WHAT? The big old venture firms are turning more risk averse? Well at least in the very early “seed stage” of investing. Seems that early stage “seed” funding has been declining for a while now and almost drying up. Are venture funds getting “old” and stingy with their funding? OR, is it a strong shift toward initial coin offerings (ICO’s……..or, TGE’s-Token Generated Events). ICO’s/TGE’s are THE hot new financing vehicle BUT here’s a thought; perhaps the VC world is getting shaken by not being able to extract those huge equity hunks early stage startups have to give up. Oh gasp, a disruptive force in the venture world. Scary.
Two trends are combining to create an interesting market moment: As seed-stage capital in the United States slips, ICOs are forging ahead. The dynamic is notable as it shows that as some investors are pulling back from super early-stage investments, amateur investors are piling into new funding mechanisms for nascent projects.
This could indicate that venture capitalists are de-risking their activities by curtailing investments into seed-stage companies, the riskiest of startup wagers, while confidence in the crypto markets is moving in the opposite direction, allowing incredibly speculative ICOs to thrive.
The trends divergence is notable, but not as clear as we might have hoped. That the ICO market may replace some early-stage venture activity is directly hinted at by the purported VC panic over the coin offering boom. But the decline in seed-stage capital funding isn’t a new trend, at least in terms of round count. And the ICO trend doesn’t only fund concerns that would have sought traditional seed capital.
But we have a grip of data and a bright sunny San Francisco day, so let’s dig in to see what the contra trends of rising ICO revenues and falling seed rounds in the United States can tell us…
Full Story at Crunchbase