Seed Funding Slows in Silicon Valley (reuters.com) 66
The bloom is off seed funding, the business of providing money to brand-new startups, as investors take a more measured approach to financing emerging U.S. technology companies. From a report: Seed-stage financing has been sliding for the last two years, with the number of transactions down about 40 percent since the peak in mid-2015, data show. Dollar investments in fledgling companies have also declined, although less dramatically, dropping more than 24 percent over the same period. The slowdown comes despite an explosion of interest by wealthy individuals and foreign investors looking to park money in the next big thing. And it has potentially big implications for Silicon Valley. Early-stage funding is the lifeblood of a technology ecosystem built on risk-taking. Denied critical resources in infancy, companies can't hope to scale quickly enough to unseat incumbent industries and grow into the next Uber Technologies Inc or Airbnb. "The reason why startups are disrupting companies in the 21st Century is not because they are smarter. It's because they have capital to do so," said Steve Blank, a serial entrepreneur, startup mentor and adjunct professor at Stanford University. [...] The zeal that prevailed just two years ago has faded. Seed and angel investors completed about 900 deals in the second quarter, down from roughly 1,100 deals in the second quarter of 2016 and close to 1,500 deals during that time period in 2015, according to a report released last month by Seattle-based PitchBook Inc, which supplies venture capital data. The dollar amount provided by seed and angel investors was $1.65 billion in the second quarter. That's just shy of the $1.75 billion for the same time period of 2016 and down significantly from 2015, which saw $2.19 billion invested into fledgling startups.
US stock market at record highs (Score:2)
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or it went into some cryptocurrency,...
seeing the amount fo bull$hit that was funded, lower funding counts might be a good thing,...
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There are a lot of stories about products that seem so far fetch that made it in spite the general consensus.
If they figured the Personal Computer would be a big Hit, HP wouldn't had let Apple start its own company. But because they figured there was no real money in it they allow Woz the rights to use the technology.
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There are a lot of stories about products that seem so far fetch that made it in spite the general consensus.
Name 3 "far fetched" products that "made it" (to sustainable profitability) to come out of silicon valley in the last decade.
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Sorry, you misunderstood my intension. ;)
'made it' = got funded
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Well being the market is growing, a lot of investors will invest in it... However investing in a startup could have great rewards if a success.
THE UNICORNS ARE DISAPPEARING... (Score:2)
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April 2015. Look at the unemployment numbers. Down, down, down, ... still down, but not as quickly. Inflection. I've been saying that such an inflection indicates the recovery is over, and that the long historical trend is to enter a new recession about 2 years later.
This is actually a large part of my justification for a Universal Social Security: to diminish the strength of recessions, to reduce their duration, to speed their recovery, and to protect the working-class American from the loss of lif
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Since the late 1950's, the end of the decade has always had a recession of some kind. Sometimes it's a bit late and sometimes a bit early, but always there. Even before the 1950's, there's been roughly a 10-year pattern also. (Wars tends to jack up the economy, mucking up the pattern. Great stimulus, but deadly of course.)
The only thing I can see preventing or delaying it is pent-up demand due to the large mortgage bubble recession: the economy has yet to get to "full steam" because of side-effects of it, s
Look outside of Silicon Valley. (Score:5, Interesting)
Like a lot of business incubator locations. There is a point where it is no longer the home of fancy startups and the home of the boring business. The cost of living is so high in Silicon Valley, it is too expensive to start a company there. However you can start a company in the newer business incubators say in Upstate NY, or in a rural town trying to attract technology firms.
The investors are following the new businesses, so a small business that can pay the rent for their business and their living for less than a $2000 a month. While selling products at the same price as the more expensive locations.
Also the 1990 New Economy that sparked Silicon Valley, had been proven a great failure. So while technology is hot again, it is far more reserved, and will not classify a pet food store as a tech company because it sells its product on the internet at a loss.
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I wouldn't say so...
However it more or less started as a way to offset your cost while commuting with a tool to show who needs a ride. However their business model has changed, for a tech company to a Taxi company. The technology developed, is just to keep the business running.
