Crazy Seed Funding – Helpful or Harmful?

In season 2 episode 9 of HBO’s Silicon Valley The Pied Piper founder talks with a founder about how things might have been different if he had asked for less money during one of the funding rounds that lead to his company’s demise.  The decision in the show was that bigger was definitely NOT always better.  What do you think? Take a look at the following article and see if you agree with their opinion….

Seed Funding - Is Bigger Always Better? Dollar image courtesy of Andrew Magill - CC2.0

Seed Funding – Is Bigger Always Better?
Dollar image courtesy of Andrew Magill – CC2.0

When it comes to seed funding for startups, is bigger always better?

by   – Technology Editor-Boston Business Journal

Statistics show that seed and Series A funding rounds for early-stage companies are getting bigger.

In 2014, a total of $1.3 billion in funding nationally went toward seed venture capital deals, up 49 percent over 2013, according to New York-based venture capital database CB Insights.

Global tech Series A deals of $10 million or more were up 64 percent in 2014,according to a recent study by CB Insights.

But when it comes time for entrepreneurs to raise outside investment, it might not always make sense for those investments to be large amounts.

Investors Behaving Badly?

Large seed rounds might actually be a sign that investors are “behaving badly,” said Matt Fates, partner at Boston-based Ascent Venture Partners, which invests in early-stage companies.

“There are exceptions, but in general seed rounds are for completing an initial product and starting to test with customers,” Fates said in an email. “Making the round large doesn’t change this, and potentially removes the need to

Read the complete article at BizJournal.com





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