October 9, 2017

Silicon Valley: Where investors don’t get out of bed for under $10 million

An article I ran across this AM jumped out at me. It came via PitchBook with the title “How 20 big-name VCs in the US are investing at Series A and B”.I live and work in Denver and primarily interact with SaaS Founders and investors outside of Silicon Valley. So, I was interested in the data, which I’ve presented below along with my takeaways.




1. Silicon Valley Series A rounds are Ginormous

Median of $11mm put into companies at the Series A stage, compared to a median of $6mm for the U.S. in aggregate. I attribute this to a few factors (none of which I currently have data to support):

  1. These are massive funds that need to stroke massive checks to move the needle. Just not worth it otherwise.
  2. A lot of B2C deals in here that require tons of capital to acquire users.
  3. These funds have set their own slice of the market with its own valuation dynamics, so this is the arena they are competing in (they’ve bid up their own valuations).

2. VC ownership targets are geographic agnostic

Whether you’re raising a Series A in Silicon Valley or Spartanburg, bona fide, institutional Series A venture investors are targeting ~30% ownership of your company.So, don’t get super hung up on valuation, but do understand the size of the funds you’re approaching and aiming to partner with as that will inform their check size and, in turn, the valuation they put on your business.