May 7, 2024

227. Seed Crust: The Bifurcation and Its Unfairness

227. Seed Crust: The Bifurcation and Its Unfairness
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Season 4

Text your thoughts directly to Rich.

There are rays of hope for the market, but the most important thing is to stay focused on what you can control.

Seed Crust: State of the Seed Market 1H 2024
Most startups at Seed are circling around, unable to break through to Series A. We're calling this the Seed Crust. I recently released a market report covering: 

  • The market forces behind this
  • What it will take for this to change
  • The paths forward for founders stuck

Download the report and watch the event here: https://vcminute.substack.com/p/seed-crust 



 About AVL Growth Partners
AVL Growth Partners, founded in 2009, is the leading fractional Finance and Accounting firm supporting organizations in pivoting from growth to scale. AVL brings an experienced team of CFOs, Controllers, and Accountants to your organization, delivering transparent, strategic actions for short and long-term success. Transform your financial approach affordably with AVL, supporting companies coast to coast - get to know AVL Growth Partners at avlgrowth.com. (Sponsored)

About SpringTime Ventures
SpringTime Ventures seeds high-growth startups in healthcare, fintech & insurtech, and logistics & supply chain. We look for founders with domain expertise, forging a path with a truly transformative technology. We only invest in software-based businesses in the USA. We bring a people-focused approach, work quickly, and reach conviction independently. Our initial check size is $600k. You can learn more about us and our approach.     

Transcript
WEBVTT

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This is Rich Maloy with SpringTime Ventures, bringing you the VC Minute, quick advice to help startup founders fundraise better.

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Last week we hosted a public event to present at the Seed Crust market report.

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I was incredibly grateful that Peter Walker from Carta came and joined us.

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This week I want to share with you insights from that event, whether from me, or from Peter or from my partner, Allyson.

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If you want to watch the recording of the event or download the market report.

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Head to stvc.us/sc as in seed crust.

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I hope you enjoy it because it was a ton of fun to do.

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But first I want to thank AVL growth partners.

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Outsourcing your finance and accounting function is a no brainer for startups.

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And you need to work with a firm that specializes in high growth companies.

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Founded in 2009.

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AVL has fueled the success of over 1200 early stage companies.

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Specializing in raising capital, M&A, financial modeling, scaling, and bringing financial transparency and a disciplined approach to the companies they work with.

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Head to AVLgrowth.com and explore how they can be pivotal to your growth.

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AVL Growth Partners.

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Your success.

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Their expertise.

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Now let's dive into that market report.

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By Q3 of 2022, you started to see the VCs shift their strategy from a hot market strategy to a cool market strategy.

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And I was estimating that there would be, on average across the industry, one fewer investment per month.

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And so basically three fewer investments per quarter.

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And it came pretty close to that.

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I was also worried about something that in our LP meeting I called the bifurcation of seed but I like catchy titles, and so my market report was titled"Hot or Not Pool Party" and your round is either hot or it was not.

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And this is really persisted.

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There's an element of this that makes me sad about that separation.

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But this is really how the market has continued where for some founders, it feels like it's 2021 and for everybody else, it feels like it's 2001.

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And Rich, just to double down on that, I think sometimes when we kind of tell founders this, cause we say this at Carta all the time.

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We call it a barbell market where there's founders who seem like they're getting everything and more from the 2021 ZIRP days, then founders who can't buy a meeting with the right people.

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And a lot of that feels unfair, and we're here to tell you that it is.

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It is unfair.

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People with a profile that have a couple successful exits will get meetings, valuations and cash, that those who may have a better idea but can't prove it with credibility will not.

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And it is definitely not an equal marketplace.

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And that feels shitty, honestly, to say, if I can cuss on this, sorry.

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And then but it's, it's just like the way that venture works.

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So, it's no fun for anybody.