Funding Conditions for Tech Startups Soar to a New Record

Haven’t a bunch of VC firms raised new funds recently? I remember the announcements rolling in one by one a couple months ago.

Could this be a result of those fresh new funds eager to deploy their new capital?

I don’t have accurate data on this to be sure if my hypothesis holds up though. Especially at the seed/early stage specifically.

VCs seem to be making a greater effort to fund startups outside the valley these days. Could explain the discrepancy.

As my ex-journalist friend so eloquently put it, journalists have to pump out stories no matter what because they have to sell you stories or their editor will fire them. So most of the stories are clickbait busybody rubbish.

It's no different than youtube vloggers or bloggers or anyone other content creator who has to pump out content to make money.

That's why the media loves trump, kim jong il and drama. It gives them something to write/talk about.

The way I interpreted the article was that more money is being poured into the seed stage funding, and late-stage funding is drying up. This has also been my experience working for a VC backed startup and seeing our competitors recently go out of business because they did not build sustainable models and couldn't get late stage funding.

Investing more at the seed stage also makes sense because it allows the investor to diversify with a smaller amount of capital, and potentially exit earlier (if the company can get late stage funding and the early investors can get out through it or a secondary market).

This behavior is in line with your observations of a concentration of investment in winners (and in line with GSV Capital's public statements from the 2Q earnings call earlier this week). It is also consistent with the article's statement that now may be a good time to quit your job, as seed stage is frothy.

> So it's a concentration of investment in likely winners.

It's not clear that's what is occurring now. I think you're confused by the outsized deals reference about last Summer - they're not saying that's what is causing the index to spike now; they're saying it's what caused the spike last Summer, such that comparing today vs a year ago should come with a flag about that data.

> And I expect better from Bloomberg when it comes to clickbait.

It's funny you mention that ... over the past week, I've found myself seeing more bloomberg promoted posts on facebook (I've been purging/blocking "viral" pages from my feed), and thought to myself, "these are awfully clickbaity". This is anecdotal of course ... but thought it was funny to see the same thought mentioned here :)

Speculation: My guess is this is being driven by the slowdown in China, and the very low price of petroleum. Startup funding, circa 2008-2015, was helped by the sluggish Western economies, the 1% interest rates, and the desperation investors had for yield. That era is over. But sluggishness in China is causing Chinese investors to look overseas, and they too are looking for yield. And also, it probably helps that oil prices are so low, as that both helps Western economies and also leaves all of the investors in the oil countries looking to invest in something other than oil. (In 2008, the price of oil briefly peaked at more than $140 a barrel. In recent years it has not gone above $50 a barrel for any sustained period of time.)

Still as difficult as ever, but I'm not in a hot sector for fundraising.

PM if you need some seed money.