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Seed: The Best of Times, The Worst of Times

Seed: The Best of Times, The Worst of Times
By Keith Teare • Issue #286 • View online
More Seed stage companies die than ever before. And more money is going into seed than ever before. And later stage investors are investing $20 for every $1 invested at the seed stage. Is it the best or worst of times for the seed stage investors and companies?

The week after Thanksgiving, and the week of Hanukkah (happy holidays) has been full of news but not necessarily enlightening news. Jack Dorsey left Twitter. David Marcus left Meta, Omicron became a variant and the stock markets were super volatile. Also, I spent 3 days in the first SignalRank team offsite. So, if I am not mistaken there is no overriding theme to the week.
In addition, we are not doing a video this week as Andrew Keen is overseas.
So what better than to drill down into the seed investment ecosystem?
Crunchbase News published the latest statistics on the death rate of seed-funded startups. Pitchbook published US venture startup valuation trends, Samir Kaji tweeted a chart showing the seed ecosystem compared in size to the venture and growth ecosystem.
All three helped to shine a light on the early-stage venture funding climate. According to Crunchbase, only 28% of seed-funded startups went on to raise a Series A round (2018 data). The total number of companies funded is large and so too is the death rate.
However, Pitchbook data shows that the valuation of early-stage companies continues to rise. It’s US VC, Q3 2021 valuation report indicates median valuations have reached $53m and the average valuation is over $135m.
So you might die young or you might survive and prosper.
Samir Kaji focuses on the relative size of the seed-stage investment ecosystem compared to the rest.
He shows that the seed stage aggregate financing us around $10 billion compared to over $50 billion at the early stage and over $170 billion late stage. This in 2021 to date.
Another way of looking at that chart is to see that less than $5 billion of seed money in 2017 and 2018 produced over $200 billion of investments in 2021 as early and late stage venture invested in previously seed funded companies. Despite the fact that 73% or more of them will never raise more capital.
The seed stage ecosystem is the foundation on which venture capital rests. 2021 seed investments of $10 billion will likely attract over $400 billion of later stage investments in 2022, 23 and 24, into only 20% or s of the seed funded companies. It is the best of times for seed investors because they have more capital and because their best companies are being backed earlier and with more capital than ever before.
And if you are one of the companies that fails to raise it is the worst of times.
To repeat, no video this week, enjoy the curated articles below.
Seed: The Best of Times, The Worst of Times
What Are The Odds Of Success For A U.S. Seed Funded Startup?
US venture capital valuation trends in seven charts | PitchBook
samir kaji
So many seed funds today, but the dollars (<$10B) are so tiny when looking at total funding. Still plenty of opportunity for first series capital into companies.
Venture: Who is your competitor?
Family offices become serious rivals to VC firms for funding start-ups | Financial Times
VC Investments in Consumer Crypto Startups Soar 26-Fold
Why We’re Auctioning an NFT of Our 2005 YouTube Memo
Valued at $9B, Pokemon Go creator to build metaverse with fresh funding
Web3, Interoperability and the Metaverse
Jack Dorsey, David Marcus and Crypto
What’s Next for Meta as Longtime Crypto Chief David Marcus Leaves
Twitter CTO Parag Agrawal will replace Jack Dorsey as CEO
Jack and the Long Twitter Goodbye
The Creator Challenges Facing Twitter’s New CEO
Regulation of Big Tech
Facebook Ordered to Sell Giphy by U.K. Regulator
FTC sues Nvidia to preserve Arm’s status as “Switzerland” of semiconductors | Ars Technica
EU Parliament Takes First Step Towards a Fair and Interoperable Market
Startup of the Week
MoonPay raises $555 million from Coatue and Tiger
Tweet of the Week
Sam Altman
Don't think there have ever been more simultaneous technological revolutions going on than right now.
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Keith Teare

That Was The Week is a editorialized and curated weekly look at developments in tech, startups and investing

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Keith Teare, Palo Alto, California