Allen Wagner May 30, 2014
Hunter Walk, a partner over at seed-stage VC firm Homebrew, recently investigated whether party rounds at the seed stage have been going by the wayside in favor of “Piggy Rounds”—where one firm offers 100% of a startup’s seed financing. We at PitchBook took a look at our data to see whether this might be the case and also compared seed rounds to Series A financings, just for reference.
It turns out that in the first quarter of 2014, the percentage of seed rounds with just one investor did increase over the previous two quarters, from 44.7% in 3Q 2013 and 35.5% in 4Q 2013 to 53.8% in 1Q 2014. But these piggy rounds have been just as popular in the first and second quarters of 2013, as well as in 1Q 2012. The chart below shows a kind of cycle in the percentage of seed financings with one investor, dipping in the middle- to late-part of both 2012 and 2013 before growing again in the early part of 2013 and 2014, respectively.
Just to compare seed financings with Series A rounds, the all-important follow-on financing has a smaller portion of rounds with just one investor (23.7% in 1Q 2014). This makes sense, as financing sizes grow at the Series A round and usually require a syndicate of VC firms to generate enough money for the round. It’s also worth noting that over the last two years, the percentage of Series A rounds with just one investor has dropped eight percentage points, from 31.7% in 1Q 2012. This reflects the trend of round sizes growing immensely across all series of stock over the last two years, making it harder for just one firm to provide all the equity in a single financing round.
To read Hunter Walk’s full article on this subject, click here.
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