Taking the pulse of the seed market in the Northeast

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Techstars Kerty Tax He knows a thing or two about where the seed funding is and where it might go in the Northeast.

During a presentation at TechCrunch’s Early Stage in Boston last month, Levy took a brief look at deal counts and valuations before exploring in more depth what the hurdles are to funding right now and what founders will need to expand to reduce. a deal.

From 2021 to 2022, the overall transaction count in the Northeast decreased by around 25%. It may not be surprising, but it’s pretty tough. If you look specifically at seed funding, things are even more contracted.

“Even if you extrapolate beyond this quarter, even if we have a great second half of the year, I’m afraid the deal count looks bad,” he said.

In the first quarter of 2023, the majority of investments in New England were in the productivity, business productivity, software, healthcare, weather, energy, and fintech sectors.

But in Levy’s view, investment-seeking founders are expected to jump through a series of hurdles to access a pool of money that has dwindled in size.

“In 2021, you would go through this list of things to think about,” Levy said. “Traction: check. Founder/Market Fit: Check. That’s the attitude investors were going through at the time. But this time, what we’re seeing is really, really rigorous, hopping hoops to get through due diligence and even some investor meetings. And I think that’s because investors have funds to invest and they want to spend it, but they want to spend it on the companies that they think have the best chance of success.”

While investment may have declined overall, there is still a lot of buzz around companies breaking through all the hurdles.

“As always, there’s a bit of FOMO in there,” Levy said. “So those companies that are strongly checking those boxes and going through that diligence, those are the ones that are hearing the buzz about valuations that are still up there.”

The obstacles are high.