The State Of The Early Stage Financing Market

I am headed out on a bike ride with my daughter this morning and don't have a lot to say today. But I did read an interesting post by Semil Shah where he outlines what he thinks is going on in the early stage financing markets right now.

He starts with this observation:

Young founders are incredibly influenced by the online brands of certain investors. 

And so that's why I post every day, even when I don't have anything to say πŸ™‚

But go give Semil's post a read and do me a favor and have the discussion about his post on his blog, not here. He deserves it and I don't. And I'll make sure to engage there as well today.

#VC & Technology

Comments (Archived):

  1. Aaron Klein

    We’ll see if AVCers have the discipline not to post a single comment he…whoops.

    1. Semil Shah

      This is, and will always be, the best place to comment.

      1. ShanaC

        we try to make it a good experience for a range of people

      2. Aaron Klein

        Great post, btw. Nice summary of the same points I’ve been hearing from friends who are entrepreneurs.

        1. Semil Shah

          Thanks Aaron. Have you been hearing anything that’s not on my list?

  2. Richard

    Silent Treatment (shhh)

    1. Semil Shah

      Ha! I see what you did there.

      1. Richard

        Another cool thing I learned in highschool baseball

  3. Kasi Viswanathan Agilandam

    So what was the tech topic you talked about with your daughter during the ride?P.S. That is a very relevant question to the TODAY’s post …sorry addicted to post comments only here at AVC.

    1. fredwilson

      we talked about mobile and web apps that help find rental apartments

      1. Richard

        What’s your take on the exhisting apps?

        1. fredwilson

          don’t have an opinion yet but Jessica is going to use all of them and we are going to develop one

          1. awaldstein

            Share your discoveries if you feel like it. Real estate went on line early and still is woefully lacking for the most part.Concierge driven is the trend but generally, for rent or buy, in a market as complex as NYC, all is a too big compromise.

          2. pointsnfigures

            seen a lot of management apps for apts., but not a good search. There was one company in Madison, Wisconsin, and I am reconnecting with them this week.

          3. Drew Meyers

            Would love to hear your thoughts re what is lacking. I’ve spent 6 1/2 years in the real estate industry, so it’s a discussion very much up my alley.In fact, if anyone in the AVC community wants to do an analysis of anything geeky and real estate related, I run a re tech blog – Geek Estate – that I could highlight it on (or someone could guest post there if they want thoughts from an industry audience).

          4. awaldstein

            I’m not in the field at all so take everything with a grain of sand. You can ask for details, I may not have them.Generally, everything I’ve seen deals with the idea of what’s available rather than what you want. That metaphor is the starting point and that’s the problem from my outside view.Where is the listing that shows every available pop up that is open for small merchants for the holiday season from the LES to the stalls in Union Square?If you are looking to have a juice bar in the East Village how do you find the ‘windows-to-the streets’ that could be used? The lean to off of a grocery in the alphabet streets that has ‘permits’ to allow for making and selling and is kosher enough to still get insurance on?NYC is super complex. At one layer it works, At the others its all people to people, endlessly. That works as well but its hardly a system.

          5. Drew Meyers

            There is a lot to be desired, for sure..In my case, in a relocation scenario, I’m looking for social context (written in 2011, but still relevant) –

          6. awaldstein

            Like I said, I’m just a user. As a user in NYC, it’s woefully lacking.

          7. Richard

            I’ve been hacking on something with some secret sauce to engage users.

          8. Matt A. Myers

            Isn’t that a description of what we’re all working on? πŸ™‚

          9. Richard

            … Apartment hunting

          10. Matt A. Myers


          11. Kasi Viswanathan Agilandam

            by we u mean … your daughter …good for her…. young minds can really come up with something interesting.

          12. Drew Meyers

            curious your take on Street Easy…a NYC company which my old employer just purchased for $50M

      2. William Mougayar

        Then have her check this one in case it’s not on her list. read they did $10M in revenue after 4 years bootstrapped.

        1. fredwilson

          will do

          1. Dale Allyn

            Might like to know about Cozy also:…That’s the page for renters. More info on the landing page and in the footer.

      3. ShanaC

        in ny, there sin’t anything really good because most landlords are small

      4. Kasi Viswanathan Agilandam

        real estate is a boon and curse to Indian market.Boon: There are no unemployed youth here in India … all of them are real-estate middle men.Curse: deserted lands are selling at a price more than gold….Real estate is not any more REAL.

