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