Managing Startups: Best Blog Posts

Chapter 43. Micro-VCs and Super Angels Two Years Later: Looking Back and Some Predictions for the Future

Rob Go

I was surprised to find that it has been more than two years since my post summarizing the state of the seed stage market, and trying to bring a balanced view on the rise of Super Angels and Micro-VCs.

The venture capital market continues to be in transition, and a lot of changes have occurred in the early stages of the market. In some ways, many of the forces that drove the rise of Micro-VCs are as strong as ever. But there are also a whole host of new questions that have arisen. Here’s my take on the state of things as they stand at the end of 2012.

The Dedicated Seed Strategy Continues to Have Strong Benefits

I call “dedicated seed funds” ones that, at their core, make seed investments. These are not funds that “do seeds but pile in on the winners.” Those are what I’d call more traditional “life-cycle funds.” Overall, I’d say that if your model is to “lead” the Series A of your best seeds, that is not really a dedicated seed strategy. To do that means that you have a large enough fund to write a $3–$5m Series A check, which is great, but creates a lot of misalignments that true dedicated seed funds have.

Given this definition, we continue to see dedicated seed funds providing strong benefits for founders, including:

Minimal signaling risk at the next round of financing

Chris Dixon has written most articulately about this, but many others have as well. ...