Cash-strapped start-ups need look no further than Looker Data Sciences for evidence the investment boom is alive and well. The two-year-old company that helps businesses analyze data announced on Tuesday it’s tapped venture investors for $16 million in early-stage funding – the type of sum no start-up could previously have managed without a slog of around four or five years. These days, even as some young companies complain of a crunch in the early-stage funding known around Silicon Valley as “Series A”, a growing cohort is chalking up giant amounts. That’s creating a class of richly valued, deeper-pocketed companies in prime position to outmaneuver the competition.
Behind the supersized checks: rapid growth rates in an era where business expansion may involve simply renting more server space on Amazon Web Services, along with sizable potential markets. For consumer companies, they would likely have to be adding at least 1 million users a month. Inflation is also popping up one level down from Series A, at the very-early stage called seed – funds that used to total around $1 million or so and come in when the company had little more than proof of concept for its idea. Looker raised $2 million last year at the seed stage. By that time, it already had a product and paying customers, says chief executive Frank Bien, a feat that would have been impossible in the days before technology allowed start-ups to skip time-consuming and expensive steps such as building their own computer servers. Many of the group are what Silicon Valley denizens like to call “ramen profitable,” meaning they are profitable as long as expenses like salaries stay minimal — even if it means the founders go for months eating little more than noodles.