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[PreMoney SF 2015] K9 Ventures >> Manu Kumar,"Seed Is The New A: What The Seed-Stage Explosion Means For Founders, GPs & LPs

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SEED IS THE NEW A:
WHAT THE SEED STAGE EXPLOSION MEANS FOR FOUNDERS, GPs and LPs
@ManuKumar from @K9Ventures

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Copyright © 2008-2015 K9 Ventures, LLC
@ManuKumar from @K9Ventures
Venture Capital may fund
technology revolutions, but it...
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[PreMoney SF 2015] K9 Ventures >> Manu Kumar,"Seed Is The New A: What The Seed-Stage Explosion Means For Founders, GPs & LPs

  1. 1. SEED IS THE NEW A: WHAT THE SEED STAGE EXPLOSION MEANS FOR FOUNDERS, GPs and LPs @ManuKumar from @K9Ventures
  2. 2. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Venture Capital may fund technology revolutions, but it itself evolves slowly over time. Sometimes we need to take a step back and recognize when things have changed.
  3. 3. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Flashback to June 2013…
  4. 4. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Excerpt from K9 Ventures 2013 LP Extravaganza
  5. 5. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Not Series A crunch Overfunding at Seed
  6. 6. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Massive late stage rounds Flight to traction
  7. 7. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures More competition for Series A More traction Higher costs
  8. 8. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Introducing “pre-seed” Series A as 4th round!
  9. 9. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Super Angels are now Micro- VCs Seed is the new Series A Series A is the new Series B
  10. 10. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures 2015: EPILOGUE THE NEW VENTURE LANDSCAPE
  11. 11. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Seed is the New A Round sizes close to $2M + Valuations rising to match Expectations of GPs rising as well Traction, Revenue model, Unit economics Logical evolution for larger fund sizes
  12. 12. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures
  13. 13. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Pre-Seed is the New Seed Closer to $500K raised Not enough traction for Seed Used for building team and product New gap emerging in the funding ecosystem?
  14. 14. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Raising a Seed round is harder Good news: Lots of new funds and capital Bad news: Change in expectations Founders…
  15. 15. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Seed is not the first round Founder expectations are off Expect to raise $2M off the bat… 
 but don’t have the milestones for it Raise Pre-Seed first, grow into Seed Founders …
  16. 16. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures “As I grow older, I pay less attention to what men say. I just watch what they do.” Andrew Carnegie
  17. 17. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Watch what investors do, not what they say Investors aren’t clear on their messaging Look at: Who they’ve funded How much they’ve invested At what stage Founders…
  18. 18. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Stop living in denial If you’ve spiraled up… It’s a natural evolution Not always a bad thing Revisit your messaging GPs
  19. 19. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Your early stage investment portfolio may no longer be early stage Traditional VC firms moved up the spiral Return profile will change across industry Pre-Seed and Seed may have outsized returns LPs
  20. 20. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Micro-VCs are the new Series A investors Some LPs already invested in Micro-VC Others may have missed the boat on some of the best LPs
  21. 21. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures New crop of Pre-Seed funds emerging Dearth of funds doing Pre-Seed investing Tough to pick funds at this stage LPs
  22. 22. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Scaling VC breaks it VC is and should remain a boutique industry Increasing commitments to best funds/managers
 leads to the Venture Spiral Management Fee/Carry gives incentive for larger fund size LPs
  23. 23. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Too Much Capital New capital from non-traditional geographies China, Russia, Middle East, India Formation of new funds LPs
  24. 24. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Too Much Capital Value creation predominantly in private markets Wall Street entering private markets Hedge funds and banks leading growth rounds Insensitive to valuations? Liquidation preferences dominate? LPs
  25. 25. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Too Much Capital Corporate investors in late stage For some corporates it’s a money management strategy Don’t lose money. Making money is icing on cake. LPs
  26. 26. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures There is an erosion of valuation discipline across all stages of venture capital right now.
  27. 27. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures
  28. 28. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Let’s talk about Bubbles… I’m an expert in bubbles. But only of the soapy kind.
  29. 29. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures
  30. 30. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures
  31. 31. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures Bubbles are awesome. They’re so much fun to play with, fun to watch, but ultimately they pop.
  32. 32. Copyright © 2008-2015 K9 Ventures, LLC @ManuKumar from @K9Ventures LET’S GO! Read the full post at: http://k9.vc/SeedsChanged

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