Beware, there was a bubble in early stage funding in 2012-2016
The data from Techcrunch in the chart above show that there was a bubble in early stage funding from 2012-2016 and according to the chart below, the number of deals closed show a dramatic downward trend in terms of number of deals closed.
Investing in Seed or early stage is tough. The percentage of success is very low and it's very easy to end up with a non performing portfolio. In the last few years quite a number of VCs and angels have been burnt. Not easy to put seed money into a startup. You wait very long to make money and you loose control as other larger investors than you take control and this is not only a US development. This phenomenon is global as shown in the chart below from Techcrunch.
We also may be reaching the end of some eras: the number of Apps created as well as Saas solutions. In fact the money is now going else where. "Since 2014, aggregate funding into late-stage rounds has hovered around $55 billion a year, though it will be somewhat lower this year. Today’s $1 billion private financing round was unheard of a decade ago. Recent $1 billion raisers Airbnb, Spotify, WeWork and Lyft have joined previous billionaire raisers, including Uber, Facebook, SpaceX and Flipkart, and point to a strong trend to concentrate “winner take all” funding into companies that have real potential to lead or dominate their segment." Techcrunch.
So what does it mean for the new startups. Obviously the money is going to be more difficult to find in seed and early stage round. Maybe also the valuations will be more reasonable and one will be able to make 10 or 20x on one's money invested which seems reasonnable when one can loose 60 to 80% on its investment.
So now, is maybe the time for angel and seed investors to be back in.