Speaking of seed funding:`the availability of seed funding doesn’t seem to be slowing down.
One CEO recently told me he had been approached by every single one of his investors (!) to be a “scout investor” for them. He also observed that in his own seed round, the price was driven up by scouts backed by the same firms bidding against each other.
One of YC’s LPs recently observed that all pitch decks for new funds look almost identical, which is a bad sign for startups and probably for funds too. But the funds keep happening.
I suspect what will happen is that seed fund returns will continue to compress—there was an unusually high rate of return for a while, and as more people figure that out, seed funding will approach the risk-adjusted return of other investment classes.
But investors seem willing to take this deal, and there continues to be a lot of promising startups. Hard to predict what happens in the next downturn, of course.
The top few seed funds will continue to do incredibly well—the variance is about as high as startups.
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