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2 minute read / May 4, 2022 /

5 Key Data Points about the Early Venture Market in Q1 2022

AngelList published their quarterly state of venture report. I wrote down five data points that struck me:

  1. Q1 2022 was the most active quarter ever in Angellist history, and likely venture history. The term sheets signed in November and December closed in Q1, which may buoy these figures. In addition, late-stage investors moving into the seed stage market also buttress these stats.
  2. 83% of rounds in Q1 were up-rounds, which is statistically identical to Q4. late-stage market prices have declined about 30%. No parallel compression exists in the early-stage market, yet.
  3. Startup valuations. The 75th percentile of Seed startups raises at 30m valuation and Series A at $100m. Seed has become the new A. $100m post is consistent with what I’ve seen in the market for the most sought-after investments. Some raised a seed first; others particularly in infrastructure decide to go straight to A.
  4. 65% of seeds choose to raise capital via SAFE, a form of debt, rather than an equity round. If Seed is the new Series A, then this implies a meaningful change. Most SAFEs forgo a board-of-directors. A decade ago, businesses raising $3-5m Series As would elect a board. This data point confirms founders have maintained leverage in fundraising conversations.
  5. Web3 deals represented more than 11% of investments, the largest share, superseding fintech and healthcare. Web3 is a term that will disappear like web2 and mobile investing before it. It encapsulates software, infrastructure, and consumer services- unlike the other buckets which are more narrow. While the segmentation may skew the data somewhat, the data point does underscore investor interest in the category broadly.

The Q4 charts may not differ much from those published in this report. Web3 will remain a top area of interest. SAFEs should persist as a dominant form of financing early-stage startups, and consequently inform board construction. Perhaps valuations and activity will change, but given the amount of capital in the ecosystem, the magnitude might be muted.

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