Q1 '24 Fundraising Data Released
We discuss new fundraising data from Carta and Crunchbase and highlight a webinar to help with decision making.
Greetings! Over the next several weeks, we are going to be experimenting with a different cadence and various formats. Let us know your feedback and what you like (or don’t)!
If you were in the path of the eclipse, we hope the weather held up and you were able to catch a glimpse!
🌎 Global Venture Funding Dropped in Q1
Crunchbase released their recap for Q1 2024 fundraising, and not surprisingly, venture funding dropped by 20% compared to Q1 2023. Q1 2024 earned the unfortunate distinction of being the second slowest quarter for fundraising since early 2018.
The trends in funding, though, differed by stage. The amount of Seed funding dropped by $1B compared to Q1 2023, but Series A and B rounds increased slightly year over year. The amount raised for later stages (Series C+) decreased by 36%.
STV Take: Yes, fundraising for Seed rounds is harder than it was two years ago, but it’s not as bleak as it could be. Based on the data, historically, now is still one of the better times to be raising. For founders accustomed to the pace that was set in the last several years, bringing a Seed round together will likely take longer, which is why we advise founders to plan for it to take six months, but the odds are still more favorable for founders to successfully raise a Seed round than they were five years ago.
📒 State of the Private Markets—First Cut
Carta released a preview of their Q1 data related to round valuations and sizes. This isn’t finalized, as it can take several weeks for rounds to formally come through on the Carta platform, but it’s a good indicator of how things are going. A couple of interesting data points:
Pre-money valuations at the Seed stage increased by $1M to $15M.
Series A valuations dropped by $1M to $44M.
STV Take: Even though fewer Seed rounds are getting done (from the Crunchbase report linked above), the companies that are signaling high potential or are able to capitalize on sector momentum, like those building in AI, still have very competitive rounds. As we have mentioned before, the difficulty of fundraising feels very different for founders depending on the type of company they’re building, their investor network, and other factors such as pace of growth or a founding team's previous success. The founders who seemingly raise rounds very easily are the exception in this market, and while they definitely exist, they are fewer and farther between than it might seem.
🧮 Mastering Real-time Decision Making
Annie Duke, the author of the book Thinking in Bets, led a 30-minute webinar on strategic decision making focused specifically on identifying the amount of time that should be devoted to making a decision. She starts the webinar by introducing the time-accuracy tradeoff, which means that the more time (and research) you have to make a decision the more accurate it is and vice versa. Building off of this, she goes into specific frameworks to help the audience assess which decisions should be optimized for speed and which ones should prioritize accuracy.
STV Take: At the core of this webinar is the fact that there are a host of opportunity costs for long decision making that range from losing time to losing first-mover advantage. Sometimes, collecting the facts and making a very accurate decision is warranted, but that isn’t always the case. In the world of startups, every decision feels monumental and having some frameworks on when to throttle up on speed or accuracy enables you to move more efficiently towards the goal post.
👋 Have a great rest of your week!