Calling Bullshit On The Series A Crunch. Editor’s note: Guest contributor Paul Lee is a Partner at Lightbank Capital.
You can follow him @iPaulLee. A lot has been written about the Series A Crunch. The gist of the argument is that the number of seed financings have gone up (with the advent of incubators such as Y-Combinator, TechStars, and Excelerate, as well as a new generation of Super Angels, who may or may not be hanging out at Bin 38), but the number of Series A financings have remained relatively steady. Ergo, the percentage of companies that can’t raise a Series A must be going up. Rob Go, from Nextview Ventures, does a nice job explaining what’s happening from his perspective. Dave McClure, that swashbuckler (Hi Dave!) The "Series A Crunch" is a fucking sham, and should be exposed for such. sure some startups may hit the wall, but a 1000 more will thrive.— Dave McClure (@davemcclure) November 05, 2011 So what the hell is really going on?
There is no Series A Crunch. So what? So how does that fund play in this space? American Express Launches $100M Fund To Invest In Digital Commerce Startups. The Way Companies Are Getting Financed Is Completely Changing. There are lots of trends people have been talking about in tech financing--"superangels"; delayed IPOs; secondary market sales; and more.
But so far, few people have been putting the dots together: the entire financing landscape for companies is changing. And, excitingly, it's increasingly not just technology companies. There are many new financing options for growing companies that weren't available a decade ago. Here's how we break them down (we'll visit each one in turn): CrowdfundingAcceleratorsSuper-angelsLate-stage private equityThe long-delayed IPO Crowdfunding Crowdfunding startups has long been a dream deferred. Direct crowdfunding via equity financing is still a big no-no, because SEC rules make it difficult for non-accredited investors to invest in startups. One of the most exciting such examples is AngelList, a "Match.com for investors and startups" that lets startups vie for capital from angels and (increasingly) VC firms.
Another exciting example is Kickstarter. Accelerators. Mobile Startup Incubator Tandem Opens New “MobileHome” In Silicon Valley; Now Accepting Applicants. You may not have heard of Tandem Entrepreneurs, the incubator and capital fund that officially launched in July, but for entrepreneurs focused on the mobile space, they’re worth checking out.
What’s different about Tandem, as we wrote in July, is that founders Doug Renert and Sunil Bhargava don’t consider themselves VCs. Instead, they’ve brought together a host of entrepreneurs with decades of startup experience among them to provide resources in an incubator that specifically targets early-stage mobile startups. The incubator works hand-in-hand with its founders on everything from strategy and product design to user acquisition and employee recruiting, seeding each company with $200,000 in a convertible note in exchange for 10 percent common equity.