Probably an unpopular opinion, but when the startups receive $120,000,000 to make a juice machine that is only really accessible to the top 1 or 2% of the USA, it's not a bad idea to give funding a reset and give people a reason to step back from trying to raise funds and more time to work on more innovative ideas. America has it's fair of crises now, yet a good chunk of people have a smartphone. How can startups help people in the midwest and the coasts? Or what interesting things could be done given most of the world is online now? I'm sure we'll see some cool ideas and another funding boom again with some cool new ideas soon.
I'm not sure the pause in unicorn IPOs is <i>directly</i> related to a slowdown in seed funding -- perhaps indirectly by minting fewer angel investors.<p>A lot of the popular press -- even the popular tech press -- conflates startup funding. But late stage investing, which is mostly where unicorns play, is a totally different game from seed investing.<p>Also, there are two stories here... one is about the shift in average check size and fewer deals. This is really just investment grade inflation, where larger deals are being called 'seed.' Not sure why but it's how it works. So much of the former seed rounds are probably underreported angel / micro fund rounds now.<p>[Source: my startup's funding isn't publicly disclosed for that precise reason.]
From NYT that has actual numbers:<p>> Seed and angel investors completed about 900 deals in the second quarter, down from roughly 1,100 deals in the second quarter of 2016 and close to 1,500 deals during that time period in 2015, according to a report released last month by Seattle-based PitchBook Inc, which supplies venture capital data.<p>> The dollar amount provided by seed and angel investors was $1.65 billion in the second quarter. That's just shy of the $1.75 billion for the same time period of 2016.<p>That's slowing from 2015, but IMO these changes are pretty insignificant.
"The median seed deal is now $1.6 million, according to Pitchbook, up from about $500,000 five years ago. That's more in line with what big venture firms used to invest."<p>Cost of living, office space, employees (due to the cost of living) has to be a factor here. Maybe $500k was viable a few years ago in the Bay Area, but imagine these days a company NEEDS a larger seed round in order to get to a viable state.
I think it has to do with the traditional app model slowly being phased out.<p>There is a huge saturation of apps on every major platform and it's getting harder and harder for new devs to get enough userbase that way.
I don't think this is terrible news for entrepreneurs. It forces more operating discipline in the earlier stages. And, I believe we could do with more discipline as an ecosystem. As long as there's growth capital around once the business _is_ prepared to scale, we're all good.
The particular point about incumbent advantage, which admittedly has always been a factor, is particularly poignant in my mind. A lot of the recommendation is that founders shout from the rooftops about what they're working on, but in this climate is the better route to be relatively quiet with a small group of beta testers/a personal network? And go public more feature-rich or stable? If you hit a chord early on an incumbent could shift, even just "enough," and water-down your competitive edge to the point where the slag to viability just isn't realistic.
I've been hoping funding would slow so all the dead wood (we don't need all these delivery apps) can burn off without adding more to replace them. Hopefully we'll see companies try to grow sustainable businesses rather than a bunch of zombie startups that persist when they really shouldn't.
The cost of starting a company is also declining. So there is an offset there - In early stage the big outlier in SV is rent. However, most other aspects are getting considerably cheaper (including cloud platforms being very generous with credits)