  4. jason wright

    what is your syndication fee?is summer over?

    1. Semil Shah

      Yes, I wired funds to his offshore account.

  5. awaldstein

    If there ever was a hand off for this post, this is it:–>You can’t airlift community

    1. William Mougayar

      Well, Fred just air-lifted us to Semil’s.The other airlift destination today is my blog, celebrating 10K of comments:http://startupmanagement.or

      1. awaldstein

        Any time you use Fred and avc as the norm or a model to be copied and stamped out, you will fall sort. If you are saying that it is done today and so it can be done as a norm…the market proof is not on your side.Cute but no cigar my friend πŸ˜‰

        1. LE

          Oprah’s favorite things come to mind. Or her book choices.

        2. Semil Shah

          Another example is that I once blogged about a show Jerry Colonna did with Jason Calcanis, and Feld picked up it and basically all the Mobius and Flatiron guys tweeted it and commented. But still, nothing like AVC.

          1. awaldstein

            We are not disagreeing about the power of the network. Certainly.Nor about the level of conversation dynamics that Disqus makes possible.But what is the discovery mechanism? It’s intraplatform. Intranetwork, not one thread that connects it all together is my bet.Great discussion btw.

          2. Semil Shah

            Yes, great discussion. I see your point. I guess, from my POV, I move around tech blogs with Disqus and then see “related” posts etc. and feel like that’s a network, but maybe, like you say, it’s not a discovery tool.

          3. awaldstein

            I truly admire Disqus and its potential to change the web. And have a been a huge booster for it amongst my networks that extend way beyond tech.I come from the community space and saw it originally as the realization of things we were trying to do at Electric Communities and the Palace and the early communities. Of communications that I tried to wire into the BBS systems I ran in the early days.Things change. The web changes and so do people’s behavior.I simply don’t see the world as single platformed any longer. I see massive growth in community structures on Facebook regardless of the really primitive nature of its commenting. I see companies like Kickstarter with no internal community structures but with the extended web as its marketplace. I see place basically fading and community existing between platforms and networks.Great stuff. Great meeting you and getting to know your blog.BTW–Disqus wasn’t the discovery mechanism, Fred was and the connecting context of the work we all do that touches on each other. Disqus, thankfully made it all the more fluid and easy. And will let me find this conversation with ease tomorrow.

    2. Semil Shah

      Yes, I found William through AVC and now we are friends, and I have had many people find my blog through Disqus. I can say, firsthand, it works.

      1. awaldstein

        Big Disqus fan and have been blogging on them since October 09 actually (Comments, Conversations and Community smart plumbing and platform. The network of connections sits on it but it is in no way a network–or so I think!

        1. Semil Shah

          I do feel it is a network (especially recommendations, and then moving around familiar blogs):

          1. awaldstein

            I’ll sleep on this, read your post and see if you can change my mind.Happy to be wrong.

  6. baba12

    “But go give Semil’s post a read and do me a favor and have the discussion about his post on his blog, not here. He deserves it and I don’t. And I’ll make sure to engage there as well today.”In today’s world where the powers that be whether in various agencies of government or public/private companies seem to claim that they are getting more transparent than ever before while in reality they are just doing a better job of “bullshitting” and a larger group of people in the public that has become stupid with a higher level of Attention Deficit Disorder (ADD), it is not easy to want to follow Mr.Wilson’s advice to comment on some other guy’s blog as of all the various conspiracy theories that float around in industry and government and how some of them come out to be true.The only reason to click on that link and read is based on a certain amount of trust that is placed that mr.Wilson would not pimp someone because he either is or going to benefit from pimping…I read what this other guy has to say and to me it is not something that I am not aware of nor is it something that is not known to most folks who either read AVC or other blogs. This audience that reads AVC seems to be astute and pretty aware of trends and understand the variety of games played in the world of investment strategies.I read AVC as connect with Mr.Wilson in terms of certain values and I can have a coherent cogent discussion with him and many others who read his writings.I don’t think I will comment on the topic on that person’s post as I don’t have anything of value to add to the discussion nor do I wish to engage in dialog out there.

    1. Semil Shah

      Hi there, I’m not sure I understand your comment. Could you rephrase?

