Micro venture capital

Micro venture capital is money invested to seed early-stage emerging companies with amounts of finance that is typically less than that of traditional venture capital.[1] In contrast to traditional venture capital which is money used to invest in companies looking to fund growth (also referred to as a Series A round of funding), micro venture capital consists of smaller seed investments, typically between $25K to $500K, in companies that have yet to gain traction.[2][3] In the United States, the number of micro venture capital firms have continued to rise rapidly over the last 5 years, and have become an important source of finance for startup companies.[4][5]

Principles

Micro venture capital generally share certain characteristics:[6]

Most micro venture capital firms pursue startups that are at their seed stage because of their lower initial cost basis.[7] Though there is a high probability that the majority of these startups will not survive long enough to reach a Series A round of funding, micro venture capital firms are willing to make the investment because startups generally do not require large sums of capital to bring a product to market,[8] and because they believe that it requires only a few successful companies for them to see profitable returns.[9]

Examples

In the United States, there are over 236 micro venture capital firms, with more than half located in Silicon Valley.[10] Notable examples include SV Angel, which had invested in Dropbox (a file hosting service valued at $10 billion as of January 2014),[11] and Lowercase Capital which had invested in Uber (an app-based ridesharing service valued at $62.5 billion as of December 2015).[12][13]

See also

References

  1. ↑ http://www.businessinsider.com/how-micro-vcs-invest-and-how-they-compare-to-traditional-vcs-2010-7?op=1
  2. ↑ http://www.businessinsider.com/how-micro-vcs-invest-and-how-they-compare-to-traditional-vcs-2010-7?op=1
  3. ↑ https://www.theventurealley.com/2014/09/what-is-micro-venture-capital/
  4. ↑ http://techcrunch.com/2015/04/26/the-microvc-shakeout/
  5. ↑ http://mattermark.com/the-micro-vcs-are-coming/
  6. ↑ https://www.cbinsights.com/blog/revisiting-micro-vc-market/
  7. ↑ http://www.businessinsider.com/how-micro-vcs-invest-and-how-they-compare-to-traditional-vcs-2010-7?op=1
  8. ↑ http://techcrunch.com/2015/04/26/the-microvc-shakeout/
  9. ↑ http://www.businessinsider.com/how-micro-vcs-invest-and-how-they-compare-to-traditional-vcs-2010-7?op=1
  10. ↑ https://www.cbinsights.com/blog/past-present-future-micro-vc/
  11. ↑ http://www.bloomberg.com/news/articles/2014-01-18/dropbox-said-to-be-worth-10-billion-in-blackrock-funding
  12. ↑ http://www.bloomberg.com/news/articles/2015-12-03/uber-raises-funding-at-62-5-valuation
  13. ↑ http://mattermark.com/the-micro-vcs-are-coming/
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