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August 18, 2011 01:13 am GMT
Series A financings are on the decline. They peaked at 283 in 2007 and are on pace to barely crack 100[1] this year (all data is from CrunchBase through the end of June"it is imperfect but the best I've got, see chart). They've also declined in relative terms, representing nearly 40% of all equity financings in 2006, and less than 20% year to date. I believe there are two main reasons for this: 1) the rise of the Series Seed and 2) the ho-hum exit environment since 2008.That's why a Business Insider article on Monday titled Venture Capital: No Longer a Business of Small Investments in Early Stage Companiesinspired me to dig into the data and see for myself what was going on. VCs are less inclined to lead or participate in follow-on rounds unless the company is a clear winner in its class. Furthermore, VCs have had to support their perceived winners longer because exits have been fewer and farther between. Even with the rise of the Series Seed (the nomenclature of which is not used uniformly), Seed and Series A deals collectively accounted for nearly half of all equity financings in 2006, and now account for less than one third.
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/aoBesdVfy9s/
The Series A Squeeze
Series A financings are on the decline. They peaked at 283 in 2007 and are on pace to barely crack 100[1] this year (all data is from CrunchBase through the end of June"it is imperfect but the best I've got, see chart). They've also declined in relative terms, representing nearly 40% of all equity financings in 2006, and less than 20% year to date. I believe there are two main reasons for this: 1) the rise of the Series Seed and 2) the ho-hum exit environment since 2008.That's why a Business Insider article on Monday titled Venture Capital: No Longer a Business of Small Investments in Early Stage Companiesinspired me to dig into the data and see for myself what was going on. VCs are less inclined to lead or participate in follow-on rounds unless the company is a clear winner in its class. Furthermore, VCs have had to support their perceived winners longer because exits have been fewer and farther between. Even with the rise of the Series Seed (the nomenclature of which is not used uniformly), Seed and Series A deals collectively accounted for nearly half of all equity financings in 2006, and now account for less than one third.Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/aoBesdVfy9s/
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