Prediction

Median angel and seed deal size will continue to climb.

Rationale

As more capital is injected into the VC ecosystem and the median age of companies raising capital at the angel and seed stages goes up, companies are more likely to raise larger rounds.

Caveat

A sizable negative economic event would likely lead to a plateau or reversal of median angel and seed deal sizes unfolding over the course of several years.

Background

As of the end of 2Q, the median age of companies receiving angel and seed financings has risen to 3.1 years, up from 2.8 years in 2018 (as discussed in the 2Q 2019 PitchBook-NVCA Venture Monitor). This is the first time that the median age for such financings has topped three years—or what used to be the typical age for a company raising a Series A round in 2014. Further, high levels of overall capital availability due in part to robust exit activity and an increasing proliferation of mega-deals contribute to even the earliest stage VC deals growing in size.

3.1 years
Median age of companies receiving angel and seed financings*

$1.0M
Median deal size for angel and seed financings*

$7.5M
Median pre-money valuation for US angel and seed-stage*

 
*As of June 30, 2019

Case study

Gatsby, the developer of a commission-free stock options trading platform, recently received $1.5 million in seed funding. Investors include Barclays, Radius Bank, SWS, Techstars, Plug and Play Tech Center and IrishAngels. The company’s platform is currently in beta, but has been compared to Robinhood, the popular VC-backed investment app. While not especially high, the company’s sizable $1.5M seed round goes to show how companies are able to secure more money at earlier stages—in some cases, even without a fully fledged product.

Conclusion

When the 2019 VC Outlook report came out earlier this year, we didn’t consider the breakdown between angel rounds and seed rounds. Seeing as the median deal size for angel rounds is $600,000 compared to $2.1 million for seed rounds, there is a meaningful impact on median deal size and valuation. Regardless, deal sizes have largely maintained 2018’s record levels and we expect that to lead to higher deal sizes in aggregate.

 

Get more insight into 2019’s major VC trends with our 2019 VC Outlook 1H Follow Up report.
 

Download report

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