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Delving deeper into seed and other early-stage deals requires a more precise understanding of what such terms really mean. For instance, what constitutes a seed round? With angels increasingly participating in Series A deals and more venture firms doing deals of less than $1 million, the term "seed" is murky. Until recently, such rounds clearly encompassed angel and friends-and-family rounds prior to institutional money, but now that doesn't seem as appropriate.

For instance, under that definition, Intel Capital, First Round Capital, Y Combinator and other venture firms wouldn't ever get their seed deals mentioned, even though they clearly make them. If someone invests before a product is developed, that's certainly a seed round, but once a company has a product but little or no revenue, that's closer to a Series A round. Or not (I'm happy for someone to correct me).

Another consideration is what type of company we're talking about. It's crazy to think of a capital-intensive startup, such as a chip company, raising a seed round for anything more than proof-of-concept and basic research. A prototype design would require a Series A round at minimum, while a chipmaker wouldn't see significant revenue until its products came to market, and probably a third round of financing. So a $2 million deal for a fabless company feels "seedy" to me, while a consumer Internet software deal at the same funding level feels closer to a Series A.

If I were refining such definitions, it would look more like a matrix or flow-chart with categories representing the type of startup, any business milestones the company has achieved and the type of capital raised, along with the amount. Be curious to hear anyone else's thoughts on how to define a seed deal. - Stacey Higginbotham

See Nov. 5 post from Tech Confidential

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