Quantity, quality, and size of early-stage seed financing has recently given rise to speculation about a seed funding bubble.  Ex-founders, Hollywood personalities, the rich and the powerful, the smart and the cool, all seem to be foregoing or, at least, de-emphasizing the usual trappings of wealth (homes, cars, planes, baubles) and taking center stage at pep rallies preaching  lean, capital-efficient startups poised to change the social fabric and consumer experiences, all for a few hundred thousand dollars invested.  Money is available, some will say, easy to get.  There are pitch sessions, pitch presentations, and a slew of incubators, accelerators, germinators that are ready to provide a cubicle and an internet connection in exchange for some equity.  The process is quick and painless.  I have witnessed angel investors flash their cash and write checks on stage.  Founders who have never raised a real VC funding round have all been made to believe that the traditional funding process of overly lengthy, way too expensive, and, in general, unnecessary.  Dropping out of college is suddenly cool, venture capital is stuffy and bad, and a big company can be built with almost no cash.

Early signs of trouble.

Many more companies that should not be funded are getting funded — micro-funded, to be exact.  Founding teams lack critical mass (witness the “find a technical co-founder” craze) because instead of three guys with an idea and a prototype looking to build a company you have three distinct embryonic ideas looking for money, pitching a promise of hiring a top notch team that is nowhere to be found……