Less than 1 in 3 startups that attract seed funding manage to raise follow-on funding in the form of a “Series A” round, a study by Venture Intelligence, the leading provider of data on private company financials, transactions and their valuations, shows.
Out of the over 2,500 startups that had raised seed funding between 2015-2022, only 29% (i.e., 734 companies) managed to raise a Series A round (typically the first round of institutional Venture Capital funding), the study titled “Series A Landscape Report” found. However, once a startup attracts a Series A round, its success ratio in raising subsequent rounds of capital, improves quite significantly. For instance, 50% of the companies that raised a Series A during the study period, succeeded in raising a Series B round. And, of the startups that attracted a Series B round, 62% succeeded in obtaining a Series C round. Of the Series C funded companies, 70% managed to raise rounds that were Series D and beyond. (Note: The Venture Intelligence study provides an 18 month window for a company to raise the subsequent round.)
The number of companies raising a Series A round grew at a CAGR of 8% in the five year period from 2017 to 2022. Despite the onset of a funding slowdown in 2022, the number of Series A investments during the year (289) was up 7% compared to 2021 (which saw 269 investments) and 30% above the average of 224 deals recorded in the recent 7 years.
“The total number of Series A deals is a good barometer of the ecosystem’s maturity and a lead indicator for the scale and quality of companies getting built,” said Ganapathy Venugopal, CEO of Axilor Ventures. “This edition of the Series A Landscape report by Venture Intelligence is a timely report that brings credible data to an important aspect of the VC ecosystem,“ he added.
Series A Pipeline Creators
Another highlight of the Venture Intelligence study is the list of “Series A Pipeline Creators” – investors that make seed investments in startups that are relatively more successful in raising the follow-on Series A round. The list, while topped by Sequoia Capital India, has strong representation from homegrown Venture Capital (VC) firms like Blume Ventures, Chiratae Ventures, Elevation Capital and 3ONE4 Capital as well as specialist seed VC firms like Axilor Ventures, India Quotient and Kae Capital.
Sequoia Capital India had backed 54 startups in the seed round that then went on to raise Series A rounds during the four year period (between 2019 and 2022) analyzed by Venture Intelligence. Sequoia was followed by Blume Ventures that seed funded 31 startups that then went on to successfully raise a Series A round. They were followed by Chiratae Ventures and Accel India (21 startups). Elevation Capital (20) and 3ONE4 Capital (18) completed the Top 5 list. Specialist Seed VC firms like Axilor Ventures, India Quotient and Kae Capital had backed 17 startups each that were successful in attracting Series A rounds subsequently.
Visit https://www.ventureintelligence.com/seriesareport.htm to download the full Report, rich with additional data, graphs and charts.
Most Active Investors
Sequoia Capital India topped the list of most active Series A investors during the 4 year period spanning 2019-22, being a part of as many as 93 Series A rounds, as well as during the calendar year 2022 (when it made 24 such investments). Accel India and Elevation Capital completed the list of Top 3 Series A investors in both the 2019-22 period as well as Calendar Year 2022.
Blume Ventures topped the list of Seed VC investors in calendar 2022 (making 29 seed investments), while Sequoia Capital India was the most active seed investor in the 4 year period spanning 2019-22. Accel India completed the top 3 in both tables - with 56 and 20 investments during the 4 year period and CY 22 respectively. Interestingly, Info Edge - via its corporate VC initiatives - emerged among the top 3 most active seed investors in 2022, making 16 such investments (joining Sequoia in the third most active seed investor slot).
Axilor Ventures emerged among the top five seed VC investors in both the 2019-22 period (with 46 investments) as well CY 22 (making 13 investments and sharing the 4th most active slot with Chiratae Ventures).