Re:Look outside of Silicon Valley. (Score:4, Insightful)
However you can start a company in the newer business incubators say in Upstate NY, or in a rural town trying to attract technology firms.
And then you get to find out what "massive staffing problems" are.
You can't just declare "We have an incubator and are cheap!". Companies are going to need skilled workers to hire, and rural towns as well as Upstate NY do not have a large supply of those. Skilled workers are moving away from rural towns and out of the rust belt in general.
"But we're cheap" will not reverse that. Because you're cheap. They want a nice place to live and raise a family, and that requires spending money on schools an infrastructure that you can not do while fighting to be the cheapest place.
Finally, the people running the business are going to have to want to live there. If you don't have a super-rich part of town for them to live in, they're not coming.
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I'm not so sure about that. Unless you're building a company out in the middle of nowhere, it seems like it'd be a perfect opportunity for the right people to ditch SV and live somewhere less hectic. Let's say you start up in a semi-fancy suburb of a lower-tier Northeast city. Compared to California, real estate is so cheap and plentiful that anyone owning or renting in CA would immediately experience a quality-of-life bump. California housing starts at $1 million or more in desirable areas like LA and SF/S
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I'm not so sure about that. Unless you're building a company out in the middle of nowhere, it seems like it'd be a perfect opportunity for the right people to ditch SV and live somewhere less hectic
The issue is there's not a lot of people who will accept a large pay cut to do so, even if their expenses are drastically cheaper. Which means they aren't going to be cheap employees, which means your new company just lost the reason to be created in that location.
There's also plenty of places that are not as "hectic" as Silicon Valley yet are not rural or rust belt. They've got much better infrastructure, schools, etc, so they're far more attractive to those less-hectic-seeking employees.
Quality of Life (Score:2)
... anyone owning or renting in CA would immediately experience a quality-of-life bump. ...
On paper, yes. But quality of life for most people is measured by more than the footprint of their living space. They also want to know that they can meet people like them, that they can have a good social life, that their family will be accepted, that their kids will have access to meaningful activities and academics, etc...
For example, I have run into a number of people who have faced a lot of discrimination in a certain state because of their ethnicity or the color of their skin. They wound up fired and
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The Bay Area climate is a suggestive advantage. As a north eastern myself I actually like having distinct seasons Hot Summers, Colorful fall, Snow Covered WInters, and Warm Springs. Going to areas it helps separate the year and allows you to very your life outside of work.
Re:Look outside of Silicon Valley. (Score:4, Insightful)
You're missing the key thing that makes and keeps SV so attractive despite it's disadvantages - if the startup you're working for folds, there's ten others hiring tomorrow. You don't have to move, you just change your commute. If the startup you're working for in Bumfuck, NY folds... it's going to be much harder to find comparable work without pulling up stakes. (And much harder to jump a sinking ship.)
This also works to the disadvantage of the employer. You're no longer competing to hire the best currently available, but the much smaller pool of the best currently available willing to re-locate to Bumfuck, NY. It's also harder to attract capital because of the same density issues that make SV attractive to employees.
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I'm not so sure about that. Unless you're building a company out in the middle of nowhere, it seems like it'd be a perfect opportunity for the right people to ditch SV and live somewhere less hectic.
Your workers are taking a large risk moving across the country for your company. If you were in San Jose, and in a year they were not happy, they could change jobs again. If they move to upstate NY, and it doesn't work out, they have to move a second time. You need to get most of the people at a company to take this large risk at roughly the same time. You are going to have to pay a large premium for that risk.
As long as you can convince workers that it's not worth the massive premium to live near San Francisco, it could definitely work.
No one likes San Francisco, but finding a place everyone wants to live so badly that they wil
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You are creating a false dichotomy between "the cheapest place" and "not one of the most expensive places to live in the country."
Nope. The places being discussed (rural areas, upstate NY) have only been using the strategy of being cheaper than other places.
In upstate NY the rallying cry is "Albany's high taxes are why we have no jobs!!".
Rural areas don't have anywhere near the infrastructure to compete on anything other than price. When the roads aren't paved, you're not going to be charging a premium.
