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Given that they define ‘early’ as before A, they simply mean seed fundings have dropped off a lot. There’s a lot of reasons this could be true, but a couple tha

by sulam 9y ago

Given that they define ‘early’ as before A, they simply mean seed fundings have dropped off a lot. There’s a lot of reasons this could be true, but a couple that resonate for me (an investor in three pre-A and two post-A companies) is that 1) the series A cliff is real and is backpropogating to seed rounds and 2) seed is full of dabblers (me included) who have hopefully realized the economics aren’t great unless they have quality deal flow and can afford to invest at least $1M+ being an angel (which means they should have overall portfolios in excess of $10M minimally). Bonus theory: the bloom is off the crowd-funding rose. Crowd funding was producing a lot of low quality startups that tanked fairly rapidly and probably never had a chance.

api 9y ago
Bonus theory #2: few IPOs means few newly minted angels. Bonus #3: huge companies still sucking up VC like Uber are crowding out smaller investments.
- sulam 9y ago
  I buy your first one but not so much the second. People and funds investing in seed rounds aren’t putting money into Uber right now.
  - pc86 9y ago
    No but might Uber and similarly sized financing rounds be taking money from people who typically invest in seed/A/B? So those investors' funds flow away from the seed rounds? Just postulating.
    - sulam 9y ago
      Not really. These are completely different classes of investors, and different classes of investment.
      - staticautomatic 9y ago
        Yep. A fund looking to deploy 8 or 9 figures a pop would not otherwise be putting that money into seed rounds.
- danblick 9y ago
  I like to imagine that maybe Uber and money-losing ventures like it will help bring some balance to the universe by taking away the billions accumulated by super-rich investors and redistributing that money to working-class drivers through subsidies. Like, I don't know: does all that red ink have a positive effect on the Gini coefficient? (This pipe dream might not be supported by actual facts.)
  - lozenge 9y ago
    I would argue the subsidies are going to the customers. The drivers, who often take out leases only to be surprised by Uber pricing changes, are often just treading water. Karhoo is a more flagrant example - they allowed multiple referral codes per account, and people quickly circulated lists of codes that together came to over $100 in free rides.
    - ghaff 9y ago
      In many cases, I expect customers are getting subsidized by both VCs and by drivers who don't have a good handle on their costs.
      - jmknoll 9y ago
        Regarding drivers who don't have a good handle on their costs, almost definitely. Mr Money Mustache just did a piece on this recently. https://www.mrmoneymustache.com/2017/11/22/mr-money-mustache-uber-driver/ https://www.mrmoneymustache.com/2017/11/22/mr-money-mustache...
dang 9y ago
> Given that they define ‘early’ as before A, they simply mean seed fundings have dropped off a lot. Thanks, we've updated the title to reflect this.
btown 9y ago
To your second point, do you foresee increased consolidation of angels/seed investors into angel groups/networks (even more so than is the case now), so that those investors can share in higher-quality, lower-cost deal flow/lead gen?
- sulam 9y ago
  Honestly what I’ve seen is the highest quality startups don’t need to talk to those groups, so being part of one merely encourages dabbling. That’s probably a controversial point of view, but I’ve gained zero value from being part of some of them. My best investment came from being a domain expert who has legitimately been able to add value beyond cash.
liquidcool 9y ago
Isn't crowd-funding just changing names to ICO? I'm not saying it's any better, just that there's as much talk about it now as there was for crowd-funding. Curious what the numbers are for that in comparison, and what percentage of seed stage was crowd-funded.
- smokeyj 9y ago
  > I'm not saying it's any better Donation based funding verses decentralized equity.. And we're not going to say one is better.. Crypto has become so politically incorrect on this forum that we now have to preface logical observations with these sorts of disclosures to avoid the downvote brigade. If we look at the crypto market cap it becomes clear where early stage capital is going. To where the innovation is happening. But you'd never realize it based on this echo chamber. Edit: And your comment is in the negative. Keep it real HN
  - banderman 9y ago
    Equity based funding is available on traditional platforms: https://equity.indiegogo.com/ https://equity.indiegogo.com/
- banderman 9y ago
  The term crowd funding is not being replaced by ICO. ICO is just one method of crowd funding.

by sulam 9y ago

api 9y ago

Bonus theory #2: few IPOs means few newly minted angels. Bonus #3: huge companies still sucking up VC like Uber are crowding out smaller investments.

sulam 9y ago
I buy your first one but not so much the second. People and funds investing in seed rounds aren’t putting money into Uber right now.
- pc86 9y ago
  No but might Uber and similarly sized financing rounds be taking money from people who typically invest in seed/A/B? So those investors' funds flow away from the seed rounds? Just postulating.
  - sulam 9y ago
    Not really. These are completely different classes of investors, and different classes of investment.
    - staticautomatic 9y ago
      Yep. A fund looking to deploy 8 or 9 figures a pop would not otherwise be putting that money into seed rounds.
danblick 9y ago
I like to imagine that maybe Uber and money-losing ventures like it will help bring some balance to the universe by taking away the billions accumulated by super-rich investors and redistributing that money to working-class drivers through subsidies. Like, I don't know: does all that red ink have a positive effect on the Gini coefficient? (This pipe dream might not be supported by actual facts.)
- lozenge 9y ago
  I would argue the subsidies are going to the customers. The drivers, who often take out leases only to be surprised by Uber pricing changes, are often just treading water. Karhoo is a more flagrant example - they allowed multiple referral codes per account, and people quickly circulated lists of codes that together came to over $100 in free rides.
  - ghaff 9y ago
    In many cases, I expect customers are getting subsidized by both VCs and by drivers who don't have a good handle on their costs.
    - jmknoll 9y ago
      Regarding drivers who don't have a good handle on their costs, almost definitely. Mr Money Mustache just did a piece on this recently. https://www.mrmoneymustache.com/2017/11/22/mr-money-mustache-uber-driver/ https://www.mrmoneymustache.com/2017/11/22/mr-money-mustache...

dang 9y ago

> Given that they define ‘early’ as before A, they simply mean seed fundings have dropped off a lot. Thanks, we've updated the title to reflect this.

btown 9y ago

To your second point, do you foresee increased consolidation of angels/seed investors into angel groups/networks (even more so than is the case now), so that those investors can share in higher-quality, lower-cost deal flow/lead gen?

sulam 9y ago
Honestly what I’ve seen is the highest quality startups don’t need to talk to those groups, so being part of one merely encourages dabbling. That’s probably a controversial point of view, but I’ve gained zero value from being part of some of them. My best investment came from being a domain expert who has legitimately been able to add value beyond cash.

liquidcool 9y ago

Isn't crowd-funding just changing names to ICO? I'm not saying it's any better, just that there's as much talk about it now as there was for crowd-funding. Curious what the numbers are for that in comparison, and what percentage of seed stage was crowd-funded.

smokeyj 9y ago
> I'm not saying it's any better Donation based funding verses decentralized equity.. And we're not going to say one is better.. Crypto has become so politically incorrect on this forum that we now have to preface logical observations with these sorts of disclosures to avoid the downvote brigade. If we look at the crypto market cap it becomes clear where early stage capital is going. To where the innovation is happening. But you'd never realize it based on this echo chamber. Edit: And your comment is in the negative. Keep it real HN
- banderman 9y ago
  Equity based funding is available on traditional platforms: https://equity.indiegogo.com/ https://equity.indiegogo.com/
banderman 9y ago
The term crowd funding is not being replaced by ICO. ICO is just one method of crowd funding.