Today I wanted to talk about the ‘tiny bubble’ that has shown up in early stage seed investing.
I have been consistently writing seed stage checks since 2005 so I trust my eyes and ears to tell you that prices are absolutely silly right now. The ascent to silliness seems to have happened overnight as until recently I only believed Y Combinator backed company prices to be silly.
I am seeing way too many startups without a full team or finished product raising 4 and 5 million rounds at $20 million.
Like all ‘tiny bubbles’ I have no idea how and when this will end.
There is A LOT of money chasing deals – thank you FED.
There are A LOT Of venture capitalists (new and old) flush with capital and A LOT of new seed investors flush with cash from exits and stock market gains from their employment of a $QQQ company eager to put money to work.
With the pullback in growth stocks and the crash in SPAC prices and now crypto, I imagine we will see a reset in seed stage pricing at some point soon, but this is all anecdotal through my eyes and ears.
Chasing/pushing prices higher at the seed stage puts so much pressure on the founders and companies to deliver immediately. It is really disappointing to see this sloppy behavior so early in the company life cycle.
In the meantime, I have just focused even more on my narrow domain experience until prices cool.
As for Sunday reads…
Ben Thompson has a good one titled ‘Distribution and Demand‘
Strip is the BIG fintech company that few have heard of because of their plumbing focus. This is a good read on how they build products.
Have a great Sunday. I am off for my long ride.