By some accounts, it appears investors are no longer hot for funding startups. According to an industry trade group, fundraising at the seed-stage investment level dropped 32% in the first quarter of this year. For early rounds, the amount of money raised declined 34%.
Deal making in the seed space is “warm” says James Robinson, co-founder of venture capital firm Caerus Investment Partners. His firm invests in tech startups in the Midwest and the New York metro area. Over the past few years, the venture capital market has been robust, but the slowdown in activity for 2015 Q1 doesn’t alarm Robinson. “I think now (is the time) we are really trying to digest what’s in our portfolio, what’s doing well, who we’re going to double down on, so Q1 being down, is not a big concern for me.”
Robinson says it may be more of an investor market because, he says, there are "a lot more companies" in the pool competing for every dollar. Funding, though, isn’t the only obstacle that entrepreneurs face. The investment world from Wall Street to Silicon Valley has faced harsh criticism for their lack of diversity. The recent high-profile Ellen Pao vs. Kleiner Perkins trial brought a spotlight to the issue of gender bias in the tech world.
Speaking from his experiences, Robinson believes “in order to be successful, the VCs have to look more like the next generation of entrepreneurs.” But, he said, “that’s only going to happen organically, as people of color, women continue to increase their penetration in the tech market… and it only makes it natural for the funding to continue in that front.”
The venture capitalist also advises the entrepreneurial side to have a broad base of investors aside from just the capital focus. Robinson said “if you really want to build a global company, you need operational expertise, different funding expertise, you want to go as wide as possible to build your base to get as many viewpoints as possible.”
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