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Understanding the trends in startup seed investment from 2020 to 2023
Over the past two years, the venture ecosystem has been undergoing a dramatic transformation.
After record-breaking investment activity in 2021, the market slowed down in late 2022 and into 2023.
This slump was not seen in all sectors. Here's a quick look at some of the most notable ones.
1.The biotech seed market is booming.
The recent rise in prominence of GLP-1 drugs like Ozempic and Wegovy, along with the increased focus on vaccines and other drugs for post-pandemic, was predictably contributing to this rise.
The value of this market increased by over 190% in Q3 2023 compared to Q3 2020.
2. Consumer goods businesses have the lowest share of the investment market.
At their lowest point since 2018, consumer retail startups are struggling to secure capital.
However, for those startups that have received investment in this sector, the upside looks favorable, with an average 63% increase in the value of their investments.
3.Seed investors still prefer SaaS.
Across most stages and industries, the number of seed deals decreased in Q3 2023 compared to 2021 (down 54% in biotech, 55.9% in fintech, and 69.4% in consumer goods). The decline was most modest in SaaS (down 10.6%).
However, this trend does not apply to the later stages of the venture life cycle: SaaS funding has become much more difficult at Series A, B, and C.
4.Less money is being invested in venture capital.
While the number of VC deals remained stable, the amount of money invested in venture capital was expected to decline significantly in 2023.
It is projected to be about one-third less than in 2022, which could create financial constraints for VCs globally.
5. Regional declines in VC investment projected
In 2023, all regions were estimated to experience a downturn in VC investment compared to 2022, but the African continent is expected to be the least affected.
Latin America and the Caribbean suffered a large drop of 79% compared to the first half of the previous year, while the rest of the regions, including Asia Pacific, Europe, and North America, all fell by around 45%.
*Biotech market still booming
*Different investment stages have different preferred categories.
Written by underdogs
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