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The Big One: How startup seed deals are changing
Seed-stage startups, companies that are raising funding at some of the earliest stages, provide a window into what the venture market will look like in the years to come. And since the onset of the pandemic, the seed-funding market has seen some noticeable shifts in overall volume of deals, as well as the places those deals get done.
As the overall venture market has cooled in the past year and a half, the number of seed deals has plummeted, according to Carta, a cap-table management platform for startups. Startups use Carta when they have an equity transaction, like a fundraise, which gives Carta unique perspective on the health of the venture market.
In the last quarter of 2021, there were 880 seed rounds on Carta's platform. In the second quarter of 2023, that number was cut in half to just 440 seed deals.
It's indicative of the broader pullback in startupland, but seed deals have also mirrored a larger venture-capital trend: a geographic shift in where startups are raising capital.
In 2020, 40% of all startup seed-funding rounds took place in California, according to Carta. Through the first two quarters of 2023, California's share of seed deals fell to 31%.
To see which U.S. cities are landing a higher percentage of seed deals, and how valuations compare to three years ago, dive into the story:
FULL STORY: The startup seed deal landscape is changing — and not just because there are fewer deals
Startups to watch
- Austin cybersecurity startup SpyCloud raised $110 million in fresh funding. The company says its tech can help detect intrusions that traditional security software typically misses. That includes things like cyber criminals swiping application credentials and session cookies from a device and then identifying ways to get inside a corporate network undetected, often in very short periods of time, Austin Inno reports.
- Mountain View-based battery materials startup Mitra Chem said it raised $40 million led by the General Motors Company, which will work with Mitra Chem to develop iron-based cathode materials. Mitra Chem aims to round out the funding round with another $20 million, Bay Area Inno reports.
- Health care technology firm Lyric has raised $90.9 million. Investors in the startup include professional golfer Rory McIlroy's Symphony Ventures. Lyric's software helps health plans address policy management needs and pay claims, PHL Inno reports.
- Clockworks Analytics, a startup providing SaaS building analytics for institutions like MIT and Harvard University, raised $16 million in new funding. Founded in 2008 within MIT’s Building Science Department, the startup says its fault detection and diagnostics platform gives its customers visibility into issues like building energy consumption, indoor air quality and equipment health, BostInno reports.
- With the NFL regular season only weeks away, a "Shark Tank" standout Noggin Boss has scored a key apparel licensing deal with the league. The startup makes freakishly large caps that have been popular with sports figures and fans since its it hit the market, and with the new NFL license it wil have distribution rights within sporting goods, fan shops and its own e-commerce site, AZ Inno reports.
Why startups should focus in hoarding cash now
As entrepreneurs make the funding roadshow rounds, investors have advice: Make sure you really need the cash.
Startups are competing for capital in a tight funding market that’s forcing some entrepreneurs across the nation to consider down rounds – raising capital at lower valuations than previous fundraises.
Data recently released by Carta, an equity-management platform, showed venture capital is still down 58 percent year-over-year. And 20 percent of all rounds raised in the second quarter through Carta were down rounds, the second-highest quarterly figure of the past five years, according to the company.
North Carolina angel investor Elaine Bolle, a co-founder of RTP Angel Fund, is advising cash crunched portfolio companies to conserve their cash.
“If you thought your cash was going to last six months, figure out how your cash is going to last 12 months,” she said, adding that creativity is key. She advises companies to “figure out how to get a client to pay for a pilot,” or pursue grant money.
FULL STORY: Why startups should focus on hoarding cash now
Weird and wired: A humanoid warehouse robot
Robots have been used to automate warehouses for years. But one startup thinks the best way to move boxes around might just be a robot that operates ... like a human.
Apollo, a humanoid robot developed through a decade of iterations by Austin startup Apptronik. It's 5 foot 8 inches tall and weighs 160 pounds. It can lift up to 55 pounds, and its primary function so far is moving boxes around in warehouses.
Apollo's human-like form allows it to work pretty much anywhere humans work, the startup says. It also has cameras for eyes, and its mouth can display text, smile or convey other information.
FULL STORY: Apptronik announces its next-gen humanoid, Apollo
