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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

#41

Post by rgbrenner »

jacquesm wrote: post #36
hbhakhra wrote: post #26

Earlier quoted context omitted.

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…

> Further, if you own 100% of the company, you are profitable much faster so you don't need to grow as large. Can you explain how 100% ownership translates into earlier profitability?

Fewer founders means fewer people with expenses that the business needs to support (even if those expenses are the bare minimum: food, shelter, etc).

Of course, I think what that assumes is that one person could launch a product as quickly as a team. It's easy to imagine a product being complex enough that a team could launch it before a solo founder would.

But ignoring that.. it's clearly faster/easier to build a business to support a single person than multiple people.

Re: The number of seed rounds in 2014 fell compared to 2013

#42

Post by jsprogrammer »

abalone wrote: post #28

Except: "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 sin…

Rags need to produce articles. Exhibit 1.

Re: The number of seed rounds in 2014 fell compared to 2013

#44

Post by jsprogrammer »

rgbrenner wrote: post #39
staunch wrote: post #14

Most professional investors are sheep. The number and scale of opportunities in technology is growing incredibly and they're not all doubling down. It's been almost 10 years and no one has launched a credible competitor to YC. That's proof of how incredibly weak the industry is. Where investors are afraid, consumers aren't the least bit deterred. They don't talk of bubbles. They want cool new stuff that makes their l…

crowdfunding? really? Both crowdfunding and VCs fund a tiny portion of the total small businesses started. Did you see those charts? The scale is in hundreds. In the US alone there are millions of small businesses started each year. Sure, most of those aren't trying to change the world (haven't seen statistics on that)... but even if it's 0.5% and you exclude all the solo founders, it would still far out number crowd…

How are the millions funded?

Re: The number of seed rounds in 2014 fell compared to 2013

#45

Post by jacquesm »

rgbrenner wrote: post #41
jacquesm wrote: post #36

Earlier quoted context omitted.

> Further, if you own 100% of the company, you are profitable much faster so you don't need to grow as large. Can you explain how 100% ownership translates into earlier profitability?

Fewer founders means fewer people with expenses that the business needs to support (even if those expenses are the bare minimum: food, shelter, etc). Of course, I think what that assumes is that one person could launch a product as quickly as a team. It's easy to imagine a product being complex enough that a team could launch it before a solo founder would. But ignoring that.. it's clearly faster/easier to build a bu…

But you could sell shares to non-founders. That way you have the same path to profitability but none of the extra costs.

Re: The number of seed rounds in 2014 fell compared to 2013

#46

Post by yen223 »

jsprogrammer wrote: post #44
rgbrenner wrote: post #39

Earlier quoted context omitted.

crowdfunding? really? Both crowdfunding and VCs fund a tiny portion of the total small businesses started. Did you see those charts? The scale is in hundreds. In the US alone there are millions of small businesses started each year. Sure, most of those aren't trying to change the world (haven't seen statistics on that)... but even if it's 0.5% and you exclude all the solo founders, it would still far out number crowd…

How are the millions funded?

Loans, savings, investments from friends and relatives, etc.

Re: The number of seed rounds in 2014 fell compared to 2013

#47

Post by ScottBurson »

trevelyan wrote: post #15
Patrick_Devine wrote: post #4

We definitely found this out the hard way. We tried to raise $750K for a seed round and were repeatedly told that our tech/team were great but that we didn't have enough traction. It's kinda hard watching people go on about the "bubble" when you're just out there trying to scrap it out and find something that works.

YC offers 20k+ for a few percent. Startup Chile is 40k with a co-investment of around 10k. That money is supposed to support the founders for a few months while they get the prototype out the door and build traction. In comparison, 750k is a metric ton of cash, and should be enough to support a founding team for several years. Not judging, but if you're positioning it as a seed round instead of Series A that may be p…

BTW, YC now invests $120k in most of their companies: http://blog.ycombinator.com/the-new-deal

Re: The number of seed rounds in 2014 fell compared to 2013

#48

Post by hbhakhra »

jacquesm wrote: post #36
hbhakhra wrote: post #26

Earlier quoted context omitted.

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…

> Further, if you own 100% of the company, you are profitable much faster so you don't need to grow as large. Can you explain how 100% ownership translates into earlier profitability?

I guess not earlier profitability but earlier "riches" because there is only one person taking from the pie.

Of course the reason people add confounders/employees and take VC funding is because it makes the total pie easier to grow in many cases.

Re: The number of seed rounds in 2014 fell compared to 2013

#49

Post by birken »

> And of course there is another possibly — maybe hundreds of startups collectively decided to stop announcing their funding rounds?

There is also a much simpler explanation... there is a lag in when seed rounds happen and when they are announced. The fact that the most recent data point stands out as a massive outlier is a strong indication of this possibility. Simple to check as well, we can look at this same plot in 6 months with the back filled data and see if the conclusion is the same.

Jumping to conclusions for the sake of a headline is fine, that is Techcrunch's job after all. But for those of you that do data analysis for your own companies, be careful when jumping to conclusions. If you see a massive outlier on your graph like this, more often than not it is a data collection/sampling issue than a giant change in the world. And of course if you do think it is a giant change in the world, extraordinary claims require extraordinary evidence. So there shouldn't be a caveat, which if true, completely disprove the whole conclusion.

Re: The number of seed rounds in 2014 fell compared to 2013

#50

Post by staunch »

rgbrenner wrote: post #39
staunch wrote: post #14

Most professional investors are sheep. The number and scale of opportunities in technology is growing incredibly and they're not all doubling down. It's been almost 10 years and no one has launched a credible competitor to YC. That's proof of how incredibly weak the industry is. Where investors are afraid, consumers aren't the least bit deterred. They don't talk of bubbles. They want cool new stuff that makes their l…

crowdfunding? really? Both crowdfunding and VCs fund a tiny portion of the total small businesses started. Did you see those charts? The scale is in hundreds. In the US alone there are millions of small businesses started each year. Sure, most of those aren't trying to change the world (haven't seen statistics on that)... but even if it's 0.5% and you exclude all the solo founders, it would still far out number crowd…

There are more Italian restaurants funded every year than there are technology startups as a whole. But if you take "startup" to mean "technology startup" you're talking about the same thing I am.

And almost all of these startups were funded by VCs early on. Crowdfunding will replace VCs as it becomes possible for people to get equity in exchange for funding. Your average person is more than clever enough to invest $500 in Dropbox the day it launches as a video on Digg. Only a broken system stops them from being able to profit the way already rich investors do today.

In the same way that Uber didn't replace taxis, crowdfunding will not replace VCs, it will surpass them. The crowd has far more money and are themselves the ultimate judge of what's good.

http://en.wikipedia.org/wiki/List_of_highest_funded_crowdfun...

http://www.forbes.com/sites/geristengel/2014/03/26/equity-cr...

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