Early metrics of where seed investing stands today (dollars deployed, deal sizes, valuations), how it’s changed, and a list of 500+ active seed funds by location, AUM, GPs.
Prior to joining Susa Ventures as an investor, I was a research associate at Silicon Valley Bank where my team monitored and analyzed the evolving landscape of venture capital. I was super fortunate to work alongside incredibly good people who were forward thinking, collaborative, and were equally obsessed with the state of and future of venture capital. One of the areas that the bank was (and continues to be) keen on was the next wave of Emerging Managers. Emerging Managers encompasses the newer stewards of capital: pre-seed funds, seed funds/microVC, family offices, etc.
The seed landscape has evolved to be a completely different animal (and not just the Susa 🦍 getting on the map) than what it was just a few years ago. Below you’ll find a few highlights of where we are in the start of 2018 with seed investing, how metrics have changed from 2017, and a patched together list of 500+ seed funds which includes their location, AUM, number of funds, and GPs. With record levels of capital being deployed into seed companies, and over 500 seed funds to support them, it’s not a bad time to be a seed founder 🙂
- Dollars into seed deals remains high, deal count sees sharp decline. $1.6B was deployed into 727 seed companies in Q1. This is the 15th consecutive quarter that more than $1.5B was invested into angel/seed deals. However, the number of completed seed deals completed per quarter has been slashed in half from the highs of mid 2015. Rebounding from the highs of 2015, 2016 has been characterized as a tumultuous year in the land of seed, with both dollars invested and deal activity coming down by a whopping 20%. 2017 represented a year of stabilization with 13% pullback in seed activity, but similar levels of capital deployed as the year prior. 2018 continues to march to this same tune, similar levels of capital being deployed as the first quarter of 2017, but a 30% drop in completed seed deals from this time last year.
- Total venture invested dollars hit dot com levels, fueled by unicorn rounds. In 2017, $84B was invested in the US venture industry, the highest amount we’ve seen since the dot com era. Buoying this number is the growing list of mega funds and unicorn rounds, over 20% of dollars invested in 2017 were in rounds with a valuation of at least $1 billion. In Q1 of 2018, this number jumped even higher with more than 25% of total capital deployed going towards 17 deals that were billion dollar plus valuation rounds. The first quarter of 2018 saw $28.3 billion in venture funding, the highest amount of capital deployed in a single quarter in over a decade.
- Seed deal sizes and valuations in 2018 set records. The median deal size for seed companies is now $2.2M, with a median post money valuation of $10.7M. To put this in perspective, median deal size has more than doubled in just last three years, in 2015 median deal size hovered around $1M. More recently, we’ve seen a 30% jump in median deal sizes from year end 2017 to where seed deals are clocking in the first quarter of the year. About half of the seed deals done in the first quarter of 2018 fell within $1M — $5M deal size range. Roughly one out of every ten seed deals fell in the $5M — $10M deal size range in the first quarter, which relative to the full year of 2017 where we only saw 6% of seed deals fall within this same range.
- Median age for a company raising a seed round is 3 years old, the oldest we’ve seen. Since 2015, the median age of companies raising institutional angel & seed rounds has grown 41% to surpass just over 3 years in the start of 2018. From 2006–2013, the range hovered within 1.4 to 1.75 years. Seed companies today face lower barriers to start, and thanks to AWS, open source communities, freelance networks, proliferation of accelerators/incubators etc seed companies can do a lot more with significantly less.
- Average fund size for seed funds is ~$40M. Fund size grew by 20% from year end 2017 to first quarter of 2018. Seed funds are also seeing greater bifurcation in size, a few hypotheses to explain: rise of pre-seed funds that are smaller in size, more first time funds entering the market that must raise smaller vehicles before they’ve established a track record, and seed funds that have performed well go on to raise larger vehicles.
Last but not least, here’s a patched up list of active seed funds in the US. I’ve tracked over 500, included location, AUM, number of funds, name of GPs. I wish I could say it’s not prone to human error, but it certainly is. Please don’t be shy to let me know if updates are needed!