INSUBCONTINENT EXCLUSIVE:
six or seven years ago.We explored the issue yesterday with Peter Wagner, who spent more than 14 years with Accel as a managing partner
Capital.Wagner has an obvious interest in how rounds are changing
founder who is thinking about raising either a seed or Series A round any time soon
How did you put together this new reportPW: We looked at companies that were funded by the 20 or so leading venture firms between 2010 and
If a company raised a seed fund from another firm, but Sequoia led its Series A, all of its financings rounds, including that seed round,
were incorporated into our research
Others are eight years old
The average Series A in 2010 was $4.9 million; by last year, it had reached $12.1 million
Do you find it concerning at allPW: Not necessarily
Those defined as Series A investors have mostly adopted a later-stage posture and at scale
to be a lot further along than was formerly the case
Perhaps more telling is that 67 percent of them were already generating revenue, unlike 11 percent of their peers in 2010
The same is playing out for seed investments.PW: Yes, just 9 percent of seed-funded companies were generating revenue back in 2010; last
Since everyone is taking so much less risk on these companies at the seed and Series A stage, are early-stage VCs getting less in terms of
their ownership of these startupsPW: Ownership percentages [outside of Wing] are hard to get, other than in IPO prospectuses
sealing up before they get to the Series A
It used to be A was the second round
Now, companies have raised nearly three rounds before they get to that point
So you have this segmentation within the world of seed before you get to post-adoption, where you have some evidence that things are working
and investors can see how rapidly
Are you still taking the 20 percent that you looked to own when you were doing Series A deals that looked more like seed dealsPW: Ideally
We play the role of go-to partner, so we want to be in that ownership position.TC: With things shifting around so much, where is the Valley
investors, who are launching a fleet of a thousand ships
But it does mean that seed firms have been presented with this expanded territory from which these other firms have backed away
Somebody has to do the foundation building
Is there a correction coming or has something fundamentally changedPW: There will be a correction
There will always be a correction
releasing half the capital or more back to their limited partners when the market changed
Returns on big funds have always disappointed
Things do change and tech is a much more important ingredient
But I do think this is still a boom-bust business.
