1. The new Series A disruption aka The Revenge of the Crossover funds (thread)

2. The last big disruption to Series A was @a16z doing $10m at $40m post (circa 2013). I remember my jaw dropping when I heard about that kind of Series A for the first time. Prior A rounds used to be $5m on $20m post.

3. The new A trend that's picked up steam over the past year-ish is crossover funds (funds that invest across both private and public companies) moving downmarket and leading $16-20m Series A rounds at $80-100m post, and in some cases, not taking a board seat.

4. These rounds are in companies that are promising, with strong founders, but either have very early revenue; or are pre-revenue; or in some cases are pre-product-launch. All these companies had raised a seed round earlier.

5.From a crossover fund’s point of view, this makes perfect sense. They get to acquire ownership in a company early for a relatively small amount of money by their standards.

6. If 1 in 20 of these investments make it really big ($10B), that makes for a good return on this pool of money ($2b returned on $400-500m invested). Of course that's still a big ”if”, but you can tweak it to 1 in 30 and it still makes sense. That's how good the numbers are.

7. This is a natural response to traditional Series A funds protecting their ownership in portfolio companies and doing insider growth rounds, leaving cross-over funds scrapping for low ownership stakea in pre-IPO rounds where much of the value has already been captured.

8. I spoke with an entrepreneur who's considering one such Series A offer, and I can see how compelling this offer looks:he can raise 2x the money at the same dilution and doesn't need to give up a board seat. He doesn't feel he needs the value add from a traditional A firm.

9. This route is not for everyone - traditional firms offer a strong propsition for many entrepreneurs across strategy, hiring, brand - but this new phenomenon is further blurring the lines in an already confusing venture landscape. Everyone is playing in everyone else’s sandbox.

10. Crossover funds have been leading As in geos like India for several years, but at much smaller check sizes ($5m). The $20m A is a recent phenomenon and one that's here to stay and become an increasingly important option for a subset of entrepreneurs.