Today's VC Industry Trends looks into venture funding for startups hailing from the Midwest.
All figures are derived from Crunchbase data, and all graphs are my own.
When discounting all forms of funding beyond early- and late-stage venture capital, the total round count for Midwestern startups began to decline at the end of 2015 and has subsequently dipped to levels unseen post-2013. This was, of course, exacerbated by the pandemic, which drove steep falls in the last two quarters and could be responsible for the reversal of a three-quarter uptick beginning in Q1'19. The aggregate average round began falling in Q2'19, and later statistics will probably see the anomalous growth in this quarter erased as more early-stage funding rounds are reported.
Funding for late-stage companies beyond series C has all but dried up in the last three quarters, which is a particular disappointment given its prevalence beginning in mid-2018. It was undoubtedly these rounds that drove the growth in the aggregate average round. Series A funding has brought in more dollars recently compared with the previous year, while the series B dollar-volume has contracted substantially. Aside from late-stage funding, seed-stage investments have experienced the most substantial setbacks, while pre-seed funding levels have slid into being inconsequential.
While all funding stages have seen their round counts decline, the losses are most pronounced at the extremes: seed-stage round volume appears to have fallen by 50% per quarter during the last three, while the pre-seed funding round count appears to have bottomed out. While the late-stage funding incidences have been reduced to a trickle, series A and B rounds seem to have weathered the storm with remarkable resiliency.
This resiliency has been matched by marginal growth in the average funding round for these two stages, while the average series C round has shrunk heavily. While the seed-stage round count is down, its average round is up, indicating the early-stage investors are being pickier with young companies and providing their winners with larger war chests.
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