Seed investing fell 56% in the recent third quarter to the lowest level of the past six years, according to the MoneyTree Report. The question is whether this accurately reflects the seemingly irrepressible seed market.
One line of thinking is that the MoneyTree study may not entirely capture the continued ground swell of support for these earliest of enterprises. It may overstate the fall off because of its focus on venture capitalists and not angels. This viewed seemed to be the consensus of a panel of angels and seed investors Wednesday at the AlwaysOn Venture Summit Silicon Valley.
(BTW, the MoneyTree Report is put together by PricewaterhouseCoopers, the National Venture Capital Association and Thomson Reuters, publisher of this blog.)
“I’m not going to use the word bubble,” said panel member Aydin Senkut, managing director at Felicis Ventures. But “there is an incredible amount of companies in the market.”
And more fuel continues to be added. The conference coincided with the announcement Wednesday of another Y Combinator protégé, the startup accelerator Amplify, which is located near the Google offices in Venice Beach, Calif.
The new accelerator has a long list of big name backers, including Accel Partners, BV Capital, Rustic Canyon, Eric Schmidt’s Tomorrow Ventures, Tim Draper, Gordon Crawford, Vivi Nevo, Paige Craig, Diego Berdakin, Tom McInerney, and Greycroft Partners. Greycroft Venture Partner Paul Bricault, who sat on the panel, will help manage it.
The game plan is to use $4.5 million of funding to offer startups as much as $50,000 a piece, according to a press release. And several big names from inside the entertainment industry – Mark Burnett (Apprentice, Survivor), Brian Grazer (J. Edgar, 24), and Jarl Mohn (E! Entertainment, MTV) – have signed on.
According to Senkut, valuations for seed companies are at high levels, including among the vast majority of businesses that might not rank among the 5% cream of the crop. “You just have to look that much harder” for deals, he said.
There also isn’t likely to be enough Series A money to back everyone seeking it, added SoftTech VC Managing Partner Jeff Clavier (pictured). “It’s always been a pretty hairy ride,” but now “the bar is getting higher,” he said.
Still, interest is high. Menlo Ventures’ $20 million Talent Fund has made 10 investments since June, says Managing Director Shervin Pishevar. “I see these incubators as the new university” for entrepreneurs, he added.