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2016 VC Half-Thoughts: Seed Companies Aren’t Being Overfunded, They’re Being Prematurely Funded

In the spirit of clearing out some half-formed thoughts, I wanted to share my response to venture LPs who ask about the effect of “so much money” flowing into the seed space and how we think about its competitive impact upon our fund Homebrew.

So what’s the impact upon Homebrew?

Well, when we see a company at this stage we assume their round is going to get done. Maybe not from the quality of investors they were originally seeking or the terms they proposed, but we can’t always get a second bite at the apple. The resultant hastening of the market funding means that, at time, we have to decide whether we want to pay seed prices for pre-seed risk. We tend to pass on these types of companies when the technology is undifferentiated or the value proposition to the potential customer is unclear. Or there’s not a missionary zeal from the founding team as to why they’re pursuing this goal.

The additional cash isn’t leading to overfunding so much as it is premature funding.

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You’ll find me @homebrew , Seed Stage Venture Fund w @satyap . Previously made products at YouTube, Google & SecondLife. Married to @cbarlerin .

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