The fight for seed

When Mike Fitzsimmons went out to raise his seed round, he negotiated with all the usual suspects. The second-time founder needed a few million to get his cloud SaaS hiring tool, Crosschq, off the ground. And as a repeat CEO, he had options.
It was Slack and Airbnb investor Glenn Solomon of GGV Capital, a multi-stage firm with billions under management, that ultimately led the $4.1 million seed round announced earlier this month. Another mega-fund, Bessemer Venture Partners, also participated: “I did take a handful of meetings with pure seed funds and my conclusion was that there was more value in getting in bed with some, frankly, more established funds with more established track records and partners that could add real value,” Fitzsimmons tells TechCrunch.
Increasingly, the largest venture capital funds are leading seed deals in fledgling upstarts, offering larger checks, limited dilution and the opportunity to stamp a legacy brand name on a months-old project.
The institutional players are raising specialty funds to execute these deals. GGV, for example, raised a $460 million “Discovery Fund” last year, its second of the sort. Sequoia Capital operates a scout program in which its portfolio founders hunt for early-stage talent and invest out of a $180 million fund. Kleiner Perkins re-entered the early-stage market with a whopping $600 million effort announced in January. General Catalyst recently “re-committed” to seed with a new seed-stage program. Even Coatue Management, a hedge fund turned VC, has a newly formed $700 million fund dedicated to early bets.
Seed funds beware — today’s fight for equity in Bay Area startups requires muscle and a whole lot of cash.
The fight for seed
(Photo via Smith Collection/Gado/Getty Images).
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