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Why Has Seed Investing Declined? And What Does this Mean for the Future?

Source | bothsidesofthetable.com | Mark Suster

Seed investments are down by any measure (funds, deals, dollars) over the past 3 years in deals < $1 million AND in deals between $1–5 million. What gives?

Over the past month a colleague (Chang Xu) and I sifted through data on the venture capital industry (as we do every year) and made a bunch of calls to VCs and LPs to confirm our hypotheses. We published our initial findings in our deep dive on the VC industry in which we showed that:

  • Venture Financings for “traditional VC” is relatively flat over the past 5 years (up only 4% compounded annually)
  • The venture industry as a whole grew massively, mostly due to the IPO window for tech startups being pushed from 6–8 years a generation ago to 10–12+ years today.
  • As a result of the IPO window shifting we saw a massive inflow of public-market capital into the latest stages of venture. Round sizes of > $100 million or more now account for 47% of all VC dollars (62% if you count rounds > $50 million)
  • This has made venture capital significantly more valuable for VCs and LPs who invest in the best companies

Click here to read the full article

Source
bothsidesofthetable.com
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