“There are still healthy gains to be had”
Among the doom and gloom felt lately in venture capital investments and returns, there seems to be quite a bit of movement in the pre-seed stage.
In the past month, for example, Catalyst Fund, ALIAVIA Ventures, Greylock, Garuda Ventures, The House Fund and Bee Partners all announced new funds to infuse pre-seed investments into startups. If you add all of that up, it’s over $220 million (that’s not including Greylock’s $1 billion) of potential capital flowing over the next few years.
Like all the other stages, pre-seed deals have declined in number and value since 2021, according to PitchBook. At the end of the third quarter, just 788 deals were made globally, down from the 2,572 deals in 2022 and 2,650 investments made in 2021.
You can perhaps blame the decline of deals, and the subsequent fund performance, on a few things, among them: higher valuations, investors not wanting to take the usual risk, and how getting to Series A is a challenge right now.
So why are we now seeing a fair number of VC firms closing new funds?
Good outcomes abound
It takes a certain type of person to want to help founders at their earliest stages. It’s also validating to be able to say that you were involved at the very beginning of a company, when deal size and valuation weren’t as expensive.
For Eric Bahn, co-founder and general partner at Hustle Fund, the flurry of new activity in pre-seed funds “is fascinating to watch,” he told TechCrunch+.