One chart shows how seed stage valuations were a rare bright spot in VC during a turbulent period

February 17, 2023, 11:50 AM UTC
Chart shows seed pre-money valuations since 2012
Valuations for seed stage startups saw record growth in 2022.

These days, it’s a safe bet that whenever we talk about valuations in this newsletter, it’s probably bad news. And indeed, much of the venture landscape is facing uncertainty and a challenging environment at the moment. But not every type of company has been suffering—and in fact, certain startups have seen strong valuation growth.

Seed-stage startups, those in the earliest stages in the fundraising journey, actually saw record valuation growth in 2022. Per a new report from PitchBook, median pre-money seed valuations grew nearly 17% to $10.5 million in 2022, breaking the previous yearly record and hitting the highest valuations since 2012. Meanwhile, on an annual basis, the median seed step-up valuation, meaning the increase between a company’s current valuation and its previous one, climbed to 1.9x from 1.79x. Feast your eyes on the rare up-and-to-the-right chart below: 

Chart shows seed pre-money valuations since 2012
Valuations for seed stage startups saw record growth in 2022.

It’s proof of what we’ve all been hearing anecdotally for a while—that startups in the seed and early stages have largely been more insulated from the massive drawdowns we’ve seen in later-stage companies that were closer to the IPO phase. Indeed, the PitchBook analysts note that the rise of micro funds in recent years helped fuel these seed startups, as well as “investors shifting their focus toward startups in nascent stages of development, allowing more buffer time before the gate to exit reopens.” That exit window, or rather, lack thereof, is becoming increasingly worrying for VCs and LPs alike. 

Plus, Vincent Harrison, a venture capital analyst at PitchBook and one of the authors of the report, made an interesting point: Seed-stage companies probably have and may continue to have a bit more leverage when it comes to deal terms given the investor-friendly market (read: more VC-friendly deal terms) for companies at the later stages is “much more pronounced” than for seed.

“I think that leverage combined with the fact that more investors are moving downstream can help buoy up seed-stage valuations,” Harrison told me. 

However, it hasn’t been a straight shot up for seed valuations: On a quarterly basis, those median seed step-up valuations fluctuated. Q1 showed the highest median step-up valuations, at 2.5x, but, after a slump in Q2, they continued to tick up in the following quarters. Overall the PitchBook analysts note that those valuations were “on par” with 2021 and showed strength. 

But 2023 is shaping up to be a tough year for venture-backed companies. As I’ve written about lately, VCs and analysts alike expect the markets to remain challenged in 2023, even for earlier stages. And in fact, VC funding into seed startups started to fall, particularly in the latter half of last year, as my colleague Jessica Mathews reported last month

(I wrote a guide for founders on fundraising in 2023 that’s packed with a lot of good advice from some top investors.) 

So what to expect in 2023? Harrison argues that because there’s still so much capital out there, and investors with money to spend are moving earlier in the cycle, “It’s very possible that seed stage [valuations] could continue this growth. Now, will ’23 have, you know, record growth compared to ’22? I doubt it. But on a historical basis,” 2023 could still prove a “really strong year for seed stage deal size and valuations,” he argues. 

Meanwhile, Grace Isford, a partner at Lux Capital, told me over text that “valuations across the board have dropped,” but in certain sectors like A.I., “I’ve seen that seed deal valuations could be as competitive as 2021.” Apart from those sectors, though, she says she’s seen seed valuations falling. 

We’ll have to see which seeds end up growing into those valuations. 

Investors in hot water over FTX: The FTX implosion was certainly embarrassing for VCs who shoveled millions of dollars into the firm and hyped its eccentric (and now, out-on-bail) founder Sam Bankman-Fried. But certain firms who backed the company are now in hot water after a class action lawsuit, filed this week, accused firms Sequoia Capital, Thoma Bravo, and Paradigm of touting the legitimacy of FTX to the public (Paradigm didn’t immediately comment to Bloomberg and Sequoia and Thoma Bravo didn’t immediately respond to the outlet’s requests for comment). As others like TechCrunch have observed, it could be a huge—and detrimental—moment for the venture community if the lawsuit proceeds to a trial or settlement. I’ll be watching this one closely. 

Stripe’s cash burn: The beloved payments titan reportedly burned through over $500 million in cash in 2022, per The Information. That’s in stark contrast to the reported $400 million it made the year prior, and it also sheds light on the state of the closely-watched company as it is reportedly trying to raise new funds at what would be a steep discount from its last valuation. 

One more thing: Term Sheet will be off on Monday for Presidents Day, but we’ll be back in your inbox starting Tuesday. Enjoy the long weekend!

Anne Sraders
Twitter: @AnneSraders
Submit a deal for the Term Sheet newsletter here.

Jackson Fordyce curated the deals section of today’s newsletter.


- Aera Therapeutics, a Boston-based genetic medicines biotech, raised $193 million in combined Series A and B funding led by ARCH Venture Partners, GV, and Lux Capital.

- R-Zero, a Salt Lake City-based healthy buildings and green buildings company, raised $105 million in Series C funding. 

