Entrepreneur and superangel Dave McClure has never been one to mince words. Speaking as part of a panel that included Softech VC's Jeff Clavier and Bessemer VP's Ethan Kurzweil, Dave pointed to an emerging trend in the venture capital world: seed investing.
Seed investments have always existed, but they've typically been tiny and minor, and some VC firms skipped them altogether. Now this is changing—the seed round has become incredibly popular in North America.
"Seed investing is in vogue now," Dave affirmed at the 2012 Grow Conference.
This suggestion is reinforced by recent data from research firm CB Insights, which this month revealed that seed investments have grown by a staggering 400% in one year in the US. They reached an all-time high in the second quarter of this year, CB says, and have already surpassed Series A investments in the tech sector.
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Of course, seed rounds are still by far the riskiest investment an angel or venture capitalist can make in any startup. "The earlier you invest, the higher chance of failure," Dave noted.
Dave McClure speaks with Techvibes at the Grow Conference in 2010.
"I don't think anyone is good at detection early," he added. "You want the 7-foot-6 person on your basketball team but you have to pick your players when they're eight years old. You're either early and contrarian or you're late and you're right," Dave adds.
Photo: Paul Morris, Bloomberg