« Apple: Reports of Material iPhone Manufacturing Cuts | Main | Fed Rate Cut Frenzy: Refinancing Boomlet Underway? »

Latest Stories

• Excel Wankers and Recession Averages
• Sorry, New York is Closed. Check Back Later.
• Catching Falling 2009 Earnings Estimate Knife
• Survivorship Bias in Global Markets
• Talking Positions on a Lazy-ish Retirement Portfolio

January 24, 2008

Seed Investing and Why VCs are Risk-Averse Greed-heads

The NASVF has out some new analysis purporting to show a decline in seed (and early-stage) venture investing. At first glance, admittedly, the following graph looks fairly compelling. The percentage and number of deals that can be called seed/early has fallen off a cliff since 1995, and while it has climbed back a little in recent years, it's still a long way down.

So there it is, right? More seed money needed? And VCs are shown to be risk-averse greed-heads?

Not so fast. While VCs are risk-averse greed-heads, the period when seed was high was hardly representative. The 1995-1999 period was actually highly anomalous, with seed investing fairly consistently turning in early, high-multiple exits for investors, which had been historically unprecedented.

The upshot: Today is a lot closer to normalcy than was the prior period. Far from there being too little seed capital, you could reasonably argue there is about enough, or even too much.

Sphere It   |   Digg it   |   Bookmark it   |   Stumble it   |   Facebook it