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Summary:

Data from CB Insights, a research firm that tracks the Venture Capital industry shows that seed investments, led by Internet startups, increased from mere one percent of all deals during the third quarter of 2009 to a whopping 11 percent of total deals a year later.

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If Angelgate didn’t prove it, then the following data will; there’s a tinge of mania when it come to early- and seed-stage funding. The latest data from CB Insights, a market research firm that tracks the venture capital industry, shows that seed investments — primarily in Internet startups — increased from a mere one percent of all deals during the third quarter of 2009 to a whopping 11 percent of total venture investment deals during that period in 2010.

The sharp increase in seed-stage investments is the sole reason the total number of venture investments jumped during the third quarter of 2010 even though overall funding dropped. Nearly $5.4 billion was invested in 715 deals during that time frame, CB Insights’ data reveals. All that essentially made for one hot summer.

Here is some salient data from CB Insights’ latest report covering the July – September time frame:

  • Nearly $1.253 billion was invested in 233 Internet related deals. Series A media deal size was at an all time high of $3.4 million, once again proving that early stage investing is going through a frothy phase.
  • San Francisco saw 36 Internet deals that brought in $131 million, while New York City saw 31 Internet deals garner $126 million. In comparison, Mountain View, Calif., San Mateo, Calif. and Palo Alto, Calif. saw 21 deals focused on the Internet and they brought in a total of $174 million.
  • Early-stage investing is dominating the New York area and accounted for nearly 63 percent of all deals. New York can thank folks like Chris Dixon and Fred Wilson for bringing investment dollars to area startups.
  • Massachusetts saw a year-over-year decline in amount VCs invested during the third quarter of this year: $466 million was invested in 87 deals versus 73 deals which garnered $596 million during the third quarter of 2009.

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  1. no good deed goes unpunished

  2. They need to sprinkle some of that seed money our way. We promise to change the face of e-commerce. Quite literally, PennyGrabber is eCommerce eVolved.

  3. its important to note that most seed and angel funding is consumer internet stuff, not core technology and infrastructure.

    http://blog.pasker.net/2010/10/13/consumer-seed-funding-is-the-new-black/

  4. Silicon Valley and the Talent Crunch: Tech News « Wednesday, October 13, 2010

    [...] demand for talented engineers and designers. Why? Because there has been a sharp upsurge in early-stage investing in Internet companies. Early-stage investments accounted for nearly 11 percent of new deals during the third quarter of [...]

  5. VC Funding Dips in Q3 but Early-Stage Deals Still Strong: Tech News « Friday, October 15, 2010

    [...] quarter, when 47 percent of all deals were early and seed stage investments. That jibes with data Om reported earlier this week from CB Insights, which found that seed funding accounted for 11 percent of all deals in the third quarter, up from [...]

  6. Angel Funding: Deals Are Up, Dollars Are Down: Tech News « Tuesday, October 26, 2010

    [...] Om reported earlier this month, seed stage investments bounced back in the third quarter. But overall, it seems we’re settling into a period of more deals for [...]

  7. Fred Wilson: New York Tech Scene Ready to Take The Wheel: Tech News « Wednesday, October 27, 2010

    [...] Om shared earlier this month, New York’s tech scene is getting a flood of venture capital for Internet deals, rivaling San Francisco. It’s validation for a city that has built a formidable base of [...]

  8. VC Funds Caught Between a Rock and a Hard Place : Tech News « Monday, November 1, 2010

    [...] firms are increasingly getting used to working with less money, placing more early bets on cash-efficient start-ups like Internet and software companies. A drop in VC fundraising may not be critical in the short term if firms learn to make do with less. [...]

  9. Bullpen Capital’s New Fund Will Rise Above the Angels: Tech News and Analysis « Wednesday, January 12, 2011

    [...] Martino said the firm will look to take seats on about half the start-ups, but only those in need of guidance. For those companies with a head of steam, Bullpen is happy to provide just the money. It’s an interesting proposition for Bullpen, trying to be the bridge between seed and traditional VC funding for start-ups. The hard part will be to pick out the winners from some still developing start-ups. But if Bullpen catches on, we might see this become a new target for investors who are quickly finding it’s getting crowded in the seed round. [...]

  10. New York Tech Mojo Attracts More Valley $: Tech News and Analysis « Wednesday, January 12, 2011

    [...] York in general is hitting its stride with a number of start-ups getting funding. The latest numbers from CB Insights found that New York has supplanted Massachusetts as the second [...]

  11. DreamIT Ventures Taps Startup Founders as It Expands Into New York: Tech News and Analysis « Wednesday, February 23, 2011

    [...] is just the latest addition for a city that is becoming a hotbed of start-up activity: Accelerator program TechStars announced last year that it was expanding to New York, while Accel [...]

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