excerpt 2013 k9 ventures lp gathering

from 2013 K9 VENTURES LP EVENT

EXCERPT

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


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


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


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


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


Thank You


excerpt 2013 k9 ventures lp gathering

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