Pre-IPO Profits

Startup Investing in 2014 vs. Startup Investing in 2021

Startup Investing in 2014 vs. Startup Investing in 2021
By Adam Sharp
Date September 21, 2021
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When I first started investing in startups in the summer of 2014, seed-stage deals were typically valued between $4 million and $5 million. I remember seeing a few deals at $1 million and a few more at $2 million and $3 million. 

Today Iโ€™d estimate the average seed deal is around $14 million. Thatโ€™s a significant increase. Of course, the definition of โ€œseed stageโ€ has changed quite a bit. What was a seed stage deal in 2014 is now often called a pre-seed round. But Iโ€™m talking about startups with similar levels of progress and traction. 

The amount of money being pumped into venture capital and the angel investing ecosystem is truly staggering. As a result, the average quality of deals Iโ€™m seeing has gone down, and prices have gone up. 

There are still good deals to be found. Some founders understand that raising money at a crazy valuation is not a good thing for their company in the long term. But these deals are pretty rare. 

When I find a quality deal at a reasonable valuation, I tend to invest more than I used to. So Iโ€™m making fewer investments, but investing a higher amount per startup. I plan to keep this as my strategy for the foreseeable future. I think itโ€™s the only rational way to invest these days.

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