(2010-07-14) Seed Money Funds

A series of posts on the Seed Capital market have been posted.

Paul Kedrosky thinks there are too many Seed Capital funds being formed, and they're making too many investments, and many of them will end up failing.

Chris Dixon noted the advantage to the Seed Fund in getting in earlier (thus at a lower valuation) than the VC-s.

• last year he noted that it's risky for an Entrepreneur to take seed money from a big VC, because then you need them to invest in the following bigger rounds for perception purposes (and since you need them, you reduce your negotiating power in that bigger round).

John Borthwick noted that while many companies can start with less capital now, they still need a lot of money to grow, therefore they'll need that source of big money eventually. Seed funds who invest all their capital at the early stage will be left out of the bigger rounds (and often bought out without getting the big upside).

• Fred Wilson agrees. And notes that the VC fund doesn't want to miss the early round, because it will be much tougher to get in the later round.