boldstart ventures, partnering from Inception with bold founders reinventing the enterprise stack - Snyk, Kustomer, BigID, Blockdaemon, ProtectAI...
❤️ this from Mattias Ljungman - thanks for expanding on my Inception stage investing framework, no pun intended, with what comes after Inception with "Seed Expansion". Yes, seed is so confusing as everyone from pre-seed firms to multi-stage firms are writing checks. Hopefully founders can get some clarity with Mattias' post below on where to go for their early rounds. Also check out my initial post on what's happening in the venture market, The Race to Be First and What is Inception Investing? https://lnkd.in/eJhEsZ4s
Seed has never been more competitive, highly priced – and confusing. It can mean everything from backing first-time founders with no product to investing in serial founders with significant traction, encompassing rounds from $500k to $6m+. So the ‘step up’ from Seed to Series A is now equivalent to scaling a sheer cliff face. It’s no wonder the percentage of Seed-stage startups able to advance to Series A within two years has dropped – from 23% for the 2020 cohort to just 5% in 2022, according to Crunchbase data. While high failure rates indicate higher quality startups coming out the other side, there’s also a risk that some are falling through the cracks, simply because their growth is being misunderstood and poorly categorised by investors who are setting unrealistic targets for valuation and growth. Early metrics for successful development should include the Googles, Notions, and Facebooks of the world that took time to mature their products and monetise. Seed has become an increasingly significant and elongated phase in a company’s early life cycle, often raising multiple million-dollar Seed rounds. The median time from a $1m+ Seed round to Series A has increased from 14 months in 2014 to 28 months in 2023, according to Crunchbase. And, like Seed, Series A rounds have got much larger – $20m+ Series As are now the norm, according to Wing VC’s data. The proliferation of terms like ‘post-seed’, ‘seed plus’, ‘A minus’ and ‘early A’ reflects an industry grappling with these changing dynamics. But these labels obscure the real progress and needs of young startups. They still define a company by the quantum being invested rather than where a company is in their growth journey. We need language that accurately captures the specific challenges and milestones of young startups at each phase of their journey. I propose categorising Seed into two distinct groups: Seed Inception, which describes the initial ticket going in, and Seed Expansion, which describes rounds where founders have already achieved some milestones and metrics. Here’s how I’m thinking about it: https://lnkd.in/enp3XEvw Thanks to Matt Robinson, Tomasz Tunguz, Crissy Costa Behrens, and Ed Sim for reading drafts of this. #seedfunding #venturecapital #founders #funding
