Interesting graph. The "bubble" goes parabolic right in 2009, as the financial system is awash in QE money, searching for yield. Almost textbook.
QE has nothing to do with VC
The number of seed rounds in 2014 fell compared to 2013
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Re: The number of seed rounds in 2014 fell compared to 2013
#22This plays right into YCs hands: seed money is harder to get, but YC is still open for business. And with the number of deals they fund the remainder of the seed world is left with what they (incorrectly) perceive as 'second choice', now that the path to YC is well known.
This is true. I think what we saw was an accelerator bandwagon. It was truly a revolutionary mechanism in the VC world and everybody under the sun wanted in on the action... but there were too many and hardly any of them could replicate the same results as YC and TS. We knew some of them were going to die off and now they have. I fail to see how anybody but the "me too" accelerators lose with this trend (and they wer…
That's something worth remembering about reading graphs. When you're looking at the aggregate of a trend, it's worth asking what changes in that aggregate represent. Sometimes, growth means taking on dead weight. Sometimes recession means shedding it.
Re: The number of seed rounds in 2014 fell compared to 2013
#23Interesting graph. The "bubble" goes parabolic right in 2009, as the financial system is awash in QE money, searching for yield. Almost textbook.
A very good observation, and one that I've been making to my friends and family. Where else to put the money sloshing around in the system except technology and automation? It almost doesn't matter what the idea is, only that it "could be big." Many other industries are either already commoditized (manufacturing) or require too much money to enter (healthcare, anything regulated heavily by the government). Why not throw some money at a few guys who want to "change the world?"
Re: The number of seed rounds in 2014 fell compared to 2013
#24Re: The number of seed rounds in 2014 fell compared to 2013
#25That first graph doesn't really show the bursting of a bubble. Yes, the number of rounds have gone down, but I think an important metric is the amount raised, which has only slightly decreased. This make it seems like there have been stricter requirements by seed investors before jumping in. Which to me sounds like not a bad thing. Ideally we'll get less Yo apps this way.
The problem I see is that if fewer companies are being funded early-stage today, then there will be fewer companies around to get later-stage funding tomorrow. One of the reasons we have so many companies getting later stage funding right now is that there was so much seed funding a few years back. If early-stage funding is starting to dry up, that may be a sign of other things to follow...
Re: The number of seed rounds in 2014 fell compared to 2013
#26So bootstrappers are on the rise now?
This talk by DHH explains why I prefer to bootstrap a company: https://www.youtube.com/watch?feature=player_embedded&v=0CDX...
The main point being, that if you start off by selling a product (rather than getting people to sign up for a free product and then monetizing later) and can get a fraction of the people to sign up then you are in profit. Further, if you own 100% of the company, you are profitable much faster so you don't need to grow as large.
Ex: $30/month * 500 users = $15,000 a month. If that was a bootstrapped business with just a solo founder...$$$
Re: The number of seed rounds in 2014 fell compared to 2013
#27Earlier quoted context omitted.
Yes and it's going mainstream. Starting a company is so cheap and fast now that it doesn't even take a team of 2 or 3 anymore. A single person can do it. There are so many benefits to solo-founding, it's not even funny. Without co-founders, there's no delay in getting started. There's no drama. The development cycle is fast and the code can be remarkably clean. Personally, I make changes to my production code all the…
One small problem: co-founders make you stronger. You are your own single point of failure. For many customers that makes you a no-go zone.
Cofounders with good relationship > sole founder >> cofounders with poor relationship or other issues.
Re: The number of seed rounds in 2014 fell compared to 2013
#28Except: "Bear in mind that the total dollar amount of money flowing into seed deals barely declined".
That is a questionable definition of "popping" a bubble.
The article does go on to admit that it's just selectively illustrating the number of deals, not the amount invested in seed deals, which is actually still the same in aggregate, and then wishy-washily says it's up to you to interpret this yourself etc. But since most people don't read too far past the dramatic chart and the headline, I think it would be fair to say this smacks of click-baity sensationalism.
Re: The number of seed rounds in 2014 fell compared to 2013
#29I totally misread the graphs. Sorry Danielle!
Re: The number of seed rounds in 2014 fell compared to 2013
#30"The Seed Bubble Has Popped" has popped.