Month: August 2016

Venture Observations 2016 — Tweetstorm version

Follow me @samirkaji for my always random, sometimes relevant thoughts on the world of venture investing and startups. As we move closer to Labor Day (amazing how quickly this year has gone), I wanted to share a few observations we’ve seen within the world of venture. I may expand on a few later, but in the interest of time and ease of digestion, I’ve listed my thoughts tweetstorm style below— Yes, I may have hit >140 characters on a couple below. 1/No slowdown in Micro-VC formation; we have observed 77 new first time funds in 2016 (some still raising) 2/New Micro-VC’s w/no prior inst. investing experience should expect no inst. LP’s/target $20MM or less. 3/Opportunity funds more common; i.e.DCVC, SoftTech, Lightspeed, Eclipse, Homebrew (2015), Industry, 4/1H16’ massive fundraise year; many funds held dry closes; anticipatory raises to guard against potential sig market downturn 5/Established inst. seed funds going larger and often play later in seed process. Post-Seed/early A hot area right now. 6/Harder to raise on either end of funding barbell (late stage; pre-seed). Seems $1MM ARR is bar for inst.seed SaaS rounds 7/Incongruence of private markets (growth focus) and public markets (profitability) very remains prominent. 8/Anecdotal, but we are seeing far less SPV’s being created for B+ round deals. 9/”Unicorn” market very top heavy; 50% of unicorn market cap can be captured in top 12 companies (Uber,Xiami,Airbnb top 3) 10/Leveraging of technology within venture firms; proprietary tech at firms like Goodwater, Signalfire, Eventures. 10/Low yield environment/recent exits (Jet/Nervana/DSC/Cruise/Twilio IPO) bring hope of a relaxing liquidity sphincter in priv. mkts 11/Diversity in venture much more prevalent in seed stage firms 12/LA venture fund ecosystem heating up with new entrants;i.e.Refactor/Fika/Alpha...

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The different types of Seed VC’s

Please follow me @samir kaji for my random and occasionally relevant thoughts on venture capital and technology. Stemming from the venture pullback that started in late 2015, it’s been one of the toughest years in recent times for companies seeking seed capital from VC’s this year.  The good news for companies seeking seed venture funding is that with the with a record number of new institutional seed funds and what appears to be shaping as a monster fundraising year for VC’s, the slowdown may be short-lived. A critical consideration for founders when developing seed fundraising strategy is being able to accurately map out the market to determine what type of firms might be a good fit for your company. The table below provides some characteristics of venture firms, bucketed by size (fund size provides a great clue of investor behavior and thesis). A few things to note first: -Things like initial fund size only refer to seed.  For example, NEA’s average initial investment across all investments is not $2MM and below, but that’s where they usually play when invested in seed stage companies. -There are of course exceptions, as the table is meant to provide generalizations that most often are true. -Some of the ranges below are fairly large.  The closer a fund is to the bottom or top of the range, the more likely it operates similarly to venture grouping it borders. Fund Size  $0-±$15MM“Nanofunds” ±$25MM-$75MM“Micro-VC”  ±$75MM-$200MM“Early stage” funds ±$250MM and over“Lifecycle” funds  Primary Investment Stage Pre-seed & Seed Pre-seed to Post Seed Post – Seed & Series A Series A and above Invest in Seed? Yes Yes Yes Often, but not all do # of partners at firm Usually 1 1-3 2-4 4+ Typical initial investment (refers to seed only) $150K-$250K $500K-$1.5MM $1MM-$3MM $500K-$2MM Who you get from firm? General Partner General Partner General Partner or Principal Principal or below Take a BOD seat at seed? No Sometimes Sometimes, and usually during large post-seed rounds No Leads rounds? No, usually just a co-investor Sometimes Yes Sometimes Investor Participation level? Medium High High Low Usual valuations paid (seed only) $4MM-$7MM $4MM-$10MM $4MM-$15MM $4MM-$20MM Examples of firms (based on prior/current fund) Array VC645 VenturesFuture-PerfectRubicon VCFemale Founders Fund LemnosMerusMuckerCowboyBullpen Capital SoftTechForerunnerFelicisFloodgateRibbit Capital NEASequoiaAccelUpfrontEight VC Kleiner...

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