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Exploring the Series A Funding Gap with Everywhere Ventures’ Jenny Fielding

Horizonstocks

Haje Jan Kamps
May 29, 2024
25 min

Listen on Apple Podcasts | Listen on Spotify

The Series A Chasm: A Growing Concern for Startups

It’s no secret that the bar for startups to land a Series A has risen, but has it risen too high? According to Jenny Fielding, a co-founder and managing partner at Everywhere Ventures, startups are facing what she calls ‘The Series A chasm.’ In a recent post on X, Fielding said, "There’s a huge backlog of seed stage companies with nice traction – just not $3m ARR + 30% MOM growth kinda traction." The post sparked a conversation online, and Fielding joined Haje Kampson on Equity to talk through it all.

The Rise in Seed Funding

Looking beyond Fielding’s portfolio, we can see that the early-stage storm has been brewing for quite some time. According to data from Crunchbase, seed companies have raised about $7 billion so far this year, which is down $1 billion year over year and down significantly in the later stages. Crunchbase has even taken to calling this a moment of "extended adolescence" for startups, with an increase in companies raising $5 million+ seed rounds instead of a Series A.

The Impact on Startups

The rise in seed funding, combined with the increasing bar for Series A investments, is creating a chasm that many startups are struggling to navigate. Fielding’s comments on X highlight the issue, pointing out that there’s a backlog of companies with decent traction, but not quite enough growth or revenue to attract investors.

The AI Elephant in the Room

Of course, no conversation about seed funding and Series A investments would be complete without mentioning the impact of AI. The recent $135 million seed round raised by xAI, a company backed by Elon Musk, has certainly caught attention. However, it’s worth noting that the company behind Grok has already announced a $6 billion Series B round just six months after its seed funding.

A Conversation Worth Having

The conversation between Fielding and Kampson on Equity is an interesting one, and highlights the need for startups to rethink their fundraising strategies in light of the changing landscape. With more companies raising larger seed rounds, but fewer landing a successful Series A, it’s clear that there are challenges ahead for early-stage founders.

The Future of Fundraising

As we look to the future of fundraising, one thing is certain: the rules have changed. With AI and other emerging technologies transforming industries and creating new opportunities, investors are looking for companies with more than just traction – they’re seeking those with real growth potential.

Key Takeaways

  • The bar for Series A investments has risen, leaving many startups struggling to secure funding.
  • The rise in seed funding is not a replacement for Series A investments, but rather an extension of the early-stage storm.
  • AI and other emerging technologies are transforming industries and creating new opportunities for investors.

Conclusion

The conversation between Fielding and Kampson on Equity highlights the need for startups to rethink their fundraising strategies in light of the changing landscape. As we move forward, it’s clear that companies will need to have more than just traction – they’ll need real growth potential to attract investors.

About the Author

Haje Jan Kamps is a journalist and TV producer who has covered general tech news and focused mostly on hardware. He has founded several companies to varying degrees of success, spent time in the VC world, and is now writing about startups and fundraising for Equity.

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Full Episode Transcript

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