SA国际传媒

For seed-funded startups, the odds of graduating to a Series A round have never been particularly favorable. But as venture funding contracts, the chances have gotten even slimmer.

That鈥檚 the broad finding from our latest perusal of U.S. Series A funding, which shows that investment is on track to hit the lowest quarterly total in over two years.

Things have been heading lower for a while now. Per SA国际传媒 data, Series A investment has fallen for five consecutive quarters, since peaking in late 2021. For perspective, we chart out funding totals and round counts for the past nine quarters below:

Biotech dominates for big rounds

Even though funding is down, there鈥檚 still an enormous chunk of change going into Series A. So far this year, investors have poured close to $4.5 billion into the deals at this stage nationwide.

They鈥檙e writing some big checks as well. At least five startups secured Series A investments of $100 million and up, and about 35 rounds exceeded $30 million.

As usual, life sciences companies captured most of the largest rounds in recent months. Top fundraisers include:

• , a New York-based startup developing technology aimed at simplifying clinical trials for doctors, researchers and pharmaceutical companies, raised a $203 million Series A round led by and .
• , a San Mateo, California-based biotech working on a next generation of chimeric antigen receptor T-cell therapies for cancer, raised $200 million in a March Series A round led by and .
• , a Boston-based developer of precision neuromedicines, raised $100 million in a March Series A, also led by Third Rock Ventures.

It鈥檚 common to see biotechs top the Series A ranking, which is a function of the fact that they鈥檙e expensive to scale. Biotechs also often tap public markets for capital in lieu of late-stage rounds, so early stage is a venture investor鈥檚 best chance to get in while a company is still private.

What we鈥檙e not seeing

While biotech is alive and well at Series A, the same can鈥檛 be said for other sectors that were hot several quarters ago.

Fintech and Web3 have been particularly out of favor at Series A, which is a finding we also noted for Series B. It鈥檚 an especially striking shift for fintech, which was the leading sector for venture investment in 2022 across stages.

So far this year, there have been just 30 disclosed-size Series A rounds totaling $598 million across all financial services categories, which includes such areas as cryptocurrency, consumer lending and digital banking. In the same period last year, $2.15 billion went to financial services.

Oddly, even funding to AI categories 鈥� one of 2023鈥檚 buzziest sectors 鈥� was down at Series A. Per SA国际传媒 data, $371 million in Series A funding went to companies applying or developing AI technology , down from $1.08 billion in the same period last year.

Not everything is down

While fewer seed-funded companies are closing Series A rounds, the good news is that for those who do, the typical check size is bigger.

So far this year, the median size of a Series A round was $12 million, per SA国际传媒 data, compared to $7.5 million in the same period last year. That鈥檚 not entirely a bullish signal 鈥� while rounds are sizable, there are fewer of them. Still, it鈥檚 something.

It also looks like the decline in peak to trough investment totals for Series A is less pronounced than for Series B. That said, Series A quarterly investment is still down about two-thirds from the highs hit in late 2021.

Will we reverse course and see things pick up again? That鈥檚 certainly the hope, and venture investors still have plenty of dry powder to make that happen. Even so, there鈥檚 little expectation we鈥檒l be retracing previous highs anytime soon.

Illustration: Dom Guzman