As we’ve been documenting for a while, Seed VC investing has been growing at a torrid rate since Q1 2010 having climbed 483% in the last ten quarters. Comparing this to Series A deal activity which has increased 51% over the same period provides a sense for the popularity of Seed VC rounds. Seed VC which refers to smaller investments, generally less than $1 million, made by VC firms, are of course, growing off a smaller base, but nevertheless, the ascent of Seed VC has been swift and significant. In Q2 2012, Seed VC deals hit another high notes as the graphs below illustrate. Across all sectors, there were 175 Seed VC deals in Q2 2012 as compared to 219 Series A deals. But as is clearly evident, there has been a significant and steady closing of the gap between Seed VC and Series A in terms of deal volume. Only 2 years ago, for every 8 Series A deals, there were around 2 Seed VC deals. In the first two quarters of 2012, for every 6 Series A deals, there are 4 or more Seed VC investments.
While the gap between Series A and Seed VC volume has closed across the entire range of VC investments, the shift has been most pronounced in the internet sector where Seed VC investments are actually outpacing Series A deal activity in quantity as illustrated below. Out of the 175 Seed deals in Q2 2012, 111 were from the internet sector. As we look at internet deals, we see that Seed VC deals have increased 455% Q1 2010 to Q2 2012 growing from 20 to 111 deals. Over the same period, Series A deals have grown from 58 deals to 107 – an 84% growth rate.
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