1. Over the last decade, the size of seed rounds has remained stagnant and the number of trades has decreased. To the untrained eye, it appears that there is more competition for seed dollars. Beneath the surface, however, startups are recycling the founders’ expertise. The reason the number of deals has decreased is that teams are better prepared, more financially savvy, have access to better priced support, waste less time and resources, use other forms of funding BEFORE early rounds, and are pivoting or deciding to exit earlier, in the pre-seed stage. (The founders will be launched to explore new opportunities).

The founding teams are recycled

2. More companies seeking seed rounds already have sales, expression of interests, and some form of market validation as a result of the circular economy of mind and business action. Firms seeking seed rounds are further along than they were 10 years ago. Founders are using other ways to get funding (as they should! Because startup funding is so expensive!), as well as recycling the experience of founding, co-founding, mentoring, and/or being the first hires at previous companies. This is creating a circular economy of business experience. Not just serial entrepreneurs, but a great group of people who have experienced building a startup (failed, successful, and everything in between, in so many roles!).

Funder are recycled

3. More investors are getting involved in each round and seed rounds have become more collaborative. More and more small funds, angels and groups of angels are co-investing. That means more eyes are evaluating the (GOOD) deals, but also BAD deals are being made because the impact of each deal on the overall portfolio is less, and FOMO (fear of missing out) can get that signature! Think Theranos (ouch).

TIP: Nobody talks about the herd mentality and there will be some lessons to be learned in the future. Due to the cyclical and recycling nature of funding, early investors can scan offers earlier, with lower amounts, and if they want to play in future rounds, they must enter early and with others – pay to play.

The recycling of founders and funders is also changing the exits:

4. Exits are also being recycled! Companies are being acquired, taken public, broken up into pieces, resold, privatized, republished, and there are plenty of opportunities emerging to get out. This is actually an area ripe for disruption. Welcome to the world of recycling outlets.

And the financing process has become more interesting and complex.

5. As entrepreneurs and funders alike become more comfortable navigating the many startup or adult financing options, new financing options are emerging: There is better knowledge about crowdfunding, cryptocurrencies, hybrids (safes, /convertible notes) and SFI types (can we call these special financing instruments?). The capital providers are SPV, SPE and SVI borrowing mechanisms. I can’t wait to see what new options come out of this.

All this recycling and reuse has an impact on ROI and the capital markets.

6. Cycles are longer: It takes longer to climb a bigger mountain, especially if there have been a few near misses, pivots, more turns and bigger ones along the way. This is having an impact on the way we negotiate financing coming into the company, because there is light at the end of the tunnel, but the tunnel is getting much longer. Combine this with the uncertainty of how investors come out. Once again, this is an area ripe for disruption and I can’t wait to see new options emerge. With longer cycles, the return on investment decreases, so companies are forced to find new and disruptive ways to excite investors and NEW investors who are supposedly more risk-averse and adventurous, but are actually reckless.

Longer paths need more resources,

But the supply of capital does not exist in a vacuum.

7. Public markets are shrinking and investors, especially institutional investors, are riding a roller coaster of political madness. Mainly stemming from the surprising interest in protecting borders rather than having healthy global economies, financial and economic illiteracy is permeating the political arena where decisions are reckless and financial managers focus on reducing stupid risks (gasp) instead of creating and support new wealth.

Overall, a mix of healthy recycling of talent, capital, and technology is driving the economy despite the mistakes made by politics.

For investors, the signs are clear: get in early, support lots of startups, learn and collaborate.

For entrepreneurs, the signs indicate: use many forms of financing, use dynamic financing, ask investors for support (not just money), and create dynamic teams.

Oh, and for those small business owners who think “small is beautiful,” now, more than ever, my famous quote of 100% of 1 is 1, but 1% of 1000 is more, is more valid than ever. Get in line, drop the illusion of a “safe” and adopt the “growth” mindset. If we stop growing, we start dying. Small IS beautiful, it’s just not sustainable.

For government and economic development agencies, the puzzle is getting more and more complex… Hang in there!

We don’t really know what we’re doing, but we’re doing it!