

The Eye of the Needle - turoczy
http://www.crashdev.com/2012/09/the-eye-of-needle.html

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dm8
Survival of the fittest! It's applicable for everything.

Edit: Btw, I've heard follow on venture rounds (A, B, C etc.) get harder and
harder on an exponential scale. If it is then why everyone is saying Series A
crunch.

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nostrademons
Possibly because it's quite possible to have a successful exit or profitable
business with only a Series A (Google did it...), but hard to reach that
milestone on seed/angel funding alone, unless you're bootstrapping entirely in
which case you don't care about funding.

The reason follow-on rounds get harder is because there are exponentially
fewer markets where it's rational for investors to put money in at that
valuation. If you take a $5M Series A that values the company at $20M or so,
then a $50M acquisition is still a win for everyone. If you take a $50M Series
B that values the company at $300M, you _better_ be a billion-dollar business.
If you take an $800M Series F, either you're the next Google or a bunch of
investors are about to lose their shirts.

The Series A crunch gets publicity because it means that a bunch of founders
are presumably either going to fail or will get talent-acquired for not-quite-
FU-money. The Series B crunch just means that a lot of companies are getting
acquired for FU money for the founders and a down payment on a house for the
employees.

