When it comes to seeking out investment from Venture Capitalists and Angel Investors, most entrepreneurs and CEOs feel some hesitation. There’s a risk here – after all, you’re giving away a piece of your company; and everyone knows that giving away a piece of your creation. But in the long run, Seed money can provide huge benefits to your company.
Already decided that seed money is something you’re going to need to grow? No problem – check out our blog on building the perfect pitch to learn how to attract investment. When you’re done there, feel free to send us an email and we can help connect you to some of the biggest names in Silicon Valley.
But for my readers who want more information, I have some good news for you: now is the time to get that seed money. Let’s take a look at some figures:
• By October 2015, Startups in the US had raised over $98 billion dollars. That’s almost $10 billion more than in 2014 – and 2015 wasn’t even over;
• Investments of $100 million (a.k.a. Mega Rounds) or more grew by 125% from 2014;
• 23 startups were valued at over a billion dollars, a feat once so rare that companies to achieve this number were called “Unicorns.”
Venture Capitalism vs Angel Investment
The one downside to the trend we were seeing in VC investment was a decline in seed money. First-round investments only made up about 28% of a VC Investment. But never fear my fledgling #Startups – this is why they made Angel Investors!
Angel Investors tend to be stand alone individuals – people who have substantial personal wealth and who are willing to invest it in companies. Traditionally, Angel Investors are much more likely to invest in seed money investment rounds.
People like Steve Anderson (just named to Forbes “Midas List”) look towards startups that ready to enter the market. Generally, these funds tend to be between $25,000 and $100,000, though this number isn’t set in stone. VCs, on the other hand, come in during a different startup investment round “Series A” funding. This takes place when startups are in the market, but looking to grow.
To drive this point home, the well known investment matchmaking company AngelList just launched a Seed fund. A seed fund with $400 million in it. So while VC interest in Seeding startups is down, Angel Investor interest is up. Ready to get started? We can help you build a demo to show investors – for as low as $2,000.
But just because Angel Investors are more likely to seed a startup doesn’t mean we should walk away entirely from Venture Capitalist Firms. We talked above about the stats from 2015, but let’s talk about the first 3-5 months in 2016 – months that have already proved record breaking:
• SnapChat just entered a new series of funding. Series F, which was funded by legendary VC firm Fidelity, gave the company with $175 million dollars, raising the value of the company to $16 billion
But that was that was March. A whole 2 months ago! That means it’s time for more money. This is an “expansion” of Series F (called FP), but what is clear is the company raised another $200 million. The company is now valued somewhere between 20 and 22.7 billion dollars. This makes it among the top valued companies funded by VCs.
• Just recently, the EdTech Startup Bloomz received $2.3 million in a new series of funding. While not as impressive as SnapChat, but venture capitalism 101 states that when VCs invest multiple millions, they see massive potential.
• As of the end of 2015, Bitcoin startup firms broke global funding records, raising over a billion dollars. Why? It’s not the currency; it’s a piece of technology called the BlockChain. BlockChain is what makes the BitCoin network so secure. Far, far more secure than what most banks use today.
And tech encryption and security will probably be among the most valuable sectors in the tech market. This is an excellent demonstration of how VCs view projects: they may not necessarily think your actual product is a winning one, but they may see value in the underlying technology.
• We’ve talked a lot about VR on this blog, from how we watch TV to how we train surgeons. The reason for that is because it is one of the fastest growing industries in the world. And investors agree with us, having funded over $4 billion dollars worth of VR startups since 2010.
• In the first 4 months of 2016, VC firms have raised more money than any year since the year 2000. At the end of March, the Wall Street Journal announced that 13 billion dollars had already been raised – almost half of all monies raised in all of 2015. In fact, let’s take a look at some of the biggest funds:
○ General Catalyst Partners
♦ $845 Million
○ Founders Fund
♦ $1.3 Billion
○ Battery Ventures
♦ $950 Million
○ Lightspeed Venture Partners
♦ $1.2 Billion
○ Accel Partners
♦ $2 Billion
We Got the Network, You Got the Ideas
So yea, there is a whole heck of a lot of money floating out there, just waiting for the clever entrepreneur to snatch it up. Luckily for you, SDI can help not only plan a presentation and build a demo, but we can even help connect you to the Venture Capitalist network in Silicon Valley.
We’ve operated in the Bay Area for a long time and over the course of that time we’ve built a substantial list of the biggest Venture Capitalist firms and Angel Investors out there. All you have to do to get your hands on that list is pick up the phone and give us a call at 408.802.2885 or contact us. Get in touch soon for a free consultation and quote!