Is the Series A Crunch Going to Starve Search Vendors?
November 29, 2012
Short honk. If you watch the venture capital league tables, you will want to read “The Series A Crunch Is Hitting Now. Have We Even Noticed?” The main idea is that starts up looking for the next round of dough may not get it. I have a difficult time keeping track of the new search, content processing, and predictive analytics vendors. I don’t have much trouble keeping track of the vendor “pivots” and the legal hassles arising from information retrieval litigation. I am already experiencing HP fatigue. It is an ink company, right? Assume the write up is correct when it says:
But wherever you stand on that, there’s one very real consequence of this explosion in seed funding: There has not been a corresponding explosion in investors willing to lead the next round, the so-called Series A. In fact, if anything, there are fewer. In the late 90s there was an explosion of capital at every level. This time around, there has been an explosion at the early stages, and the very late pre-IPO growth stages. But the Series A has remained the same. While Series A is what everyone is focusing on now, life doesn’t get much easier for those who survive. Finding a Series B will be even harder. That means we’re getting a very different “nuclear winter” as a result of industry excesses this time around. And by most accounts, it’s a far more benign one, considering that potentially thousands of companies are — and will be — going out of business in droves over the next year.
Assume this is okay. My thoughts:
- Some companies will find that their access to cash is gated. These outfits will be forced to slash staff and take extreme measures to survive.
- Some companies will shift from serving customers to preening themselves to the handful of companies which buy technology to take it off the table.
- Some companies will remain university type research outfits chasing every money making opportunity that each can find. Open source search vendors and some of the fragile, government centric analytics companies may become fans of hyper marketing.
I am glad I am old and living in a goose pond in rural Kentucky. Here information retrieval means shouting at someone down the hollow. Less financial risk with this findability method.
Stephen E Arnold, November 29, 2012