Only a few years ago most people — familiar with raising venture capital – would have told you that it was easier to raise five million dollars than it was to raise fifty thousand dollars.
Now the trend seems to be to look at early-stage companies much sooner, or risk being too late to get on board. Seed funding is usually considered to be somewhere between two hundred thousand dollars up to five million dollars.
For most first-time entrepreneurs, if they have a good business plan, two to three hundred thousand dollars is now more likely to be obtained.
Low-end seed capital will likely carry much higher rate of failure according to Roger Ehrenberg, managing partner of IA Ventures, a seed-venture fund that specializes in big data companies, who stated in the article that “The mortality rate will skyrocket.” But the entry fee for them to get involved into start ups is so small — relative to what they’ve historically invested in later stage deals — that they only need one hit in 10 or 20 to see good returns.
While Dow Jones VentureSource didn’t break out the number for New York regarding the increase in seed-capital activity, CB Insights CEO Anand Sanwal estimates they’re probably even higher: “The trend is probably is even more stark in New York,” he said. “New York has become a seed hub.”
So for all you NY based start ups, this might be the year for you to get your business plan finalized (article to be added) and start knocking the doors.
SOURCE of quotes for this article: Crain’s New York
Published initially in my column at Examiner