The phrase “seed in the new A” has been rolling around the startup scene for a while now. There are multiple opinions about the cause of this prolonged seed stage, but most include the idea that founders can now get further with less cash, seed rounds are getting bigger, and series As have also gotten bigger. What other factors have contributed to the seed-is-the-new-A concept?
Some great points being made here. I’m seeing a lot of seed stage companies really struggling to get attention from either the established/sophisticated angel community or the early stage VC community. In fact, from an entrepreneur point of view, the hurdles with each group aren’t all that different. I think it’s primarily a function of supply and demand. There’s an explosion of startup activity, at least in the Bay Area. The funding available to early stage ventures, while growing, is not growing as fast as the number of startups trying to get funded. Therefore, the investors become more selective. That late stage seed round with the higher end angels ends up feeling a lot like a Series A. Companies have to accomplish more to get on investors’ radar. What do they do? Embrace lean startup. Stretch their cash longer than they thought they'd have to. Redouble efforts with friends and family investors. Work with incubators. Be ready to make a well-considered pivot (see Market Timing point by Edwin). And focus, focus, focus on hitting key proof points. If you think you’re ready for high end angels, it wouldn’t hurt to target early stage VCs in parallel, since the investment criteria are so similar.