      1. baba12

        Ok I shall rephrase:-What you have written in your post today, most of it is known to many who reads AVC.Only reason I clicked on the link and read the blog you have written was because I tend to value Mr.Wilson to not share such things with some ulterior motive.I would assume that sharing of this link by Mr.Wilson has significantly increased the readership of your post.Generally speaking many times when such things happen i.e someone like Mr.Wilson sharing a link it involves some kind of marketing and or cash compensation etc. But in this case I doubt Mr.Wilson profited from sharing this article.As for what you have written about, I would say the observations you have made are pretty much true and known to many.If you have time check this out

        1. Semil Shah

          OK, so now I understand what you’ve written — but what’s your overall point?

  7. andyswan

    The currency of comments knows no borders.Nice post, Semil.

    1. Semil Shah

      I agree, Andy. I learn so much from Disqus.

  8. John Revay

    “I am headed out on a bike ride with my daughter this morning and don’t have a lot to say today.”Enjoy the ride – I played hooky Friday and went on a one day beach/camping trip to RI with our daughter

    1. Semil Shah

      I wish Fred went on more morning bike rides! πŸ™‚

      1. fredwilson

        i try to go on bike rides three mornings a week and generally do that

  9. LE

    “do me a favor and have the discussion about his post on his blog, not here.”Sure, but with respect to this:In the back of my head, I knew this was important, but boy, it’s just incredible how much of an influence a blog with no real additive value can have. Perhaps I was naive to begin with.I’ve always found this to be true and you could call it a cousin to “you can lead a horse to water but you can’t make them drink it”.The situation with your influence is easily reversed engineered and obvious right from the start. But yet there are people out there that apparently are still surprised at the impact even when you state quite clearly that it’s your “secret weapon”. Even discounting people who might know what you are doing but not want to take the time to do the same thing.Reminds me of when I built an entire business with yellow page advertising but yet competitors failed to want to spend the money on the same way thinking surely that I (as well as others who I had copied which is where I got the idea) were throwing money out the window.This is what makes business so interesting. It’s not just knowledge it’s application and understanding of the knowledge that can make success or failure.By the time the “secret” becomes commonplace and ubiquitous and 80% do the same it’s to late and the impact is gone. You have to recognize things at the early stages to gain an advantage like you have done.

    1. Semil Shah

      Great comment. In part, this is why I’ve focused on video, as well.

  10. Brandon Burns

    So basically, if entrepreneurs were to pull a Fred Wilson and back the underdog, they’d seek funding from folks who are nothing like the popular Fred Wilson. πŸ™‚

    1. Matt A. Myers

      And so they better be offering more of something then …

    2. Semil Shah

      Ha! To a degree. Maybe smaller rounds or carve outs. For what it’s worth, I have seen founders make carve outs for people who fit this profile.

  11. ShanaC


  12. David Semeria

    Dude’s smart

    1. Matt A. Myers

      Apparently someone doesn’t find your comment of value. πŸ˜›

      1. David Semeria

        I’ll live Matt

        1. Matt A. Myers

          Oh thank goodness

    2. Semil Shah

      Thanks! But, overall, I try to use my blog as a means to learn about technology and entrepreneurship, as I’m playing catchup! Would appreciate any feedback you have.

      1. David Semeria

        You write with efficiency and make strong, clear points. The only possible feedback I can give is to continue in the same vein.

        1. Semil Shah

          David, that is probably too generous. On this note, I have been thinking about my writing frequency — I end up doing 1-2x per week, and I think I would fail at doing daily. As someone who reads often, what’s a good pace?

          1. David Semeria

            Great question. I wish I knew the answer.Fred blogs religiously once a day whereas Paul Graham averages once a semester.I think it boils down to two aspects: scope and quality. Fed’s focus is very broad which allows him many more topics on which to kickoff a discussion, whereas Paul’s is extremely narrow.It goes without saying that if the post does not provide honest insight or is badly written, any effort will have been in vain.It also doesn’t do any harm to be a very respected industry figure with a track record people would die for πŸ™‚

          2. LE

            “Paul Graham averages once a semester.”Graham has built in extra traffic and attention from Fred doesn’t.If you are referring to Graham’s “essays” they are essay’s they aren’t really blog posts.Further Graham also has people check his “essays” (see the bottom) before putting them up there (something that I think takes away from the raw nature of what a blog is and makes it more like a vetted speech.)

          3. fredwilson

            What Paul has done with his essays and HN is brilliant.

