By Polina Marinova
January 4, 2018

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

Term Sheet has learned that Arena Ventures, the Los Angeles-based early-stage venture capital firm, is pausing seed investing “until the seed market corrects.” Arena managing partner Paige Craig sent out a private letter to LPs laying out concerns about the seed market — overvalued seed companies, excessive capital supply, and imbalanced market forces.

In other words, the seed stage has become increasingly crowded, competitive, and expensive. VCs are raising larger funds, writing bigger checks, and inflating already-inflated startup valuations. Put simply, it’s getting expensive to invest in companies whose seed rounds are really the equivalent of Series A rounds.

It’s unclear if this is the sole reason for the pause or just how long it will last considering that the two principals (Frank Shih and TJ Hennessy) at the four-person firm have left. Shih’s LinkedIn page lists him as a partner at Arc Labs, and Hennessy is said to be looking for a new opportunity.

Asked whether he would be working on something else during the hiatus, Craig said “No, we’re full time on Arena.” The firm will continue to invest in its existing portfolio companies and plans to launch a new fund with a new early stage strategy.

Arena had closed $37 million to invest in software-focused businesses based in Los Angeles, San Francisco, and New York City. Investments ranged from $500,000 to $1 million. Arena’s portfolio includes companies such as ClassPass, Plated, Reserve, and Laurel & Wolf.

I will update this story as we learn more.

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