The great unbundling of venture capital

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The “The old Series A investor who put in $ 2 million and really cared and had resources is dead.”

Gil Penchina is not a man who minces words. Pando has detailed, at length, a number of forces that have deteriorated the “first money in” position of traditional Sand Hill Road VCs. Manu Kumar of pre-seed fund K9 Ventures has recently argued they are now usually the fourth round in.

Naval Ravikant of AngelList would say that’s unequivocally bad for traditional VCs. It has some benefit for entrepreneurs: There are more places than ever to get that early cash. The problem is that many of those sources don’t do all the things a Series A VC used to do during the boutique glory days of the industry. Some simply don’t want to.

“A seed fund doesn’t have the resources that a Kleiner Perkins or a Benchmark had,” Penchina continues. “Incubators help for three months and then kick you out. AngelList syndicate leads help, but they don’t care enough to help as an old, classic $ 2 million VC did. These platforms are all trying to rebuild that to some degree, but I’m not totally buying it. Entrepreneurs have to stitch it together themselves.”

Mark Goldstein puts it another way: We are midway through a great unbundling of what a VC used to be…

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The WhatsApp Moment: When the venture climate became a giant frothy mess

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When Josh Kopelman’s letter to First Round LPs leaked this week, a lot of focus was given to his chatter about bubbles and unicorns.

Referencing The Wall Street Journal’s tracking of unicorns at the start of 2014, Kopelman wrote, “At the time, there were 42 unicorns. Just one year later, the unicorn population has more than doubled to a total of 87 unicorns. Yes, it seems that a new unicorn was created every 9 days last year!”

“This is a tremendous shift in the way that startup companies get valued — and funded,” Kopelman added.

Sounds great right? Well, not so much for early stage investors, because barring a few outliers the actual exit values have not increased. In fact, it’s the most sobering view of seed investing since the fear over the Series A crunch…

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