A Deeper Dive into the Dynamics of the Seed Market

Earlier this week, I wrote about the collapse in the number of seed investments. I received many questions about the data, all the same. Why is this happening? This is a deeper dive into the data. First, there are fewer seed investors participating in the market than in 2015, about 40% fewer. Second, many of the most active seed investors and institutional seed funds are investing in fewer companies. The largest accelerators in the US buck the trend, however. The lines in gray trace the investment counts by firm. The red sketches a smoothed aggregation. Third, all but one of the most active venture capital funds have reduced their seed investment activity. In aggregate volumes have declined by half. Fourth, syndicates size haven’t changed. The average number of major investors buying at the seed has remained about 2.7 investors per round throughout the gyrations of the market. And the
Continue reading "A Deeper Dive into the Dynamics of the Seed Market"

A Deeper Dive into the Dynamics of the Seed Market

Earlier this week, I wrote about the collapse in the number of seed investments. I received many questions about the data, all the same. Why is this happening? This is a deeper dive into the data. First, there are fewer seed investors participating in the market than in 2015, about 40% fewer. Second, many of the most active seed investors and institutional seed funds are investing in fewer companies. The largest accelerators in the US buck the trend, however. The lines in gray trace the investment counts by firm. The red sketches a smoothed aggregation. Third, all but one of the most active venture capital funds have reduced their seed investment activity. In aggregate volumes have declined by half. Fourth, syndicates size haven’t changed. The average number of major investors buying at the seed has remained about 2.7 investors per round throughout the gyrations of the market. And the
Continue reading "A Deeper Dive into the Dynamics of the Seed Market"

Why Series As are Much Easier to Raise in 2018 than the Past 5 Years

In the last six years, the median time between seed and Series A has more than tripled from about 200 days to about 750 days. Why? The seed market is in the midst of some secular changes. Seed rounds have declined 63% from their peak. Total dollars invested have fallen by 37%. But the median round size is up 3x in the same time period. In other words, investors are concentrating capital in fewer startups. Consequently, this smaller number of startups has substantially longer runway, fueling a longer gestation period to series A. In 2011, the median startup raised a $0.5M seed and a $3M Series A 9 months later. Today, the median startup raises a $1.5M seed and an $8M Series A 22 months later. Some of these startups wait more than 2 years, up to 6, 7 or 8 years, to raise the Series A. The
Continue reading "Why Series As are Much Easier to Raise in 2018 than the Past 5 Years"

Why Series As are Much Easier to Raise in 2018 than the Past 5 Years

In the last six years, the median time between seed and Series A has more than tripled from about 200 days to about 750 days. Why? The seed market is in the midst of some secular changes. Seed rounds have declined 63% from their peak. Total dollars invested have fallen by 37%. But the median round size is up 3x in the same time period. In other words, investors are concentrating capital in fewer startups. Consequently, this smaller number of startups has substantially longer runway, fueling a longer gestation period to series A. In 2011, the median startup raised a $0.5M seed and a $3M Series A 9 months later. Today, the median startup raises a $1.5M seed and an $8M Series A 22 months later. Some of these startups wait more than 2 years, up to 6, 7 or 8 years, to raise the Series A. The
Continue reading "Why Series As are Much Easier to Raise in 2018 than the Past 5 Years"

What I’m Grateful For

Earlier this week, Redpoint announced its 7th stage fund of $400M. Over the past 10 years that I’ve been Redpoint, I have seen our firm learn, evolve and grow in many different ways - important ways - that fill me with gratitude and pride. First, we have and will continue to plant trees we will not see. Our founders who started the firm about 20 years ago built the firm to endure for decades. They taught us the business and invested consistently in the future of firm. We plant trees outside the firm by contributing knowledge and connections through events, publishing and networking. Second, we’ve reinforced key values that have always been, and will always be core, to our culture. We have five: founders first, think independently together (brutal intellectual honesty); open source the org (transparency inside and out); move as one, have fun (team first, individual second; Continue reading "What I’m Grateful For"

What I’m Grateful For

Earlier this week, Redpoint announced its 7th stage fund of $400M. Over the past 10 years that I’ve been Redpoint, I have seen our firm learn, evolve and grow in many different ways - important ways - that fill me with gratitude and pride. First, we have and will continue to plant trees we will not see. Our founders who started the firm about 20 years ago built the firm to endure for decades. They taught us the business and invested consistently in the future of firm. We plant trees outside the firm by contributing knowledge and connections through events, publishing and networking. Second, we’ve reinforced key values that have always been, and will always be core, to our culture. We have five: founders first, think independently together (brutal intellectual honesty); open source the org (transparency inside and out); move as one, have fun (team first, individual second; Continue reading "What I’m Grateful For"

What I’m Grateful For

Earlier this week, Redpoint announced its 7th stage fund of $400M. Over the past 10 years that I’ve been Redpoint, I have seen our firm learn, evolve and grow in many different ways - important ways - that fill me with gratitude and pride. First, we have and will continue to plant trees we will not see. Our founders who started the firm about 20 years ago built the firm to endure for decades. They taught us the business and invested consistently in the future of firm. We plant trees outside the firm by contributing knowledge and connections through events, publishing and networking. Second, we’ve reinforced key values that have always been, and will always be core, to our culture. We have five: founders first, think independently together (brutal intellectual honesty); open source the org (transparency inside and out); move as one, have fun (team first, individual second; Continue reading "What I’m Grateful For"

The Three Layers of Management

Imagine you come across three builders working on the same project. You ask each the same question: what are you working on? The first says, “I lay one brick after the other.” The second says, “I’m building a wall.” The third, “I’m erecting a cathedral.” What is the moral of this aphorism? I see two. The first is to keep the greater vision of our work in mind. Said another way, “If you wish to build a ship, do not divide the men into teams and send them to the forest to cut wood. Instead, teach them to long for the vast and endless.” The second is we work on different levels. Without the vision of the cathedral, we may never motivate ourselves to achieve grandeur. Instead, we might create a cluster of one-room, square red brick houses. Equally true: without the focus on the bricks Continue reading "The Three Layers of Management"

The Three Layers of Management

Imagine you come across three builders working on the same project. You ask each the same question: what are you working on? The first says, “I lay one brick after the other.” The second says, “I’m building a wall.” The third, “I’m erecting a cathedral.” What is the moral of this aphorism? I see two. The first is to keep the greater vision of our work in mind. Said another way, “If you wish to build a ship, do not divide the men into teams and send them to the forest to cut wood. Instead, teach them to long for the vast and endless.” The second is we work on different levels. Without the vision of the cathedral, we may never motivate ourselves to achieve grandeur. Instead, we might create a cluster of one-room, square red brick houses. Equally true: without the focus on the bricks Continue reading "The Three Layers of Management"