Some Seed Stage Funding Data

This post is by Jeff Carter from Points and Figures

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Saw this article in Techcrunch.  It’s data to consume.  I don’t think a lot will surprise you.  

Here is one thing that jumps out at me. Illinois did 65 seed deals at $90MM.  Washington did almost double, with roughly a third more deals.  When I criticized the Project 33 push, I said that all Chicago needs is more risk capital investing at seed stage.  I think the data backs me up.  Colorado had more VC at seed.

I also said that Illinois lacks big funds that can do later round financing.  One of the reasons is that we don’t seed enough companies early. With more risk capital going at seed, there will be more companies that can make it to the level where they raise $5MM to $50MM.  Because the startup failure rate is about 50%, you need to seed a lot of companies in order to see

grow at later stages.  Here is some data on the later stages.  Illinois falls way down the ladder.

The tech hub that is showing the most momentum?  Texas.  Specifically Austin.  People are moving there in droves from places like California.  Those kinds of network effects will increase if the capital funding seed companies grows there.

When we look at fundings of $50MM or more, Illinois had 1.  New York and Massachusetts had 10 and 15 respectively.  California had 34.  Rule of thumb venture math says those companies had a minimum valuation of $250MM.

Chicago doesn’t need central planning, consultants, or some figurehead.  We need more seed funding and more risk capital in Chicago.  Some more data points:

  1.  Illinois ranks 46th out of 50 for private sector job growth.
  2.  Illinois Government grew faster than any other sector, up 3%.  Information was down 4.1%
  3.  Illinois is 2nd in the US in moves out of state.

I think we know where the problems are.  This isn’t rocket science.