The subscription publication reports that “smart money,” or blue chip venture capitalists, quietly started pulling back from Series A funding rounds several months ago. The data, compiled by San Francisco-based venture firm Signalfire, is based on investment behavior of 29 leading VC firms including Andreessen Horowitz, Kleiner Perkins Caulfield & Byers, and Sequoia Capital.
That VC firms are pulling back from early stage funding shouldn’t surprise anyone, tweeted Khosla Ventures partner Keith Rabois; it’s been going on “very acutely” for the past 3-6 months.
The point, emphasized Information reporter Amir Efrati, was to zero in on Series A and seed funding, where he said he didn’t expect to see much of a change. Except that he did.
Rabois agreed that he wouldn’t expect to see a change at seed level, and said the trend is even more pronounced in B and C funding rounds than series A.
Here’s some data from The Information’s story:
- Seed: 5.4 percent of seed funding came from blue chip VCs during the first 9 months of 2015; last year it was 5.9 percent, and in 2013 7 percent.
- Series A: 5.3 percent of series A funding came from blue chip VCs during the first 9 months of 2015; last year it was 6.1 percent, and in 2013 7.5 percent.
- Series B: 9 percent of series B funding came from blue chip VCs during the first 9 months of 2015; last year it was 11.2 percent, and in 2013 11.4 percent.
Overall, private investment in tech is on the rise — but a shrinking proportion of that money is coming from the investors who’ve been showing the best returns in the last few years and setting market trends with their deals. “Filling the place of smart money venture capitalists are investors with less experience in the market, such as mutual funds better known for public-market investing,” states The Information.
What this means? “The ‘smart money’ of tech investing isn’t heading for the exits, but it has meaningfully pulled back funding levels this year compared to the last two, a signal of the group’s true sentiment about the market.”
Of course, these trends haven’t stopped some investors from telling startups that now is the time to seek funding.
“Historically speaking this is a very easy time to raise money. So just do your thing,” Andreessen Horowitz cofounder Ben Horowitz said during a live chat in September.