          4. LE

            HN is great and I go there everyday.That said there is much room for improvement at HN (fair amount of censorship and “hellbanning”, Graham tends to be very parental. I’ve even seen him say things like “you all should get back to work” Seriously.). Grimlock, Kid and SigmaAlgebra wouldn’t last very long (in their raw form) on HN. It’s also a little silly seeing how everybody drips on his every word about everything with very little kickback. Any kickback is usually met with defensiveness (as opposed to your “thank you sir may I have another!”. So it would be definitely possible for someone to duplicate and steal traffic from HN with a new venture. (Not to mention enlarge readership by using an easier to find URL than the hidden club of attraction at AVC is you. Someone can’t can’t simply spend money and buy a “you”. There has to be a “you” that wants to put in the effort to do what you do (and even then there is room for 10 or 50 of you). And that “you” has to have a few hits so that there is a halo effect and people have a reason to listen to what “you” have to say. And they have to have loyal commenters that show up every day or regularly to be the recognizable “micky mouse”. And the amount of comments has to be “just right”. Not 7 and not 800.HN otoh is essentially comments to stories and an algorithm to rank them.All those things can be duplicated with the right amount of money. Starting with the top commenters who could most likely be bought.My guess is that if someone were to cherry pick the top commenters (“the content”), cut them into the action, and give them a new home the resulting product would stand a good chance of success.Especially if those commenters were given a chance of getting into VC investing or advising or had some small cut of the action in any successful startup company.

          5. fredwilson

            I hope that doesn’t happen

          6. Semil Shah

            Ha! Yeah, a track record helps. Thanks for your insights, am mulling over.

          7. LE

            I think you need to do it daily in order to build an audience. It has to be frequent enough that it becomes a daily ritual and the same people visit over and over again. Not that you wouldn’t get traffic elsewhere of course.If you are going to do it only 1-2x per week then you need to do it on the same day(s) each week. So people know to check at predictable times.The posts should be short as well. Better to do multiple posts on a long topic than a single long post which people will bail out of.

          8. Semil Shah

            Good ideas. I’ve been keeping a weekly column at TechCrunch which posts every Sunday at 10am, like clockwork. Otherwise, I post randomly on my blog, but I like your idea about a regular time. Need to think that over. Thanks.

          9. Drew Meyers

            Consistency is what matters. Not the actual pace. People just need to know what to expect. People expect a daily post here because that’s the way it’s been for so long. 1-2x per week is fine in my book, if you do 1-2x every single week.

  13. andyidsinga

    not just young founders πŸ™‚

    1. fredwilson


    2. Semil Shah


  14. jlm2166

    I’ve just received my first Series A termsheet and as a “young founder” in today’s market, 1 clear take home observation I’ve arrived at is: do whatever it takes to get an exit, even if it’s a small one (that is not a “homerun” for the VC), because it will be massively weighted in favor of the entrepreneur in future business you raise financing for with regards to terms. Fred (and other investors), do you think 1 exit is more likely luck vs ability to be a repeat/serial successful entrepreneur based on your experience? Also, do you think this is something unique to today’s market, where there are so many seeded funded companies, i.e. a mechanism to weed out the chaff?

    1. pointsnfigures

      depends on your business, exit value and who acquired you.

  15. Joseph Valente

    I imagine this has a lot to do with the fact that younger founders don’t know anyone except through their online presences because they don’t have well developed networks.This is true also for people outside the valley in my opinion. I know that Chris Dixon said somewhere that having his blog was very important because he was based in NYC (I think he said it in his PandoMonthly fireside).I’m both young and based in Australia and while I know the names of heaps of investment firms, the only people I could honestly say I’d love to work with are people who give regular insightful commentary via their blog. This is also true for Quora where I know a number of VCs are active and give solid commentary.I can meet more people when I’m in the States, but it is harder for me to make that assessment of someone when I’m starting from zero. It just makes it possible for me to get some insight without the ability to even speak to someone. I think this is as true for the clever American youngsters in Ithaca or Champaign or Peoria as it is for those of us sitting at our computers in Melbourne, Santiago or Naples as well.

    1. Semil Shah

      Great comment, Joseph. I sympathize with your view. Even though I live in the Valley, I do feel like an outsider, so having my blog and using it to interact with the world has been a great experience.

  16. Drew Meyers

    It’s funny that Fred asks for no comments here, and still gets 74 of them (and counting)

  17. Fayyaz Ahmed

    I expect going on a bike ride in a couple of days with my chum.