Seed fund phenomenon
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We’ve been witnessing an institutionalizing of angel investing in recent years. For the most part, it’s good. There continues to be a gap in the market for stage appropriate seed investors, especially in the East Coast.
The Evolution of Angels into VC's - robgo.org
I don't know what the source of this data is and I don't know if this is just M&A exits or if it includes IPOs as well. It really doesn't matter for the basic point that Mark is making with this slide. Based on the NVCA statistics on the venture capital industry, there are on average 1,000 early stage financings every year. I suppose a few of those 1,000 financings are for the same company, but I doubt that many are. So we can use 1,000 as an approximation of the number of companies that get funded in a given year.
A VC: There Aren't Many Exits Over $100mm
By The Numbers: Seed Funding is The New Black: Tech News «
If Angelgate didn’t prove it, then the following data will; there’s a tinge of mania when it come to early- and seed-stage funding. The latest data from CB Insights , a market research firm that tracks the venture capital industry, shows that seed investments — primarily in Internet startups — increased from a mere one percent of all deals during the third quarter of 2009 to a whopping 11 percent of total venture investment deals during that period in 2010. The sharp increase in seed-stage investments is the sole reason the total number of venture investments jumped during the third quarter of 2010 even though overall funding dropped. Nearly $5.4 billion was invested in 715 deals during that time frame, CB Insights’ data reveals.
I wrote about two startups today that raised angel-sized financing rounds of around $1 million each: Hipmunk and Alphonso Labs . What caught my eye about both deals is this – neither had involvement from the so called “super angels” (except Hipmunk, which took an investment from SV Angel). Hipmunk raised from traditional individual investors. Alphonso Labs raised money from venture capitalists.
The $4 Million Line
Venture capital firms are in the business of funding promising entrepreneurs. The conventional wisdom, which some say has fallen by the wayside as older firms have matured, is that returns are better when VC firms are entrepreneurial -- nimble, forward-looking, well connected and armed with an appetite for risk. A new crop of investors -- dubbed "super angels" -- are trying to bring that model back into vogue, making deals that now giant firms like Kleiner Perkins Caufield & Byers and Sequoia Capital might have done in their younger days. Filling a funding gap between so-called "angel" investors and VC firms, super angels combine the traits of both, while also putting a timely, web-savvy stamp on the process of starting and building companies. Super angels are often former entrepreneurs themselves; several came out of companies like Google and Paypal.
VC 'Super Angels': Filling a Funding Gap or Killing 'The Next Google'? - Knowledge@Wharton
It’s a lot like the Cold War – most of the really interesting fights among startup investors – and there are lots of them – occur behind the scenes. Publicly everyone gets along just great. But declining returns, too much capital and the disruptive force of a new breed of angel investors has created enough tension in the system that some frustrations are beginning to boil over. And in some cases, the gloves are coming off. And entrepreneurs can and do get caught in the cross fire. Pick the wrong investor and you’ve closed the door on others.
VCs And Super Angels: The War For The Entrepreneur
The opportunity is a lot less unexploited now. Investors have poured into this territory from both directions. VCs are much more likely to make angel-sized investments than they were a year ago.
The Future of Startup Funding
Sure :-) But sometimes they just don't know they want it :p by Aug 13
Some Thoughts on the Super Angel Funding Discussion - Continuati
Paul Kedrosky has kicked off an interesting debate by suggesting we will see a “ super-angel crash .” Paul’s initial post resulted in a bunch of strong disagreement in tweets and comments , enough to cause an update to the initial post. While the update says many nice things about “super angels” and a bunch of negative ones about “incumbent vcs,” it ends on the same note by reiterating that we are seeing too much of a good thing. From a social perspective I believe that overfunding of startups (which is what Paul argues is happening) is actually a good thing . Even if a bunch of super angels wind up not succeeding, there will be a lasting benefit to society from training many more entrepreneurs and people who know how to work at a startup.[Updated] The Coming Super-Seed Crash
Unnoticed by almost no-one, the startup financing landscape has been transformed: a combination of ease of entry, lower capital requirements, failing incumbent venture capital (VC) firms, and general fervor has driven the emergence of a host of new “super-seed” firms. These small-ish outfits — usually running less than $20m — specialize in seeding a bazillion companies, following on in very few, and generally trying to be fast-moving and networked. Now, however, the super-seed crash is coming. We have silly numbers of companies being seeded — I had someone at a well-known, larger venture fund tell me yesterday in San Francisco that they were seeing dozens of Series A-seeking newly angel-funded companies a week.
It’s not that seed investors are smarter – it’s that entrepreneurs are cdixon.org – chris dixon's blog
Paul Kedrosky recently speculated that there might be seed fund “crash” looming. Liz Gannes followed up by suggesting seed investors are a fad akin to reality-TV celebrities: In many ways, what [prominent seed funds] are saying is that they’re just smarter, and as such will outlast all the copycat and wannabe seed funders as well as the stale VCs with a fresh coat of paint. But then — Kim Kardashian is the only one who can make a living tweeting.
A VC: Some Thoughts On The Seed Fund Phenomenon
There have been quite a few posts written about this meme in the past few weeks. I think that Paul Kedrosky got the discussion started with this post . Chris Dixon wrote an interesting response .It’s Still Expensive to Build a Great Product | Redfin Corporate Blog
July 30, 2010 It has become commonplace to claim that the cost of starting a company has declined by an order of magnitude; just this morning Dave McClure took this claim as the starting point for his dazzling essay, Moneyball for Startups . I think the claim is partially true, but overstated. And I wish we had data, not rhetoric, to settle the dispute.For better or worse, Micro-VC’s and Super Angels seem to be the new intriguing sub-segment within Venture Capital. Funds like First Round Capital , Floodgate , Lowercase , Founder Collective , IA Venture Partners , Harrison Metal , and Felicis and individuals like Ron Conway , Keith Rabois and others show up multiple times a day on TechCrunch and seem to be behind every high profile investment in the internet world. How did this happen? Are these groups just a new fad or is a fundamental and long lasting change happening in the early-stage financing eco-system? Capital efficiency. The startup value equation has changed.
Making Sense of Micro-VC's and Super Angels - A Primer - robgo.org
My apologies... this is a long piece (~2500 words). Not for the faint of heart. If you want the short story, read the abstract below & 3 core assertions, then cut to the conclusions at the bottom. Abstract : VC funds are getting smaller (good), & angel investors are growing (also good), but both need to get smarter & innovate. Startup costs have come down dramatically in the last 5-10 years, and online distribution via Search , Social , Mobile platforms (aka Google, Facebook, Apple) have become mainstream consumer marketing channels.