Series A funding crunch be damned, VCs say full speed ahead!
500 Startups, led by co-founder Dave McClure, was the most active VC seed investor again in 2013, according to a new report from CB Insights.
- Cromwell Schubarth
- Senior Technology Reporter- Silicon Valley Business Journal
Seed funding by venture capital firms hit a four-year high in 2013, according to a new report, despite growing concerns about pending Series A financing crunch.
There was $893 million invested in 843 seed deals last year, according to funding research firm CB Insights, the most since 2009.
The report only examined the seed rounds that included funding from venture firms, a growing proportion of total startup funding over the past four years.
The surge in seed funding by VCs comes despite concerns that a swelling number of startups won’t be able to attract later stage money from venture firms when they need Series A funding to grow.
The top three seed venture investors were the same as in 2012, with 500 Startups repeating at No. 1. Andreessen Horowitz moved up to No. 2 and SV Angel dropped to No. 3.
The number of VC firms actively investing in seed rounds remained level at 112, but that is nearly double the number from 2012 and almost triple the 2011 tally.
The amount of seed financing by VCs in 2013 was 22 percent higher than in 2012 and 74 percent higher than in 2011. Last year’s third quarter was the biggest in this time span, with $257 million invested across 253 unique funding deals.
The average amount invested in each deal in the fourth quarter of 2013 was $1.5 million, up 50 percent over the last four years. The median was up nearly two-thirds in that same time.
The number of seed funding deals more than doubled in two startup sectors: education/training and human relations/work force management. Funding also more than doubled in those two sectors, as well as for startups in the payments business.
The biggest declines were in photography, gaming and news.
Click here to read CB Insights blog about seed funding by venture firms in 2013 and here to see its blog about who the top VC seed investors are.
Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.
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