Seed Funding Slows in Silicon Valley (reuters.com)

The bloom is off seed funding, the business of providing money to brand-new startups, as investors take a more measured approach to financing emerging U.S. technology companies. From a report: Seed-stage financing has been sliding for the last two years, with the number of transactions down about 40 percent since the peak in mid-2015, data show. Dollar investments in fledgling companies have also declined, although less dramatically, dropping more than 24 percent over the same period. The slowdown comes despite an explosion of interest by wealthy individuals and foreign investors looking to park money in the next big thing. And it has potentially big implications for Silicon Valley. Early-stage funding is the lifeblood of a technology ecosystem built on risk-taking. Denied critical resources in infancy, companies can't hope to scale quickly enough to unseat incumbent industries and grow into the next Uber Technologies Inc or Airbnb. "The reason why startups are disrupting companies in the 21st Century is not because they are smarter. It's because they have capital to do so," said Steve Blank, a serial entrepreneur, startup mentor and adjunct professor at Stanford University. [...] The zeal that prevailed just two years ago has faded. Seed and angel investors completed about 900 deals in the second quarter, down from roughly 1,100 deals in the second quarter of 2016 and close to 1,500 deals during that time period in 2015, according to a report released last month by Seattle-based PitchBook Inc, which supplies venture capital data. The dollar amount provided by seed and angel investors was $1.65 billion in the second quarter. That's just shy of the $1.75 billion for the same time period of 2016 and down significantly from 2015, which saw $2.19 billion invested into fledgling startups.

Comments

Look outside of Silicon Valley.

[jellomizer]

Like a lot of business incubator locations. There is a point where it is no longer the home of fancy startups and the home of the boring business. The cost of living is so high in Silicon Valley, it is too expensive to start a company there. However you can start a company in the newer business incubators say in Upstate NY, or in a rural town trying to attract technology firms.
The investors are following the new businesses, so a small business that can pay the rent for their business and their living for less than a $2000 a month. While selling products at the same price as the more expensive locations.

Also the 1990 New Economy that sparked Silicon Valley, had been proven a great failure. So while technology is hot again, it is far more reserved, and will not classify a pet food store as a tech company because it sells its product on the internet at a loss.