After years of growth, funding deals in the Bay Area and nationally are shrinking, according to Crunchbase.
In the Bay Area, both the median and average funding amounts for Series A, Series B and Series C rounds are down this year from last year, according to data Crunchbase provided the Business Journal. Nationally, the median and average funding amounts are down in seed rounds as well as in those three rounds, the research outlet said in a new report.
Venture funding surged in 2020 and 2021, as the Fed put in place easy money policies to get the economy through the pandemic-related downturn. It started plunging last year as the Fed reversed course and raised interest rates. North American startups raised $46.3 billion combined in the first
quarter, a tally that was down 46% from the same period last year, according to Crunchbase.
Funding rounds haven't regressed to 2019 levels, but it's unclear how far they will fall, Crunchbase said in its report. Funding rounds for late-stage companies have already come under pressure from the broad and sharp decline last year in stock prices of public companies. The decline in funding levels in later stage rounds, in turn, is putting pressure on earlier stage ones.
"What we can say is that the reset is only two to three quarters in and likely has not yet hit bottom," Crunchbase said in its report.
Here's how funding rounds have changed in the Bay Area and nationally, according to the research outlet, which excluded certain oversized, outlier rounds in its data:
- Seed: In the first quarter, the median Bay Area round is $4.2 million, up about $100,000 from last year, and the average round was $5.1 million, which is unchanged. Nationally, the median seed round was $2.3 million in the just-completed quarter, down around $200,000 from last year, and the average round was $3.6 million, down $100,000 from 2022.
- Series A: Locally, the median round was $15 million in the first quarter, down $1 million from 2022, and the average was $18.8 million, down $2.6 million. Nationally, the median round was $12 million in the first quarter, down $2 million from last year, and the average is $18.7 million, down $400,000.
- Series B: In the Bay Area, the median round in the first quarter was $37 million, down $2 million from last year, and the average was $41.9 million, down $3.3 million. Nationally, the median was $28 million in the first quarter, down $4 million from 2022, and the average was $40 million, down $2 million. Note that median rounds peaked in 2021 at $48.2 million locally and $46 million across the country.
- Series C: Locally, the median round was $50 million in the first quarter, down $2.5 million from last year, and the average was $51.6 million, down $21.7 million. Nationally, the median was $42 million in the first quarter, down $11 million, and the average was $59 million, down $15 million. Note that median and average rounds peaked in 2021 both in the Bay Area and nationally. That year, locally, the median round was $60 million and average was $82.9 million. Nationally, the median round in 2021 was also $60 million and the average was $82 million.
Here's more venture and startup news from the end of the week:
Funding rounds
- Therini Bio Inc., South San Francisco, $36 million, Series A: Dementia Discovery Fund, MRL Ventures Fund, Sanofi Ventures and SV Health Investors' Impact Medicine Fund co-led the round for this developer of treatments for dementia, multiple sclerosis and other inflammatory-related diseases. Eli Lilly and Co., the Alzheimer's Drug Discovery Foundation, Dolby Family Ventures and the Foundation for a Better World also invested.
- IDPartner Systems Inc., San Francisco, $3.1 million, Seed: Abstract Ventures led the deal for this provider of identity verification services for banks and other companies. Foundation Capital, Circle Ventures, Firsthand Alliance, Correlation Ventures, Success Venture Partners and Aleo also participated.
- Unbox Inc. (dba Openlayer), San Francisco, $4.8 million, Seed: Quiet Capital led the round for this provider of a machine learning testing and verification service. Picus Capital, YCombinator, Hack VC, Liquid2 Ventures and Mantis VC also participated.
- Get Ansa Inc. (dba Ansa), San Francisco, $5.4 million, Seed: Bain Capital Ventures led the round for this provider of digital wallet software that merchants can offer to customers. Box Group, Wischoff Ventures, Cambrian Ventures, The Fintech Fund, and Susa Ventures also participated.
- Operant AI Inc., San Francisco, $3 million, Seed: Felicis led the deal for this provider of a service that helps secure cloud-based applications.
Funders in the news
- Genstar Capital raised $12.6 billion for its 11th flagship fund. Genstar is a private equity firm based in San Francisco.
