Seed stage investments increased in 14 percent in 2013 in dollar terms. But in total number of deals, seed stage investments fell 26 percent.

A total of $943 million was invested in 218 companies in 2013, the lowest number of seed deals since 2003, according to data from the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association MoneyTree, which is based on data from Thomson Reuters.

Seed stage companies attracted 3 percent of dollars and 5 percent of deals in 2013 compared to 3 percent of dollars and 8 percent of deals in 2012, according to the MoneyTree report. The average seed stage round in last year was $4.3 million, up from $2.8 million in 2012.


This story is one of four from WRALTechWire today examining the state of VC. The other stories:

  • More IPOs appear on horizon in 2014
  • IPOs could help VC fund raising.
  • N.C., southeast investing shows improvement.

“It’s good to see the earlier stage deals done because it’s new money being invested in new technologies,” said Laura Robinette, Raleigh managing partner for PricewaterhouseCoopers. 

Bobby Franklin, the new president and CEO of the National Venture Capital Association, said that there’s likely more seed-stage investment than what the data show.

Many young companies stay under the radar until their investors are more confident about being more public about their operations. There are also alternative funding sources beyond venture capital. Angel investors and friends are funding seed stage companies.

The alternatives to institutional funding are growing in North Carolina through various initiatives such as grants from NC IDEA and startup funds made available through The Startup factory in Durham and other so-called “accelerators.”

Some companies also are finding their seed funding from employees who have left successful companies, such as Facebook and Google, Franklin noted.

“Our data doesn’t capture this kind of investing but we know anecdotally there’s a lot of activity at this level,” Franklin said.

Crowdfunding is another emerging source of startup funding, though some investors and companies are cautious. But Franklin said that alternative pools of capital can be beneficial for companies at the early stage before they reach proof of concept.

Franklin said the NVCA is optimistic that exit activity, both IPOs and mergers and acquisition, will positively affect investing in 2014. He added that he does not think that companies will have to wait as long this year to either go public or be acquired.