Seed investors still cautious on valuations

"I just stopped by San Francisco and there are actually zero venture-backed tech IPOs in the first quarter of 2016. We are also seeing some down rounds at a later stage. [But] I doubt if that will impact valuations for seed rounds," Duncan Chiu, managing director at Radiant Venture Capital, said at the PreMoney conference in Hong Kong, which is part of 500 Startups' Geeks On A Plane event.

Chiu started investing start-ups in Hong Kong and mainland China in 1999, and has added Israeli firms to his portfolio in recent years. He said start-ups nowadays are more prepared when they come out to raise seed rounds, thanks to an increasing number of accelerators and co-working spaces available. This has contributed to a steady increase in valuations. As such, seed investors in the US have become more conservative. It's tough for them to participate as entrepreneurs are raising larger early-stage rounds, whilst there is a growing pool of capital in the system ready to take their place, said Ran Makavy, vice president of growth at US-based ride-hailing app Lyft, who is also an angel investor.

"Silicon Valley has a new thing called ‘seed extension.' A lot of companies are raising $3-5 million before they actually get to the seed round," he said.

The early-stage space is getting even more crowded in China, where there are said to be almost as many investors as entrepreneurs. Meanwhile, more non-traditional investors, such as listed companies, are looking to diversify their business by investing in the technology space.

"What we tend to see is, in Silicon Valley, venture investors have very specific domain expertise," said Fritz Demopoulos, founder of China and Southeast Asia-focused Queen's Road Capital, who previously co-founded Chinese travel site Qunar.com. "What we're seeing in China is that these funds are little bit boarder, in terms of looking at a wide array of opportunities."

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• Topics
• Greater China
• Early-stage
• Venture
• Technology
• China
• seed
• USA
• TMT