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State of the Seed Market in 2017

tomtunguz.com

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Re: State of the Seed Market in 2017

#11

Post by swampthing »

graycat wrote: post #7

Yes, all nice data, but $400,000 is, sorry 'bout that, no matter what it's called, is not appropriately called a seed round. Let me guess: The usual criteria are all the first technical work done, traction significant, and traction growing rapidly. That's not planting or watering seeds ; instead, that's a sapling or small tree. Indeed, for a Web site, costs can be so low that by the time there is significant traction…

Does it really matter what it's called if everyone knows what it means? And what BoD expenses are you talking about?

Re: State of the Seed Market in 2017

#12

Post by jwilliams »

padobson wrote: post #2

I wonder if the increase of size of seed round corresponds to startups waiting to seek funding until they are more mature. The second seed round, makes me even more suspicious of this: are we simply renaming A and B rounds to seed 1 and seed 2 rounds? The increased size of these rounds would seem to imply yes. Furthermore, I wonder about the lack of stigma in a second seed round. It seems like this would happen a lot…

I think the trend of Seed Rounds being the "old" Series A seems true (even by the comments here).

The other element in the landscape is the huge increase in accelerators, AngelList and the like. There are now a lot of options to get that first $100-200k to prove out a business idea.

Re: State of the Seed Market in 2017

#15

Post by AstroChimpHam »

I have a number of acquaintances in the situation where they tried to go out and raise a proper Bay Area seed of $1-1.5m, got told they needed more traction, and wound up giving up part of the way through, stopping the round at ~$300k and calling it an angel. Then, traction appears and they come back to finish that initial seed round. Every time I've heard of this happening, the issue was investors becoming more careful with their money rather than founders underestimating how much money they'd need.

Small sample size and all, but if this is the way things are going, it'd be a good thing and force more founders to focus on metrics that matter early.

Re: State of the Seed Market in 2017

#16

Post by ccvannorman »

graycat wrote: post #7

Yes, all nice data, but $400,000 is, sorry 'bout that, no matter what it's called, is not appropriately called a seed round. Let me guess: The usual criteria are all the first technical work done, traction significant, and traction growing rapidly. That's not planting or watering seeds ; instead, that's a sapling or small tree. Indeed, for a Web site, costs can be so low that by the time there is significant traction…

The terminology has been butchered, not least because of VCs wanting to get into earlier stage and changing how they deal with companies. I've heard pre-seed as well, but realistically if you don't have significant progress, the days of paper-napkin idea => investment are pretty much over AFAIK.

Re: State of the Seed Market in 2017

#17

Post by Alex3917 »

AstroChimpHam wrote: post #15

I have a number of acquaintances in the situation where they tried to go out and raise a proper Bay Area seed of $1-1.5m, got told they needed more traction, and wound up giving up part of the way through, stopping the round at ~$300k and calling it an angel. Then, traction appears and they come back to finish that initial seed round. Every time I've heard of this happening, the issue was investors becoming more care…

These days it's pretty standard for seed to be the second, third, or even fourth round.

E.g. this scenario is entirely plausible:

1) Friends and family

2) Accelerator

3) Some combination of pre-seed / angel (depending on whether it's individual or institutional money)

4) Seed

Seed is basically just the new A.

Re: State of the Seed Market in 2017

#18

Post by nostrademons »

AstroChimpHam wrote: post #15

I have a number of acquaintances in the situation where they tried to go out and raise a proper Bay Area seed of $1-1.5m, got told they needed more traction, and wound up giving up part of the way through, stopping the round at ~$300k and calling it an angel. Then, traction appears and they come back to finish that initial seed round. Every time I've heard of this happening, the issue was investors becoming more care…

I've heard the same, or founders that (barely) raise their target seed amounts, but then traction appears and suddenly everyone wants to invest in a follow-on seed. Again, sign of a healthy market. It's not 2013/2014, when it seemed like anyone could raise on pedigree or potential, but capital is available for startups who hit their metrics.

Re: State of the Seed Market in 2017

#19

Post by api »

padobson wrote: post #2

I wonder if the increase of size of seed round corresponds to startups waiting to seek funding until they are more mature. The second seed round, makes me even more suspicious of this: are we simply renaming A and B rounds to seed 1 and seed 2 rounds? The increased size of these rounds would seem to imply yes. Furthermore, I wonder about the lack of stigma in a second seed round. It seems like this would happen a lot…

We really should just start numbering them: R0, R1, R2, ..., Rn. It's getting ridiculous.

Re: State of the Seed Market in 2017

#20

Post by icedchai »

graycat wrote: post #7

Yes, all nice data, but $400,000 is, sorry 'bout that, no matter what it's called, is not appropriately called a seed round. Let me guess: The usual criteria are all the first technical work done, traction significant, and traction growing rapidly. That's not planting or watering seeds ; instead, that's a sapling or small tree. Indeed, for a Web site, costs can be so low that by the time there is significant traction…

400k will barely get you 3 people for a year (in the US.) You'll have trouble finding anyone for under 100k in this market.

For those small seed rounds you describe, you're better off self funding and saving up the money yourself.

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