- Brigad, a Paris-based self-employed hospitality worker platform, raised €33 million ($35.24 million) in Series B funding. Balderton Capital led the round and was joined by Wendel Group, Serena Capital, and Square Capital.

- GrainChain, a McAllen, Texas-based agricultural blockchain company, raised $29 million in funding., Pelion Venture Partners, and Brigham Young University invested in the round. 

- ChargerHelp!, a Los Angeles-based maintenance and workforce development provider for electric vehicle charging infrastructure, raised $17.5 million in Series A funding. Blue Bear Capital led the round and was joined by Aligned Climate Capital, Exelon Corporation, Energy Impact Partners, and non sibi ventures

- Puzzle, a San Francisco-based accounting software platform, raised $15 million in funding. General Catalyst, FOG Ventures, and others invested in the round. 

- Zerocater, a San Francisco-based corporate catering and cafeteria solutions provider, raised $15 million in Series C funding. Cleveland Avenue led the round and was joined by Remus Capital

- UNISERS, a Zurich-based semiconductor metrology company, raised $14 million in seed funding. Intel Capital led the round and was joined by M Ventures, RSBG Ventures, and Swisscom Ventures

- Alongside, a San Francisco-based crypto market index token, raised $11 million in Series A funding. A16z crypto led the round and was joined by Coinbase Ventures, FJ Labs, Franklin Templeton, Village Global, Soma Capital, Not Boring Capital, and others. 

- QiO Technologies, a Farnborough, U.K.-based industrial sustainability company, raised $10 million in Series B funding from WAVE Equity Partners

- Third Wave Automation, a Union City, Calif.-based autonomous forklifts provider, raised an additional $10 million in funding from Qualcomm Ventures and Zebra Technologies

- SendOwl, a San Francisco-based payments infrastructure provider for digital products, raised $9 million in seed funding. TheGP led the round and was joined by, Alumni Ventures, and Authentic Ventures

- AdalFi, a Lahore, Pakistan-based digital lending infrastructure provider, raised $7.5 million in funding co-led by COTU Ventures, Chimera Ventures, Fatima Gobi Ventures, and Zayn Capital

- Planetarians, a San Francisco-based vegan meat company, raised $6 million in seed II funding. Mindrock led the round and was joined by SOSV, Traction Fund, TechStars, and AB InBev

- Sikoia, a London-based customer onboarding and risk assessment platform, raised $6 million in seed funding. MassMutual Ventures led the round and was joined by Coalition Capital, Earlybird, and Seedcamp.

- Stelo, a remote-based Web3 payments transactions protection company, raised $6 million in funding led by a16z crypto.

- Funga, an Austin-based fungal-based carbon removal company, raised $4 million in seed funding. Azolla Ventures led the round and was joined by Trailhead Capital, Better Ventures, and Shared Future Fund

- BlueTrace, a Castine, Maine-based traceability solution company for seafood harvesters, raised $3.2 million in seed funding co-led by York IE, Maine Venture Fund, and Coastal Enterprise Ventures

- CommandK, a San Francisco-based cybersecurity company, raised $3 million in seed funding led by Lightspeed Venture Partners.


- Beach Point Capital Management acquired a majority stake in Wet Noses, a Santa Monica, Calif.-based pet food and treats manufacturer. Financial terms were not disclosed.

- Fort Point Capital acquired a majority stake in The Yandell Family of Companies, a Benicia, Calif.-based transportation, warehousing, and logistics service provider for the wine, food, and beverage industries. Financial terms were not disclosed.  


- Funds managed by Stone Point Capital acquired a 20% stake in Truist Insurance Holdings, the Charlotte, N.C.-based insurance brokerage arm of Truist, for $1.95 billion. 


- Freedom Holding Corp. agreed to acquire Maxim Group, a New York-based financial services firm. The deal is valued at $400 million.

- BlackRock Alternatives acquired a majority stake in Environmental 360 Solutions, an Aurora, Canada-based environmental management company. Financial terms were not disclosed. 

- Sequoia Financial Group agreed to acquire Zeke Capital Advisors, a Berwyn, Pa.-based multi-family office. Financial terms were not disclosed.


- PicPay, a São Paulo-based mobile payments app in Brazil, withdrew its plans for an initial public offering. 


- The D. E. Shaw group, a New York-based investment firm, raised $1.1 billion across two funds. $450 million will go towards post-seed or growth equity stages and $650 million will go towards synthetic securitization investments. 

- SignalFire, a San Francisco-based venture capital firm, raised over $900 million to invest in seed to early-stage companies in the cybersecurity, fintech, and health care/medtech sectors.

- Rainier Partners, a Seattle-based private equity firm, raised $300 million for a fund focused on lower middle-market services businesses. 


- Eclipse, a Palo Alto, Calif.-based venture capital firm, hired Marc Stoll as a partner. Formerly, he was with Nextiva.

- ​​S3 Ventures, an Austin-based venture capital firm, promoted Aaron Perman to partner and Joe Curry to vice president.

- Vision Ridge Partners, a Boulder, Colo.- and New York-based investment firm, hired Chris Tehranian as head of investor relations. Formerly, he was with Igneo Infrastructure Partners.

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