Seed Stage Slaughter

New Data Show Why the Wall Street Journal is Confused About the Startup Cash Crunch

Data via CB Insights


At the beginning of August, Betabeat began talking about a coming crunch for seed stage companies in New York. We believe that the bubble in early stage financing had peaked, and that in the coming months, many young startups would find it hard to raise follow-on cash.

At the time, local investors like Chris Dixon and Shai Goldman argued that this wasn’t some dire turn of events, but simply the natural cycle of venture capital funding playing out. But the drumbeat of seed stage slaughter now seems to have made its way to the mainstream press.

The Wall Street Journal ran a story yesterday, Web Startups Hit Cash Crunch,” which claimed that valuations for these early stage companies had fallen by as much as half in recent months and the venture capital funding was at an all time low. AngelList’s┬áNaval Ravikant said that startup financing is getting weaker by the week and that the survival rate for young companies is dropping fast.

But new data from CB Insights, a venture capital database here in New York, disputes that outlook. Their quarterly report shows a record number of seed stage deals over the last quarter and a steady growth in overall venture deal flow and funding since 2009. Read More

Blog Lords

After Big Funding, The Knives Comes Out for Business Insider

Henry Blodget image via China Divide

Business Insider announced earlier this week that it had raised a fresh $7 million in venture funding from the likes of IVP and RRE. The site earned investor’s capital by showing impressive growth in terms of both unique visitors and pageviews, even booking a small profit. But a pair of posts from late last night questioned the methods by which the site achieves this enviable traffic. Read More