The bittersweet tale of two seed markets
2 min read![](https://sildenafilxu.com/wp-content/uploads/2023/07/GettyImages-1400003953-1024x655.jpg)
[ad_1]
![](https://techcrunch.com/wp-content/uploads/2023/07/GettyImages-1400003953.jpg?w=625)
Venture funding has been declining since the first quarter of 2022. But that trend has largely spared the seed stage until now. Or has it?
Apparently, Q2 was quite rough for seed deals, according to new data from PitchBook. Startups in the U.S. closed 766 seed deals in Q2, which was 26% less than the 1,044 deals they had in Q1.
And that dip means the second quarter had the lowest number of seed deals we’ve seen since Q3 2016. If things don’t change, 2023 could be the slowest year for seed activity since 2017.
But despite these numbers, many seed managers told TechCrunch+ that they are still seeing strong deal flow. They also have a few ideas of why this metric is declining.
One factor is the pace of deals. Leslie Feinzaig, the founder and CEO at pre-seed and seed-focused venture firm Graham & Walker, said the current timeline to close a seed deal is the longest she’s ever seen it — not just a retreat to pre-2021 craziness, but in her career. This means that even though deals are getting done, they’re happening at a cadence that still slows the entire stage down.
“In 2022, it still felt like folks could get some level of traction with a round, run a process and get a close. Now I’m seeing entrepreneurs that I never thought in a million years would struggle, struggling to fundraise,” Feinzaig told TechCrunch+.
No one to lead, no one to follow
Another hurdle for seed deals appears to be finding folks to invest. While seed firms have remained active, funds with broader foci have started to retreat. Richard Kerby, a partner at seed-focused Equal Ventures, said he’s seen some movement on who wants to back seed-stage startups who aren’t fully focused on seed investing. While he’s heard some multistage investors double down on the category — some had dedicated seed funds to deploy — others are definitely pulling back.
[ad_2]
Source link