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by exelius 3878 days ago
It's not really possible for there to be a bubble at the seed stage -- valuations at that stage are "paper" values because there's zero liquidity. Companies also tend not to stay in the seed stage for long enough to cause an asset bubble; they are either able to acquire follow-on funding (at which point they're no longer a "seed" company) or they aren't and they disappear.

The seed stage is increasingly crowded, but IMO that's a good thing.
2 comments
ryanSrich 3878 days ago
It's also worth noting that obtaining Series A Funding[1] is more difficult than ever. The bubble is not with growth stage companies, it's with massive Unicorns that earn 0 dollars.

1. http://firstround.com/review/what-the-seed-funding-boom-mean...

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klochner 3878 days ago
Interesting point re: not staying at the seed stage long enough for a bubble. What we're seeing instead is multiple preferences layered on in subsequent rounds.

So seed/A investors think they're doing well when the company raises B,C,D,E rounds at higher valuations, when in fact many will be washed out when the company eventually IPOs or is acquired at a lower valuation than their last venture round.

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exelius 3878 days ago
That's what I would expect -- the more crowded the market, the less leverage you have, and the lower your eventual payoff.

There are lots of people willing to provide companies with small amounts of money in exchange for a gigantic potential payoff. As payoffs decrease, lenders will exit the market.

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