitted.

Fair enough. Since the rise of of on-demand data centers and software eating the world, Series A is the new Series B, and they expect some commercializable prototype (MVP) and customer traction before they'll talk to you. So, even though Series A used to be called "Early stage" financing, I'm not sure it's fair to include it in what we used to call early stage any more. So, to your question: sticking with angel/fund/…

So I would agree that $10B in seed funding is next to zero, and yes, that is my point, however I think you are overestimating it by a (decimal) order of magnitude, and that is worldwide. I think worldwide there was less than $1B in seed funding in any year. That should be easier to falsify if you can do so! I would be interested in your data sources or methodology if you succeed in showing this.

That's an interesting claim!

I will go see what I can see. As for a starting point, I'll probably dig around CB insights, pitchbook, angellist, and the Center for Venture Research at UNH (New Hampshire). Then go from there.

If you are right, that's a very very interesting result.

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#77

Post by ci5er »

logicallee wrote: post #75
ci5er wrote: post #74

Earlier quoted context omitted.

Fair enough. Since the rise of of on-demand data centers and software eating the world, Series A is the new Series B, and they expect some commercializable prototype (MVP) and customer traction before they'll talk to you. So, even though Series A used to be called "Early stage" financing, I'm not sure it's fair to include it in what we used to call early stage any more. So, to your question: sticking with angel/fund/…

So I would agree that $10B in seed funding is next to zero, and yes, that is my point, however I think you are overestimating it by a (decimal) order of magnitude, and that is worldwide. I think worldwide there was less than $1B in seed funding in any year. That should be easier to falsify if you can do so! I would be interested in your data sources or methodology if you succeed in showing this.

You're right. It's way less than $10B (which was already nothing, in the grand scheme of things).

I'm trying to figure out how low it actually goes...

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#78

Post by swanson »

mapleoin wrote: post #68
swanson wrote: post #41

Earlier quoted context omitted.

Yep -- I understand what I'm buying (well, not buying yet...). Something like this would be a great for a Taleb-esque 90/10 barbell I think -- 90% in target-date vanguard funds and 10% in startup investments by proxy.

Taleb considers the stock-market at large to be extremely risky. He advocates the exact opposite of keeping 90% of your assets in the stock market.

Sorry, I wasn't clear. Taleb-esque in the sense of 90/10 (safe/risky) split, not his specific recommendation. Thanks for clarifying :)

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#79

Post by AndrewKemendo »

ci5er wrote: post #74
logicallee wrote: post #73

Earlier quoted context omitted.

I was not making a year-over-year relative statement. 2014 levels also were next to zero. (Every year is next to zero.) I am making a much wider statement. I asked you to sum up all seed funding in existence: what number did you get? (This is the number that I call next to zero.) It doesn't matter what year you pick.

Fair enough. Since the rise of of on-demand data centers and software eating the world, Series A is the new Series B, and they expect some commercializable prototype (MVP) and customer traction before they'll talk to you. So, even though Series A used to be called "Early stage" financing, I'm not sure it's fair to include it in what we used to call early stage any more. So, to your question: sticking with angel/fund/…

>Series A is the new Series B, and they expect some commercializable prototype (MVP) and customer traction before they'll talk to you

No, that's not even good enough. Even if you have a product in the market, with traction, if it's not millions of MAU/DAU then welp you're SOL. Doesn't matter what technology you built or how good your team is.

The only caveat to that is if you, as a founder, are already a known entity to the venture funds with a previous exit or in the right social network.

Re: AngelList Braces for Rainy Days as Startup Seed Funding Falls

#80

Post by ci5er »

AndrewKemendo wrote: post #79
ci5er wrote: post #74

Earlier quoted context omitted.

Fair enough. Since the rise of of on-demand data centers and software eating the world, Series A is the new Series B, and they expect some commercializable prototype (MVP) and customer traction before they'll talk to you. So, even though Series A used to be called "Early stage" financing, I'm not sure it's fair to include it in what we used to call early stage any more. So, to your question: sticking with angel/fund/…

>Series A is the new Series B, and they expect some commercializable prototype (MVP) and customer traction before they'll talk to you No, that's not even good enough. Even if you have a product in the market, with traction, if it's not millions of MAU/DAU then welp you're SOL. Doesn't matter what technology you built or how good your team is. The only caveat to that is if you, as a founder, are already a known entity…

Well, my point was that while, yes, it's easier (cheaper, faster) to build and market a product than it was 20 years ago, the criteria for an investment has moved right along with it. I mean - gosh - Sun was funded based on a napkin drawing. (It was already developed paid-for Stanford-developed technology, though, so declaring it to have been funded simply off just a napkin is unfair)

Currently I have a thing that is kinda/sorta like a B2B SaaS play, with bottom-up engagement directly with the employees of the target enterprise -- and I've had to shut the doors to (unnecessary) investor interest w/ only about 3K active users.

But, underneath it all the distracting details, I agree. I think the general consensus in this thread is: it's hard.

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