Silicon Valley

  • The seed and early stage angel investing market has cooled over the past few years.
  • On a dollar basis, the cooling off has been mild.
  • On a deals basis, the cooling off has been dramatic and looks to be getting worse.
  • For entrepreneurs just starting out, this means it will be tougher to raise your first rounds. For investors, it means seed rounds are going to be the place to be.

I tweeted out this article from TechCrunch in the middle of last week:

“we believe 2012-16 was a bubble in early-stage funding” https://t.co/VZlKOCDg5P

— Fred Wilson (@fredwilson) December 1, 2017

And the response from the Twittersphere was a desire to hear my views on it.

The data is pretty clear. The seed and early stage investing market has cooled substantially in the past few years.

Angel seed activity

On a dollar basis, the cooling off has been mild.

On a deals basis, the cooling off has been dramatic and looks to be getting worse.

So what is going on?

When I talk to my friends who do a lot of angel investing, I hear that they are being more selective, licking some wounds, and waiting for liquidity on their better investments.

When I talk to my friends who started seed funds in the past decade, I hear them thinking about moving up market into larger funds and Series A rounds.

You can see that in the data. Less deals and bigger deals.

Here is the thing. Seed is really hard. You lose way more than you win. You wait the longest for liquidity. You lose influence as larger investors come into the cap table and start throwing their weight around.

It is where most people start out. Making angel investments, raising small seed funds. They learn the business and many Read More Here