Data on the “seedpocalypse”


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Call it what you like. The Series A Crunch or Silicon Valley’s Financial Cliff, there’s a lot of talk about the challenge seed stage companies facing insurmountable odds raising Series A investment - PandoDaily’s analysis pegs the odds at 20% based on anecdotal data. The three horsemen of the seedpocalypse In the past 3 years, the three major trends influencing the seed market are: The decreasing cost of starting a company is balanced by growing labor costs.

Data on the “seedpocalypse”


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Call it what you like. The Series A Crunch or Silicon Valley’s Financial Cliff, there’s a lot of talk about the challenge seed stage companies facing insurmountable odds raising Series A investment - PandoDaily’s analysis pegs the odds at 20% based on anecdotal data.

The three horsemen of the seedpocalypse

In the past 3 years, the three major trends influencing the seed market are:
  1. The decreasing cost of starting a company is balanced by growing labor costs. Seed companies must still raise Series As to scale.
  2. Macroeconomic factors, namely the challenging job market for young professionals, are pushing people towards entrepreneurship. Incubators have arisen to provide education and a fundraising launching pad for these young founders. Politicians and the media have stoked this trend.
  3. Rising valuations at every stage and the fear of missing out led VCs to invest in the seed market - and more precisely, index the seed
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VC consumer investment trends by sector and stage


This post is by Tomasz Tunguz from Tomasz Tunguz


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Yesterday, I showed the increasing share of venture capital investments consumer companies represent. But examining the trends at a category level may mask patterns by consumer category and also by stage. So, I’ve created two charts: the first is a bar chart of consumer investment by segment and the second is a heatmap of of sector and stage. I categorized the consumer investments by 10 leading firms over the past 18 months into six buckets of my choosing.

VC consumer investment trends by sector and stage


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Yesterday, I showed the increasing share of venture capital investments consumer companies represent. But examining the trends at a category level may mask patterns by consumer category and also by stage. So, I’ve created two charts: the first is a bar chart of consumer investment by segment and the second is a heatmap of of sector and stage. I categorized the consumer investments by 10 leading firms over the past 18 months into six buckets of my choosing.

Consumer services and ecommerce represent 70% dollars invested

ConsumerInvestment.png Consumer services and e-commerce companies are the biggest recipients of investment. Combined, these two segments represent 70% of dollars invested and 60% of deals by volume. In addition to being the most common, consumer services average deal size is $36M, 50% larger than commerce and social media deals at $24M, implying this segment fetches the greatest valuations. Consumer services investments have boomed because of
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The cognitive burden of unbundling


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Department stores. Computer software. And even education. Products and services are being broken into their atomic units and optimized for price, selection, features and, most importantly, customer satisfaction. This is an inexorable trend that cannot and should not be stopped. Roger Ehrenberg in a post called “The Great Unbundling” This unbundling is happening. But I’m not convinced it’s every consumer’s desire to consume media or purchase clothing a la carte.

VC investment trends in the consumer web


This post is by Tomasz Tunguz from Tomasz Tunguz


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Fred Wilson’s perspectives on trends in consumer web investment created a big brouhaha over the weekend. Commenting on a WSJ article, Wilson offered his confirmatory observations that follow-on investments in the consumer web have become more challenging as momentum investors have shifted toward enterprise. Over the past 18 months, valuations of later stage consumer internet companies have ballooned into the hundreds of millions propelled by enormous user growth. For many of these startups, revenue hasn’t been able to keep pace with rising serving costs.

VC investment trends in the consumer web


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Fred Wilson’s perspectives on trends in consumer web investment created a big brouhaha over the weekend. Commenting on a WSJ article, Wilson offered his confirmatory observations that follow-on investments in the consumer web have become more challenging as momentum investors have shifted toward enterprise. Over the past 18 months, valuations of later stage consumer internet companies have ballooned into the hundreds of millions propelled by enormous user growth. For many of these startups, revenue hasn’t been able to keep pace with rising serving costs. It’s not surprising that some members of the eight figure valuation club can’t raise follow-on rounds at even greater premiums - the economics can be challenging. It took YouTube something like seven years to break-even. But is this the story for all consumer web? Is the drought of consumer investment capital experienced by the internet monoliths common to earlier startups? What fraction of investment dollars
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Continue reading "VC investment trends in the consumer web"

The cognitive burden of unbundling


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Department stores. Computer software. And even education. Products and services are being broken into their atomic units and optimized for price, selection, features and, most importantly, customer satisfaction. This is an inexorable trend that cannot and should not be stopped.

Roger Ehrenberg in a post called “The Great Unbundling”

This unbundling is happening. But I’m not convinced it’s every consumer’s desire to consume media or purchase clothing a la carte. Or that this is the end state of commerce. Instead, the future is a hybrid model. And it’s already in market. In the bundled world, consumers only chose from the products an editor had selected. Editors are paid to sift through the morass of choices, curating a subset for consumption. Department stores, record stores, newspapers, etc. Unbundling is attractive because it replaces an opaque curation process with transparency. In the unbundled world, consumers can browse every conceivable product. But in
Continue reading "The cognitive burden of unbundling"

A Startup’s Two Financial Plans: the Board Plan and the Stretch Plan


This post is by Tomasz Tunguz from Tomasz Tunguz


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Last week I wrote about the importance of a financial plan for startups at every stage. It’s a challenge to balance the predictability the board requests and the ambition the company wants. Often, as startups grow, they adopt two plans: a board plan and a company plan. By creating two plans and presenting each to the right audience, founders can communicate and motivate their teams effectively. The board plan is the more conservative of the two.