U.S. seed-stage investments flourished throughout the pandemic


Like the United The states entered their first wave of COVID-19 lockdowns. In the startup country, there were great expectations that an invoice would have arrived. However, the expected comeuppance of high brand, high growth startups fueled by cheap capital provided by venture capitalists who raised ever larger funds did not materialize.

Instead, the opposite happened.

Layoffs were quick and aggressive in the early months of the pandemic. By the middle of the second quarter, venture activity had warmed up, and dealmaking in the third quarter felt quick and competitive. Some investors dubbed it the hottest summer in years.

Venture capital as an asset class has withstood the stress test of the pandemic.

Somewhat lost among the lively megarounds and highly interesting IPOs that can dominate the news cycle, startups were in the seed stage. The crude little businesses that are the centerpiece that will morph into the next group of giants.

TechCrunch looked into what happened when investing in seeds to find out what was overlooked in the storm and fury of late-stage startup activity. According to a TechCrunch analysis of the PitchBook data and a survey of venture capitalists, some trends became apparent.

First, the pattern of increasing semen control sizes observed in previous years continued despite the turbulent business climate. Second, more expensive and larger seed deals were not just caused by excessive capital in the private markets. Instead, COVID-19 has rocked which startups were viewed as attractive by private investors. And the switch has not necessarily increased their number.

Let's dive into the dates and see what they can teach us about this wild year. Then we hear from Nihal Mehta from Eniac Ventures, Jenny Lefcourt from Freestyle, Mar Hershenson from Pear VC and Eric Tarczynski from Contrary Capital about what they saw in 2020 as we write some of the checks that comprise our dates.

The American Seed Market in 2020

If you haven't put a lot of thought into seeds in 2020, you are not alone. Late, big rounds used up most of the media's oxygen, leaving smaller startups competing for attention scraps. There was so much late-stage activity – around $ 90 million or more in the third quarter, for example – that it was difficult for smaller investments to attract attention.

But even though they lived in the background, the dollars invested in startups in the US had a fascinating up and down year:

Credit: PitchBook

Seeds Dollar volume declined over the course of the first quarter, hitting a low of 2020 in April, the beginning of the second quarter. But as May came, the pace at which investors raise money in seed startups accelerated stuck and recovered to January levels by June – before the pandemic. So the COVID dip for seeds was a short-term affair.