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The fatal flaw in this article is that the author has NO IDEA how much of the 2012 investment has made it into Crunchbase. He's dividing the total investment by
by diego 14y ago
The fatal flaw in this article is that the author has NO IDEA how much of the 2012 investment has made it into Crunchbase. He's dividing the total investment by the number of days as if every investment made until today had been accounted for.
That guarantees that the projection will fall short, because many investments are announced much later than when they're made. For example, IndexTank's round was closed in 2010 but announced in 2011. The average lag is anybody's guess, but it could easily be two, four or six months.
- barce 14y agoThis logic applies to every year, since a round could close in 2006 and have been announced in 2007. Regardless of the lag, the trend is clear. It is a downward one.
- gojomo 14y agoFunding could be reported late, but then slotted at the accurate time. For example, in January 2013, we might get news -- and then have retroactively represented in CrunchBase -- a funding that closed in October 2012. So even if Crunchbase is eventually a full/accurate/consistent record (which is itself a big 'IF'), such a lag in reporting could mean any 2012 numbers aren't accurate (and comparable to 2011/2010/etc) until sometime 2-6 months into 2013. Ergo, any 'downward trend' at this point might still just be an artifact of the limited data.
- diego 14y agoExactly. And it's even more complicated: the author assumes that funding is distributed evenly over the year, when it's not. Very few deals close during the summer, and the period September-December is particularly active. To the OP: you are jumping to conclusions too quickly without asking the right questions. You also seem too attached to your hypothesis. I recommend that you read Nate Silver's new book "The Signal and the Noise."