Excerpt from the 2013 K9 Ventures LP Gathering from Manu Kumar

1. from
2013 K9 VENTURES LP EVENT
EXCERPT

2. Copyright © 2008-2013 K9 Ventures, LLC
MARKET OUTLOOK

3. Copyright © 2008-2013 K9 Ventures, LLC
Market Outlook
■ Significant
*ghtening
in
funding
climate
■ Started
at
Series
A
■ Not
A
Series
A
Crunch,
but
a
result
of
over-­‐funding
at
Seed
■ Series
A
investors
could
be
more
picky
■ Expanded
to
Seed
and
Series
B
as
well
■ Implica*ons:
■ Fund
I:
Seed
companies
are
having
a
harder
*me
raising
■ Fund
II:
Valua*ons
are
coming
down,
good
deals
to
be
made

4. Copyright © 2008-2013 K9 Ventures, LLC
Market Outlook
■ Massive
late
stage
rounds
Series
C
/
Series
D
■ Only
for
companies
with
trac*on
■ Low
supply,
high
demand
is
driving
up
valua*ons
and
deal
sizes
■ Implica*ons:
■ Companies
that
get
to
trac*on
will
have
significant
capital
■ Scaling
is
hard
■ Curse
of
over
capitaliza*on
■ Winner
takes
all

5. Copyright © 2008-2013 K9 Ventures, LLC
Market Outlook
■ Seed
stage
is
TOUGH
for
companies
■ Need
to
show
significant
trac*on
for
Series
A
■ Takes
longer
to
build
trac*on
■ Hiring
costs
have
gone
up
drama*cally
■ $150K/head/year
fully
loaded
is
considered
LOW
■ Lower
infrastructure
and
startup
cost,
but
much
higher
opera*ng
cost
■ Implica*ons:
■ Raise
as
much
capital
at
Seed
stage
as
possible
■ My
recommenda*on
has
been
to
target
between
$1M
-­‐
$1.5M

6. Copyright © 2008-2013 K9 Ventures, LLC
Market Outlook
■ Re-­‐jiggering
of
deal
stages
and
sizes
■ Seed
is
NOT
the
first
round
any
more!
■ Several
of
K9’s
deal
are
now
“pre-­‐seed”
■ Seed
rounds
ge_ng
larger
■ Now
closer
to
$1.5M
-­‐
$2M,
up
from
$500K
-­‐
$1M
■ Series
A
is
the
4th
round
of
funding
■ 3Fs
or
incubators,
pre-­‐seed,
seed,
and
then
Series
A
■ Implica*ons:
■ K9’s
focus
is
first
significant
funding,
regardless
of
nomenclature

7. Copyright © 2008-2013 K9 Ventures, LLC
Market Outlook
■ The
new
normal
and
the
new
nomenclature
■ Seed
is
the
new
Series
A
■ Super
Angels
are
now
Micro
VCs
■ Ins*tu*onaliza*on
of
the
early
stage
means
it
has
matured
■ Using
similar
metrics
as
Series
A
used
to
use
■ Equity-­‐only,
board
seats
■ Seed
round
is
bigger
■ Series
A
is
the
new
Series
B
■ Great
blog
post
by
Jeff
Jordan
@
A16Z
■ Implica*ons:
■ Adapt
to
new
nomenclature,
but
retain
early
focus

8. Copyright © 2008-2013 K9 Ventures, LLC
Thank You
Copyright © 2008-2013 K9 Ventures, LLC