February 2016 Early-Stage Report: Funding And Activity Slip, But Deal Sizes Remain Strong

After hitting a two-year low of 239 deals in December 2015, early-stage US tech deals (seed/angel, Series A) bounced back in January 2016 to 275. However, dollars (-12%) and deals (-8%) dropped once again in February.

Looking specifically at US tech seed deals, February was the top month for median deal sizes in the past two years, at $1.9M. In general, the data shows that US tech early-stage deals have been increasing in size over the last two years.

February 2016: $710M invested across 253 deals

Early-stage deals in February dropped 8% from the previous month while funding fell by 12%, as previously mentioned. In year-over-year terms, there were seven less deals in February than in February 2015, but funding was was down by 9%.

Though the numbers in February 2016 were higher than in November and December, it was still below the average monthly funding number in the last 24 months, which was $736M. Some of the top deals this month included Series A rounds raised by biomedical data analytics company Seven Bridges ($45M) and wireless services company Federated Wireless ($22M).

Median deals size drops $0.7M from January

Though the average deal size dropped from $5.3M in January to $4.5M in February, it was still higher than the monthly average deal size of any other month in the past two years. Early-stage includes seed/angel and Series A rounds.

Seed deal size reaches two-year high

After a steady decline since October 2015, median seed deal size was up an impressive 58% from January, reaching $1.9M. More than 15 companies — including marketing technology company Amperity, mobile and software services company Flyp and healthcare data startup Vitagene — raised $3M+ seed rounds in February, compared to just 5 in January.

Series A deal size uptick in 2016

After declining in Q4’15, median Series A deal sizes rose in January and February. The average Series A deal size also bounced back this year, surpassing Q4’15 numbers.

Mobile deals bounce back in February

Internet deals continued to dominate in February. Mobile and telecom deal share, which reached a two-year low of 18% in January 2016, bounced back in February to 24%.

Deal share in the consumer products & services sector was higher in January compared to previous months, but dropped once again in February by 3 percentage points.

Mobile dollar share drops by half from 2015-16

Internet startups continued to account for the highest share of dollars in February — consistent with the trend in the last two years.

Mobile sector dollar share has remained constant over the last 3 months at 20%, down by more than half compared to January 2015, when they hit 42%.

Largest early-stage tech deals

The previously-mentioned Series A round to Seven Bridges was the largest US early-stage tech deal in February. The round came from Kryssen Capital.

Most active early-stage investors

Felicis Ventures and New Enterprise Associates were the most active early-stage investors in February. The former participated in Series A rounds raised by companies including those to ThirdLove, Siftery, and Diffbot. The latter seed-funded ClearMetal and Paysa and participated in Series A rounds raised by ThirdLove and Nimble Collective.

Early stage US tech companies with highest momentum

We used CB Insights Mosaic algorithm to identify 20 early-stage companies with the highest momentum scores — a measure of a company’s traction based on social and news mentions, web traffic and jobs data, among other factors.

The full list is available to CB Insights customers under the Research tab

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