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VC Landscape
Post Seed
The Hero’s Journey
 Seed is a process,
not an event
 Continuous ...
 The CEO’s job
becomes raising
money
2
Era of Cheap
R a ising $500k no t $5m  need $5k leg a l no t $50k
Open Source
Cloud
2000
$5m
$500k
2005
$50k
2010
source:...
Ever y Boom Comes With a New
Financial Flim-Flam Invention
Era
1960s
1970s
1980s
1990s
2000s
2010s
Instrument
Moral Obliga...
Seed Needed a New Instrument:
The Capped Convert
 Simple, cheap, fast
 Can be stacked – higher caps in later notes
 Doe...
Seed is Now a Complex Process
6
Pre-
Seed
Seed
Post
Seed
< $250k < $2m < $5m > $10mCumulative:
Institutional
Seed
Bullpen
...
Easy Seed  Series A Crunch
Source: CBinsight as reported by Dan Primack
#Deals
0
200
400
600
800
1000
1200
1400
1600
1800...
The Crunch  Post-Seed Round
source:
Jamie Davidson,
Redpoint Ventures
8
Post-Seed Funding is Increasing
O v er half of seed d o lla r s no w flo w t o “ p o st -seed ”
9
Post Seed Options
① Not ready for A?
② Need to De-Risk?
③ Confident of
milestones?
① Bridge to A
– bridges turn into ‘pier...
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Duncan davidson vator - post seed (bullpen presentation)

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Duncan davidson vator - post seed (bullpen presentation)

  1. 1. VC Landscape Post Seed
  2. 2. The Hero’s Journey  Seed is a process, not an event  Continuous ...  The CEO’s job becomes raising money 2
  3. 3. Era of Cheap R a ising $500k no t $5m  need $5k leg a l no t $50k Open Source Cloud 2000 $5m $500k 2005 $50k 2010 source: Mark Suster, Upfront Capital Cost of a Startup 3
  4. 4. Ever y Boom Comes With a New Financial Flim-Flam Invention Era 1960s 1970s 1980s 1990s 2000s 2010s Instrument Moral Obligation Bond High P/E Conglomerates Highly Confident Letter Dot-Com “Eyeballs” Subprime CDOs Capped Convert Result NYC bankrupt Broke ‘Em Up “Barbarians at the Gates” AOL buys Time-Warner!? Housing Bubble! Seed as a process! 4
  5. 5. Seed Needed a New Instrument: The Capped Convert  Simple, cheap, fast  Can be stacked – higher caps in later notes  Does not re-price employee options  Socializes the downside  Privatizes the upside  Its simplicity enabled seed as a continuous process 5
  6. 6. Seed is Now a Complex Process 6 Pre- Seed Seed Post Seed < $250k < $2m < $5m > $10mCumulative: Institutional Seed Bullpen Round Friends, Family, Crowd, Incubator “Super-Sized” A Round
  7. 7. Easy Seed  Series A Crunch Source: CBinsight as reported by Dan Primack #Deals 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2009 2010 2011 2012 2013 Seed Seeking Funding Series A Rounds Series A Crunch Seed Shifted Forward A Year .. When They Seek Funding 7
  8. 8. The Crunch  Post-Seed Round source: Jamie Davidson, Redpoint Ventures 8
  9. 9. Post-Seed Funding is Increasing O v er half of seed d o lla r s no w flo w t o “ p o st -seed ” 9
  10. 10. Post Seed Options ① Not ready for A? ② Need to De-Risk? ③ Confident of milestones? ① Bridge to A – bridges turn into ‘piers” – halfway there you fall in! ② Go right to A – Dilution vs. De-risk – Star founders do this ③ Post-Seed first – Less dilution, more control – Build a sustainable model – Super-Sized A next! 10

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