MappingTheWeb //

Is it just me or has the VC world slowed down over the past couple months?

Six months ago, TechCrunch or GigaOM would report numerous VC fundings everyday. Now, they seem less frequent and more dispersed. So… is it a case of VC money (and private equity) drying up, or is it that the VC’s are simply picking and choosing their investments more carefully?

My gut says it’s the latter. Why do I say this? Well, a typical A round of financing tends to lie somewhere in the $1-5 million range. Below that it’s usually considered a friends and family round. Above that is usually considered a B round.

We are seeing less and less rounds falling within these boundaries. Perhaps, some are carefully placing smaller amounts of money in more start-ups to hedge their bets. This would explain the ‘under-the-radar’ financings that don’t get much press or media attention.

But interestingly enough, we have witnessed a few unusually large A rounds of financing take place. Forget the typical $1-5 million dollar range. Take a look at these recent investments: Reunion.com just raised $25 million in their A round and Spock raised $7 million in an A round (with no BETA product even). Now obviously these are special cases, but it should be noted that these types of Internet-related start-up fundings are rare. Or at least they used to be.

It should also be noted that Aggregate Knowledge, another prominent new-comer, just raised a whooping $20 million after their initial (and substantial) $5 A round.

So is VC money really dead? I doubt it. We are definitely not seeing the same bubble warning signs as the late 90’s. The days of a good domain name and a slick Powerpoint presentation are gone. Nowadays, it takes a business model, and perhaps… just perhaps… a revenue model to convince a VC your company is a worthy investment.