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by arasmussen 3771 days ago
> "so far we haven't seen nearly as much of an effect on early-stage fundraising as the level of press coverage would seem to indicate"

This is pretty interesting to me. I wonder if the press is just blowing things out of proportion, or if there's some Big Money™ behind this so that investors can convince companies to agree to worse terms.
4 comments
api 3771 days ago
It's the unicorn crash. It's mostly affecting later stages of hugely valued companies. So far the impact in the seed and A markets and more reasonably valued companies is minimal.

Whether that changes depends on a bunch of factors. The two biggest are the overall health of the economy and how economically incestuous high-tech has become. If write-downs and possibly failures among the unicorns trickles down a lot to smaller ventures and investors, it will get worse. Otherwise it will be mostly isolated to that segment of the market.

Edit: check the other response to the parent-- looks like we might indeed be seeing a pullback in angel/seed.

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sama 3771 days ago
It's definitely had a big effect at late stages. Early stages may not have been mis-priced, or it just may take longer to filter down. We don't know yet.
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mathattack 3771 days ago
Early funding is a very small part of the overall pool of capital available. If every seed round is $2.5 million, 10,000 seed deals (~100X YC's size) is $25 billion in capital spent.

For context: - It's less than ten percent of Google's market cap ($490 billion) [0] - The average Series D or later round is 40x higher ($100 million) [1] - It's less than a tenth of a percent of the US bond market ($40 trillion.) [2]

Net - seed funding is just not a lot of money compared to the market at large. If founders and VCs have money, they can spend it. It gets very different later on.

[0] http://www.google.com/finance?cid=304466804484872 [1] https://www.preqin.com/docs/press/Venture-Capital-Q1-15.pdf [2] http://money.cnn.com/2015/10/14/technology/cb-insights-ventu... [2] https://en.wikipedia.org/wiki/Bond_market

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sharkweek 3771 days ago
Hmm in the aggregate, we reported a pretty sharp decline in 3Q and 4Q 2015 for angel/seed round count - http://imgur.com/CSqVOVQ

I don't think the sky is falling, but people are tightening up on the number of deals being done, there's no doubt about that.

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