The
term “series A crunch” has been moving eastward from California, like valley
girl speech, “ya know.”
The
table above appeared on the front page of yesterday’s San Jose Mercury News,
signifying that the “crunch,” the fiscal cliff of our innovation economy, is
ascending from tweet and blog status into the mainstream. The entire infomercial is titled “ 'A-Round crunch' worries Silicon Valley startups looking for funding to grow beyond seedstage.” You can probably guess the contents.
Check
their premise: “Widespread consolidation in the venture capital industry means
there are fewer places than ever to find big cash infusions.” Calling what is
happening in VC a consolidation is like calling the Titanic a consolidation in
the cruise ship industry.
The
News fails to grasp that the seat of investment power has shifted and that
today the angel community contributes more funding and support to entrepreneurs
than venture capitalists. Putting on my
analog hat (the one with the propeller on top), I read from the chart that, in
the first six months of 2012, 900 new enterprises received seed funding while
only 380 received a series A round. The
numbers from my favorite source, the Center for Venture Research at UNH, show
that in that same time frame, 27,280 ventures received $9.2 billion in funding
from 131,145 individuals; these numbers had all increased over the previous
year. If you redraw the chart using these numbers you will fear much less the “class
A crunch.”
Well said, but I think the article would have been better if Delevett had also included a spokesman from the Band of Angels, the Tech Coast Angels, or a similar group that is active in the Angel Capital Assn.
As for the VCs, before Chris O’Brien left the News for the LA Times, he wrote an article “Venture capital: Is this a down cycle or a death spiral for the industry that fuels Silicon Valley?” Once again, you can guess the rest.
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