
Series A Crunch Worsens - chailatte
http://www.pehub.com/193036/series-a-crunch-worsens/
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lifeisstillgood
So if these guys are reliable (?) and if I understand this right, from 2011 to
2012 we saw:

* An increase in preferred stock deals, decrease in convertible note deals. (bad)

* if you started in 2011, 50% of you got a series A. Started 2012 - only 33% (bad)

* this is somewhat offset by doubling of seeded companies getting follow-on seed finance (12% - 23%, almost half of the drop above) (good)

Trends:

\- Seed financing is becoming institutionalized (if you see Angellist as an
institution)

\- Seed deals grew ~400% and Series A grew by 50% (This is the Series A Crunch
right there)

\- Getting Series A needs traction, apparently traction is not being shown by
most companies started in 2012. (v bad)

Also:

There appears to be a difference between software companies and
"Internet/Digital media" companies. I am guessing content but frankly how can
content be 3/4 of the funded market?

It ignores companies funded with less than 1/4 million - so that may well
explain the preponderance of "content" companies.

Summary

Overall I like broad sweep reviews, its my years of Risk playing. But it does
not look too good for companies taking finance and hoping to drive into
millions more on Series A - and only a review of the sub-250K market is going
to tell if the world is drying up, or startups are becoming in the old words
"too cheap to meter"

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joshu
> decrease in convertible note deals

Why is that necessarily bad?

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lifeisstillgood
Late reply: bad for start up owners (convertible notes seem to be preferrBle)

~~~
joshu
They're easier and cheaper for startups.

That is distinctly better than good for them.

I've seen a lot of evidence that they aren't.

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dzlobin
This really doesn't say much about a Series-A crunch.

It doesn't take into account the percentage of those companies who raised a
seed round that were _seeking_ a Series-A round. This looks to me as if the
article is making the assumption that 100% of companies who raised a seed
round were seeking another around, and thus this year a smaller percentage of
seed companies actually raised a round.

It also fails to mention whether or not the size of the average seed round
grew. If you use HN and TechCrunch as anecdotal evidence, the trend seems to
be much larger seed rounds the last two years. This alone could explain the
fact that more companies are not actively seeking a Series-A within the first
year.

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jpdoctor
Lots more details in the report (PDF):
[http://www.fenwick.com/FenwickDocuments/2012_Seed_Survey_Rep...](http://www.fenwick.com/FenwickDocuments/2012_Seed_Survey_Report.pdf)

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pagekicker
The quoting article spins the article quite differently than the source, which
had a "things aren't so bad" message.

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dccoolgai
If by "crunch" you mean "return to sanity"...

