Source | entrepreneurshandbook.co | Corey Singleton
Without a doubt, you’ve heard reports that the VC industry is booming. And it truly is; bigger deals, bigger exits, and bigger funds are making a splash in Venture Capital.
After all, who could forget the culmination of SoftBank’s $100 billion “megafund,” Spotify’s historic direct listing, or the roof-shattering $14 billion Series C round raised by Ant Financial last year? If you were to go by the headlines alone, you might assume that now is the perfect time to pursue seed funding for your fledgling startup.
However, as fundraising goals soar higher and records continue to be broken, the VC landscape is beginning to look a lot different than it did a decade ago. In the last three years, seed investment has sharply declined, evidenced by nearly every metric. And as someone who loves combing over fresh pitch decks and executive summaries, this comes as rather disappointing news.
The apparent culprit is a shift in the IPO window and an inflow of capital into late-stage VC. Rather than going public, companies are raising more money and spending longer periods of time in private equity. In other words, going public is no longer necessary to raise billions of dollars. This benefits both parties, as investors experience less risk on their investments and late-stage companies give up less equity in exchange for capital.