business-891339_960_720In January 2016, Tech.eu reported there was a massive uplift of seed and series A rounds across Europe.  According to the research, the biggest increases were seen at €500K or lower (pre-seed or seed) and in rounds between €1M and €5M. Tech.eu reports that compared to one year ago, deals tripled in this bracket  –  from two to 76 in 2016.

At JAG Shaw Baker, this is exactly what we’ve been seeing over the past several years — a proliferation of small Seed rounds between €150K and €500K. In addition, the two other trends from our vantage point are a shift in the size of Seed and Series A rounds and an increase in “Acqui-hire” trade sales.

So, what’s with all the seed rounds?  Well, a classic Seed round (up to €500K) hopefully gets you to a minimal viable product (MVP) and maybe some traction. You still need to show the product works and attracts customers because that’s what an investor wants to see, but the Seed round is aimed at helping you get  there.  So the classic Seed round lets an investor get in for a small amount of money to see if the idea is worth pursuing. Typical investors are smaller-sized VCs or Angel investors many of whom are looking to receive tax breaks. We also see former founders who have exited and want to invest.

And in the UK, the tax breaks on offer (the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) make it extremely attractive for investors and almost “de-risk” the investment (either a 50% or 30% tax credit on the investment amount and no tax payable on the gain).

Since 2010, the funding amounts of Seed rounds has changed. It used to be that you would never see a seed round over €1 million but these days they have been super-sized and we have see rounds go up to €1.5 million and in some cases even higher, with initial seed classified as Seed 1, and Seed extensions of similar sizes (sometimes at the same valuation) classified as Seed 2 and Seed 3. Some companies have raised up to €5 M as “seed”.

On the super-sized Seed front, we are also seeing prior Series A rounds that were in the vicinity of €3 M to €5 M being reclassified as “Seed”, with a larger round becoming the Series A. And the size of Series A has been increasing. It used to be up to about €8 M (€10M  max), but we have seen recently Series A reaching €15 million and higher.

On the trade sale front, an Acqui-hire is an acquisition where the buyer doesn’t want the entire company, but wants the team and maybe some of the technology, thereby leaving behind potential liabilities and simplifying the acquisition process for the buyer. With so many companies out there, rather than fail, they sell off to larger competitors and founders go to work for the acquiring company (which would typically happen in a trade sale).

We are seeing many of these deals between €500K and €3M.

— Tina Baker, Co-founder, JAG Shaw Baker

A cookie is a small file of letters and numbers that we store on your browser or computer, phone or tablet hard drive if you agree. more information

INFORMATION ABOUT OUR USE OF COOKIES Our website uses cookies to distinguish you from other users of our website. This helps us to provide you with a good experience and also allows us to improve our website. By continuing to browse the website, you are agreeing to our use of cookies. A cookie is a small file of letters and numbers that we store on your browser or computer, phone or tablet hard drive if you agree. We use the following cookies: • Strictly necessary cookies. These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to return to a previous page. • Analytical/performance cookies. They allow us to recognise and count the number of visitors and to see how visitors move around our website when they are using it. This helps us to improve the way our website works, for example, by ensuring that users are finding what they are looking for easily. The analytical/performance cookies are provided on our behalf by Google Inc. to aid with reporting of user behaviour, market research and improving website functionality. This user behaviour is analysed in order to improve this website. To see how this applies to Google Analytics, visit http://www.google.co.uk/intl/en/analytics/privacyoverview.html. You can stop tracking by Google Analytics by visiting https://tools.google.com/dlpage/gaoptout?hl=en-GB. COOKIE DURATION The strictly necessary session cookies are a temporary cookie which remains in the cookie file of your browser until you close the browser. The other cookies will remain in the cookie file of your browser after the closing of the browser, and will become active again when you reopen this website. The different cookies have different expiration dates. Following expiry of a cookie, a new version of that cookie will be downloaded when you next visit this website, unless you have withdrawn your consent in the meantime. You can block cookies by activating the setting on your browser that allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or parts of our website. Contact If you have any queries regarding this cookie policy please contact us at info@jagshawbaker.com.

Close