Gil Beyda: We have seen a dramatic increase in seed funding -- where year-over-year it has been upwards of 50%. We have seen an increase in Series A investments but not as much. We have been talking about the Series A crunch, which is the number of Seed companies getting funded at the next level being reduced or capped, and now we see its effect on Seed investing.
Scarlet Fu: Is this likely to last the rest of the year, or is just -- is this just for the summer before a pickup by year-end?
Beyda: We will likely maintain this pace and match the numbers of last year. There is a good reason for this. There is limited supply of capital and talent in the market , and, frankly, only a certain number of really good ideas worth funding. As a result, there is a natural cap in the amount of companies able to be invested in.
Fu: Where has the talent gone?
Beyda: Soaked up by hundreds of companies in New York and elsewhere funded by large amounts of money, and now they are hiring like crazy.
Fu: Is this linked to the idea that the shift in mobile is more entrenched than it was last year at this time or two years ago at this time, and now people are sitting on a margin instead of coming up with innovative designs?
Beyda: I think it has something to do with mobile. Mobile is here to stay. There are a lot of startups in the market supporting mobile.
I think we will see that next year we will have another robust increase. Also, we are at 10-year lows for mergers and acquisition activity, the primary means for exits. And we need that recycled capital to invest in seed-stage companies.
Fu: Is there new criteria?
Beyda: We invest up to $1 million in early stage internet technology companies in the northeast. We are open for business, one of the few guys still writing checks. We closed a couple of new investments. Yes, we could be more picky or choosy.
Fu: Tell us about one deal you closed, $2.2 million seed round in Riskive.
Beyda: We have anti-virus for our computers. Now we need antivirus software for our social networks. This is a new threat where bad guys are using social networks to send you bad links and files.
Fu: And do that to all of my friends as well. Thank you, Gil Beyda.