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Yeah, and the degree to which that strategy is applied exists on a spectrum, not a strict dichotomy. Now, granted, the arguments proposed don't state that explicitly, but I'd chalk that up to considering it obvious that there are limits, at least to people that aren't delusional shitheads who think rural areas don't have paved roads.. For a more concrete example, there's the Research Triangle in North Carolina. It wouldn't be properly classified as rural, but it's a lot cheaper than Silicon Valley.
The
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The cost of living is so high in Silicon Valley, it is too expensive to start a company there. However you can start a company in the newer business incubators say in Upstate NY, or in a rural town trying to attract technology firms.
No. It is too expensive for startups with certain kinds of business plans. To varying degrees, that has been true since the 90s, when there were some people here on /. declaring that $350k houses were pricing everyone out, and surely everyone with a family would rush to Nowhere, USA for the higher standard of living.
Not every business benefits from being in or near the Valley. That has always been true.
One important advantage of the Valley is it is possible to hire up (relatively) quickly, and get expe
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So while technology is hot again, it is far more reserved, and will not classify a pet food store as a tech company because it sells its product on the internet at a loss.
I'm not so sure about that... [miamiherald.com]
Seeds? (Score:1)
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There are still a lot of good startup opportunities. The problem is starting a business from nothing is harder now. It is more complex then living off noodles for a year, but trying to make enough with your second job to survive while having enough time to make your own business is difficult. Partially due to Minimum wage not matching what is needed to survive in given areas. Then there is the fact college students are under heavy debt, that they are now asked to pay back, until their credit is good enou
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That the same set of regulations apply to multiple parties doesn't mean that there is no relative advantage. For example, if the cost of compliance with a law is roughly a million dollars, regardless of the size of your business, Apple, Google, or Microsoft can afford it without blinking, while a startup could be crippled by that kind of rule.
Parent post is mostly delusional in blaming Obama, but your premise is deeply flawed, and ignores that our system has slid much deeper into oligopoly.
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I'm not talking about any particular compliance cost, as none of us would be likely to have a strong grasp on the particulars there. I'm pointing out that a law applying to all parties doesn't mean it can't convey a relative advantage to some.
I know it's shocking, but sometimes largely companies have the benefit of economies of scale, and those benefits may very well carry over to regulations compliance.
#blametrump (Score:1)
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While I am not a Trump supporter, the things I hoped from his presidency, was some real attempt to upgrade our infrastructure. Not an infrastructure week science fair.
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If he takes credit for things he's barely touched, then it would be fair game to blame him for down-turning industries he barely touched also, no? (Including automobiles)
Both parties have been blaming or crediting the current President of the time for gas prices even though they usually have very little to do with gas prices. Any changes in drilling laws/rules usually take several years to affect supply.
It's silly political games. The problem is, such games often "work" on voters, who are often naive or sho
The bubble is running out of air finally? (Score:4)
Every week, I see stories that make me check whether it's 2017 or 1999/2000. I'm honestly glad to see that fewer crazy startups with dubious chances of profitability are getting money. There's legitimate investment and then there's chasing an IPO fueled by stupid peoples' money.
The thing that's different about this bubble is how slowly it inflated and how slowly it's deflation will likely be. I think most of this is due to the public cloud. Back in the 90s it took a massive purchase of datacenter space, hardware and network connectivity to "get big fast" like everyone was trying to do. Now, the VCs just have to pay the AWS, GCP or Azure bill every month instead of putting up millions in up front infrastructure costs. It leaves a lot more capital free for expensive offices and employee perks...er...I mean, strategic R&D investment.
Nope and nope (Score:1)
misleading headline (Score:2)
Seed funding for new startups is down. No need to qualify for Silicon Valley. This isn't a geographically isolated problem, or a problem with a single field. It's a national pattern that is also present in biotech, hardware, services, etc.
This is very significant. Generally, small businesses growing into medium and large business drive the economic growth of the country and account for most of the new job creation. Last year, we were already at a 30 year low for population adjusted rates of small busin
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