Watershed Moment for Early Stage VC

This morning we all read about the new Google Ventures group being formed to support the growing and recently re-emerging early stage investment opportunity.  This $100 Million dollar fund is intended to be focused on early stage investments in a variety of areas including consumer Internet products, IT, health care and biotech.  They plan on deploying their capital fairly quickly and making investments that range from several hundred thousand to several million dollars.  Personally, I am pumped by this news.  This is an important milestone in a series of events that have occurred over the past few months that are reshaping early stage VC.  Along with every other private equity class, VC has been brutalized in the mainstream press, blogs and by VCs ourselves.  In some cases it has been justified, in other cases it’s more of a “baby with the bathwater” reaction.  The facts, however, are clear.  Venture capital raised ever larger funds over the past years; necessitating larger investments.  At the same time, technology development cost structures have radically changed.  Simply put, it is cheaper to get a business built now than it was even a few years ago.  As the Funds grew large, this left a gap in funding at about $2-5 Million that was filled by Angels and others.  With the markets taking their toll on investor net worth’s, so goes the Angel’s capacity to do larger deals.  Thanks to the recent valuation correction in both public and now private markets, we have seen many new players adopt strategies to reinvent the early stage model.  Some call this Micro-VC.  I tend to think of it more as “traditional” early stage capital.  The formation of a host of new venture models designed to get money in the hands of entrepreneurs who are forging ahead with innovative ideas has been in full swing for about a year now.  This is why I call it a re-emerging opportunity.  Cava takes one approach but there are many others ranging from new incubator models to institutional seed capital funds.  We welcome this as a sign that the market for early stage capital is undergoing its own iteration, which will eventually lead to better returns and choices for investors.  We wish Google all the best and welcome the opportunity to look at exciting opportunities together.

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About cavacapital

Cava Capital is a venture capital firm targeting go to market stage investments (series A and B) in next generation marketing solutions companies primarily in the Metro New York region. We are business builders, actively assisting our CEO's in the critical areas of Sales, Business Development and team building, bringing our exceptional and deep network to each and every portfolio company to help drive success. We prefer enterprise facing companies, but aren't scared off by the new consumer models.
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