Analysis: seed round of financing too, you create the enterprise may be more likely to die

(Research papers Download News) we 'seed round with angel round of financing is too high will affect a company's A round of financing may be' conducted a survey, the following findings:

Founder angle: seed round or angel round of financing of $ 150-200 million would greatly enhance your chances of the A round of financing; above this amount will not have a negative impact on A round of financing, but will bring other problems.

Investors angle: seed round and angel round of funding of $ 1.5 million described above for this company successfully survived the review process as a whole will be more relaxed state of mind, however, before the A round of financing in excess of $ 3.5 million to the company will bring some pressure, mainly a previous round of financing can be greater than the amount of financing to maintain the company's sustainable development.

In the past few years, the highest rate of early stage financing experienced a rush of 'boom', a large number of 'angel' investors into the market, the company accelerator, seed investment funds after another round of micro VCs are increasingly on the rise.

Each investor to write a check for the amount of the average is not the same, but most of the company's seed round or angel round of financing are under $ 100 million. Of course, there are also a lot more than $ 1 million.

Here we can see the most famous negative example --Clinkle. This mobile payment record prices when the seed round of financing thaw got $ 25 million (the amount of history's largest seed round of financing). However, in the tens of millions at the hands of the grip, Clinkle rapidly fall into the abyss. Company Website no longer active before, not to mention the A round of financing.

Many investors believe that excessive financing is the root cause of many of the early stages of creating the ultimate failure of the enterprise. 'Financing round, the higher the price, the lower the pressure, the greater the round of financing.' Upfront Ventures of Mark Suster said so. Diluted high expectations, founders and employees equity, squandering corporate culture bud, these are the consequences of the early stages of creating high rate financing may bring.

However, Clinkle story is able to represent the overall trend in the early stages of creating circle rate financing it? Prior to create data-driven enterprise class shattered the myth, we found that many early stage investors are reluctant to 'spoil' a enterprises.

However, the financing problem of high how to say?

data analysis

To answer this question, we are on Mattermark from January 1, 2008 to August 1, 2016, more than 18,000 pen angel round, round seeds and A round of financing transactions were analyzed. We analyzed all US companies, across hardware, oil and gas, biotechnology, medicine, and other capital-intensive industries (the latter two industries have their own rules for financing the early stages). In addition, we have no record before the A round of financing or the total before the A round of financing is less than $ 25,000 a company excluded.

Why exclude the latter category company? Because $ 25,000 is not enough even to buy a few computers, if you press in San Francisco a few large enterprises concentrated area rented office record to count, you can rent about $ 25,000 for 18 minutes.

After the initial screening, we identified 5600 compliant company.

So, the higher the amount of seed round of financing the Company's performance in A round of financing in what?

1

The figure basic answer our questions: more than $ 150-200 million and creating more enterprises from the seed round and angel round of financing, the possibility of A round of financing is higher.

In fact, this result is reasonable, too little financing enterprises tend to create greater market traction before, had been gunned. However, if your first A round of financing more than $ 1.75 million, so every extra penny you actually have little effect on the A round of financing.

In other words, in the company of $ 1.5 to 2 million between 615 former A round of financing, 34% were A round of financing; A round of financing before the company between US $ 200-500 Wan, 30% -33 % of a company a round of financing. So, A round of financing amount of these companies and how? Whether the higher seed round of financing, A round of financing correspondingly higher?

2

After more than 1200 A round of financing cases analyzed, we found that creating enterprises and angel round seed round investor there is a positive intrinsic link between the company's A round of financing and financing with.

From the point of view more detailed level it?

3

On average, the highest rate of the A round of financing than the amount of seed and angel round wheel high, close to $ 3.75 million.

If the first A round of financing is too high, the highest rate of 'momentum,' seems to be the slack. We can understand from the perspective of financing the proportion of this.

A seed round of financing of $ 1 million, A $ 4.5 million round of financing record prices equivalent to 4.5 times the amount of the financing to expand; a $ 3.0 million seed round of financing, A round of financing $ 9,000,000 equivalent to half the record amount of financing to expand three times; a seed round of financing of $ 4.5 million, a $ 9 million round of financing record prices equivalent to 2 times the amount of the financing to expand.

Founder and employees dilution, as well as financing of early bleeding occurs before this problem is excessive A round of financing two of the most severely affected.

So, how much would record rate financing is more appropriate? In fact, this depends on several factors, but also the experience to follow.

In Y Comninator recently published guidebook seed round of financing, they recommended that seed round of financing of about $ 1.5 million would be sufficient (in San Francisco Bay Area 5 team record prices, the need to maintain 18 months of development to count). $ 1.5 million is sufficient to validate the idea of whether a company can gain market traction, and whether there is likely to open the A round of financing. (Source: Hunting cloud network text / Sun Yuan compile: China Electronic Commerce Research Center)

Internet Research Papers