Garbage in, Garbage Out – Yes Indeed

Renee DiRasta had a good post talking about conflicting data about seed activity. I don’t think some of her assertions about the data sources being similar for data providers are that accurate which I talked about on Twitter (see below). I also commented on her post that the whole seed deals are falling narrative is laughable.  Here’s the comment I left on her post.


Anand here from CB Insights. Great thoughtful post. Thank you.

Five reasons that came to immediately came to mind on why the whole seed is declining narrative doesn’t pass the most basic of smell tests. If I spend an hour thinking about this more, there are probably others.

1. 2014 was a record year for the # of seed or micro-VC funds being formed. Unless there are a ton of micro-VCs sitting on the sidelines, there is more seed capital than ever before. Data on this trend here –

2. The number of active seed investors climbed in 2014 as well. We’ve defined active as those doing at least 4 deals per year. There were 138 seed funds alone in 2014 who did that many deals. Data on this trend here –

3. The data in #2 doesn’t include corporate VCs either like Google Ventures and others who are increasingly doing early stage seed deals. In other words, the # of seed VC investors is even greater if you include these other VCs.

4. Sentiment is very positive and sentiment is a driver of investment. There are an increasing # of companies raising money at billion dollar valuations. There were 38 new ones added alone in 2014 ( The seed falling narrative would suggest seed investors are so contrarian that they are scaling back their investment activity even while mid and later-stage investors are ramping things up.

5. Beyond the healthy mid- and late-stage financing environment, exits have also fared well. IPO activity to VC-backed startups were up in 2014 vs. 2013. And M&A activity, some of it quite large, also remained strong. ( Again, a healthy exit environment should motivate seed investors.

The reality is there is no plausible, coherent reason or data to suggest that seed deals should have declined in 2014. Yup – garbage in, garbage out.

Thanks again for writing this.



Re: Renee’s point about the data sources being similar, here is what I said on Twitter.

I think the 3rd point above is the key one. It is good to see more attention being given to the private markets. And ultimately, there will be sources ranging from the Bloomberg style ones where data comprehensiveness and quality are high but where the price tag is also a premium one. And then there will be your Yahoo Finance ones where data is murkier in terms of quality but the price point is more accessible or free.

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