51–60 of 74 posts
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…
http://blog.pitchbook.com/a-visual-breakdown-of-vc-in-2014/
Nothing on here is alarming at all - look at fundraising, look at how much money was invested in venture companies, look at valuations, look at capital exited; all really healthy.
Sure, maybe the "spray and pray" style of seed investment has stopped as VCs are pickier about early stage companies or prefer to focus on later stage companies with their portfolios, but that's not necessarily a terrifying sign of some big bubble popping. It might be harder for a business plan and a website to get a few hundred thousand dollars circa 1998, but a lot of promising companies are still getting the money they need to grow.
> 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…
Crunchbase is by no means a comprehensive source of all deals. As an example, I work with a company that raised a seed round in Q4 2014. Crunchbase does not have this funding despite the fact that it's public.
For the deals that Crunchbase does have, the categorization can be very spotty. For instance, you can find $2+ million party rounds with institutional investors categorized as "Seed" while there are sub $1 million rounds categorized as "Venture" or even "Series A." There are also oddball categories like "Debt Financing" and "Convertible Note" which in some cases appear to be the same thing.
In my mind this is almost certainly a case of garbage in, garbage out.
[1] https://tctechcrunch2011.files.wordpress.com/2015/01/screen-...
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…
The bigger problem was we were doing something really technical that required a lot deeper pockets, and people were nervous to invest without seeing more traction. Which is reasonable; capital isn't flowing like champagne like a lot of people seem to believe.
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…
Second, the aggregate chart shows the total amount invested went from 9 years of growth to it's first decline. Look at Q3 2014 vs Q3 2013 more than a 50% decline in seed deals! With numbers like that it's hard not to interpret it as foreshadowing continued declined.
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…
How do you get a rapid, precipitous decline in deals without an expected decrease in dollars? Use a data source that a) is liable to miss deals[1] and b) will classify multi-million dollar rounds involving institutional/venture investors as "seed"[2][3].
[1] Per my other comment I work with a startup that raised a public seed round in Q4 that is not listed in Crunchbase.
[2] https://www.crunchbase.com/organization/skydio
[3] https://www.crunchbase.com/organization/north-technologies
Earlier quoted context omitted.
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…
Given that we'd sunk about $300K of our own cash into the company, I don't think $750K was out of line for what we were doing, or for the VC firms we were talking to which tend to do much bigger deals. The bigger problem was we were doing something really technical that required a lot deeper pockets, and people were nervous to invest without seeing more traction. Which is reasonable; capital isn't flowing like champa…
> capital isn't flowing like champagne like a lot of people seem to believe.
Absolutely, and I don't think it really has since 2000 to be honest. There was a minor boom around 2004 for "user-generated content" and "social/video" sites, and then another for mobile apps after the app store launched. But the general trend has been towards low-value "seed" rounds for demonstrating traction, and then lots of financing for late-stage companies that would previously have already IPO'd.
I hope you guys get the funding you need. I'm just not sure that your experience is relevant to a discussion on the availability of seed funding, that's all. What this conversation really highlights is the way no-one here even seems to even have the language to talk about what is reasonable in terms of expectations/traction for mid-stage startups that are more capital intensive.
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.
I'll probably be looking for seed later this year, so this makes me sad and despondent. I can probably bootstrap to traction, but it's really hard.
Earlier quoted context omitted.
As a solo-founder, I've never run into a customer that cared how many people were involved in my company. Once you get to the point that things look professional, most just assume you aren't running the company out of your apartment. Maybe this matters more for sales-intensive B2B startups though.
If you are selling anything mission critical like infrastructure, being a one-man shop with nobody to provide support when you get a bad bout of diarrhea is a no go.
In my experience, if you have a good brand image and a track record, people just assume you have contingency plans, lots of funding and/or a second programmer on staff.
