[premoney sf 2015] k9 ventures >> manu kumar,"seed is the new a: what the seed-stage...
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SEED IS THE NEW A:WHAT THE SEED STAGE EXPLOSION MEANS FOR FOUNDERS, GPs and LPs
@ManuKumar from @K9Ventures
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Venture Capital may fund technology revolutions, but it
itself evolves slowly over time.
Sometimes we need to take a step back and recognize when things have changed.
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Flashback to June 2013…
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Excerpt from K9 Ventures
2013 LP Extravaganza
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Not Series A crunch
Overfunding at Seed
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Massive late stage rounds
Flight to traction
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
More competition for Series A
More tractionHigher costs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Introducing “pre-seed”
Series A as 4th round!
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Super Angels are now Micro-
VCsSeed is the new
Series ASeries A is the new Series B
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures2015: EPILOGUETHE NEW VENTURE LANDSCAPE
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Seed is the New A
Round sizes close to $2M +Valuations rising to match
Expectations of GPs rising as wellTraction, Revenue model, Unit economics
Logical evolution for larger fund sizes
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Pre-Seed is the New Seed
Closer to $500K raisedNot enough traction for Seed
Used for building team and product
New gap emerging in the funding ecosystem?
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Raising a Seed round is harder
Good news: Lots of new funds and capitalBad news: Change in expectations
Founders…
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Seed is not the first round
Founder expectations are offExpect to raise $2M off the bat…
but don’t have the milestones for it
Raise Pre-Seed first, grow into Seed
Founders…
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
“As I grow older, I pay less attention to what men say. I just
watch what they do.”Andrew Carnegie
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Watch what investors do, not what they say
Investors aren’t clear on their messaging
Look at:Who they’ve funded
How much they’ve investedAt what stage
Founders…
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Stop living in denial
If you’ve spiraled up…It’s a natural evolution Not always a bad thing
Revisit your messaging
GPs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Your early stage investment portfolio may no longer be early
stageTraditional VC firms moved up the spiral
Return profile will change across industryPre-Seed and Seed may have outsized returns
LPs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Micro-VCs are the new Series A investors
Some LPs already invested in Micro-VCOthers may have missed the boat on some of the best
LPs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
New crop of Pre-Seed funds emerging
Dearth of funds doing Pre-Seed investingTough to pick funds at this stage
LPs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Scaling VC breaks it
VC is and should remain a boutique industryIncreasing commitments to best funds/managers
leads to the Venture SpiralManagement Fee/Carry gives incentive for larger fund size
LPs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Too Much Capital
New capital from non-traditional geographiesChina, Russia, Middle East, India
Formation of new funds
LPs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Too Much CapitalValue creation predominantly in private markets
Wall Street entering private marketsHedge funds and banks leading growth rounds
Insensitive to valuations?Liquidation preferences dominate?
LPs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Too Much Capital
Corporate investors in late stageFor some corporates it’s a money management strategy
Don’t lose money. Making money is icing on cake.
LPs
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
There is an erosion of valuation discipline across all stages of
venture capital right now.
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Let’s talk about Bubbles…
I’m an expert in bubbles.But only of the soapy kind.
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
Bubbles are awesome.
They’re so much fun to play with, fun
to watch, but ultimately they pop.
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Copyright © 2008-2015 K9 Ventures, LLC@ManuKumar from @K9Ventures
LET’S GO!
Read the full post at:http://k9.vc/SeedsChanged