The Crunch Only Extends to Series A, Says New Report

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Fresh numbers show that while things may be tough for those looking for Series A funding, earlier and later-stage startups are doing just fine. By Jessica Stillman (Editor, Women 2.0)

If you follow the news from startup land at all, you no doubt know that things are rough out there at the moment for founders looking to raise Series A funding, a phenomenon dubbed 'the Series A crunch.' But according to a recently released report the gloom is highly concentrated – overall investment is at its highest since the dot-com days and the volume of funding flowing to earlier and later-stage startups is up.

The numbers come from private company M&A and venture capital database CB Insights, which has just issued its report for the first quarter of this year. Tech Crunch sums up the headline findings:

VCs invested $6.9 billion across 841 deals (eclipsing a Q3 2012 high), which is the highest level since dot-com days…  One of the most interesting data points noted by CB Insights was that Series C, D and E all saw an increase in shares of funding dollars while Series A and B both saw declines. Consistent with the reports we’ve seen over the past few months, seed funding continued relatively the same despite concerns about a Series A crunch.

Deal volume was up 7 percent from last year, and funding, relative to Q1 2012, was up 17 percent.

The report also offers plenty of detail on the geography of deals (Massachusetts, it may surprise you to learn, beat out New York in terms of both the number of deals and quantity of funding) so check out the full post if you're interested in details and charts.

So what do these numbers mean? Anand Sanwal, CEO of CB Insights, told Silicon Valley Business Journal that the numbers do indeed confirm trouble ahead for many new startups and the angels that invested in them, while also noting that this fact has not yet dissuaded angels from pumping money into young companies.

"Unless somebody magically comes up with more Series A funds for these startups they will be facing very hard choices in the not-too-distant future, but it looks like the funding of seed stage companies is going to continue unabated, at least until some of this starts to play out," Sanwal said. The growth of crowdfunding may exacerbate the mismatch between seed and Series A funding, the article also notes.

Women 2.0 readers: Is the Series A crunch affecting you?

Jessica Stillman is an editor at Women 2.0 and a freelance writer with interests in unconventional career paths, generational differences, and the future of work. She writes a daily column for Inc.com and has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist, among others. Follow her on Twitter at @entrylevelrebel.