Seed-stage funding remains a critical step for early-stage startups, and while investment volumes have cooled from the 2021 peak, seed funding has been more resilient than later-stage venture capital. In 2024, seed-stage startups in the U.S. raised approximately $13.2 billion—down from the $19 billion peak in 2022 but still significantly higher than pre-2020 levels. Unlike Series A and beyond, which have seen extended fundraising cycles, seed investment remains active, with many investors viewing it as the best stage to enter high-potential startups at reasonable valuations.
However, the bar for funding has risen. Investors now expect more than just an idea—they prioritize startups with a functional product, early traction, or strong indicators of product-market fit.
The fundraising process at seed has also lengthened. Data from Carta shows that the number of priced seed deals declined to multi-year lows by late 2023, reflecting a more selective investment climate. Valuation trends have adjusted accordingly, with the median U.S. seed-stage pre-money valuation dropping from over $10 million in 2021 to around $6–8 million in 2023, before slightly rebounding in 2024. This means startups need to be prepared for more scrutiny and longer deal cycles when seeking their first institutional round.
Despite the tightening venture market, plenty of investors continue to actively back seed-stage startups. Dedicated seed funds, micro-VCs, and prominent angel investors remain key sources of capital. Firms like First Round Capital, Initialized Capital, and SV Angel are well-known for leading seed rounds, while larger venture capital firms—including Sequoia Capital, Andreessen Horowitz, and Accel—participate in seed deals through scout programs and dedicated early-stage teams.
Accelerators also play a major role, with Y Combinator, Techstars, and 500 Global continuing to provide capital and mentorship to promising startups.
The trend of “super-angels” investing alongside traditional VC firms is also strong, as high-net-worth individuals, former founders, and tech executives increasingly deploy capital into emerging startups. Additionally, corporate venture arms from companies like Google, Salesforce, and Amazon have been actively funding early-stage SaaS, AI, and fintech startups, leveraging their industry expertise to back potential future partners or acquisition targets.
A seed stage investor is an individual or firm that provides early-stage capital and guidance to entrepreneurs and startups.
Seed stage investors are different from a general venture capitalist (VC) as they generally have more risk tolerance than VCs. This means that they are willing to invest in businesses with less certainty about future returns. They understand that many startups fail – but those that do succeed can be hugely rewarding investments.
Pitching to a seed stage investor can be challenging, and there are some common mistakes entrepreneurs make when they do.
Don’t underestimate the importance of getting the basics right – Make sure you know your numbers - present clear financials and projections that make sense. Also think about all aspects of your business plan – what is the unique selling point (USP) for your product or service? What problem are you trying to solve? Be prepared to answer these questions in detail.
Don't rush into it – Take time to do research on potential investors before submitting a pitch deck or meeting with them. You should understand their investment strategy and history before presenting any ideas so that you can tailor your pitch appropriately.
Don’t underestimate the power of storytelling – Most investors want to hear a story of how your product or service will change people’s lives and how you plan to execute on that vision. Tell them a compelling story but also be ready to back it up with facts and figures.
When pitching to a seed stage investor, your pitch deck should include a clear and concise overview of your business plan. This should include the problem you are trying to solve, the proposed solution, and how it will make money over time.
You should also provide details about your team – who they are and why you believe they can execute on the vision.
You should also outline any competitive advantages that set your product or service apart from existing solutions in the market. Finally, provide key startup metrics such as customer acquisition costs (CAC), lifetime value (LTV), burn rate (monthly expenses) and other important figures that illustrate the potential of your business model.
When evaluating a startup, seed stage investors look for several key things.
First, they want to see that your product or service has potential in the market – is it addressing a genuine customer need?
They will also evaluate your team’s ability to execute on the vision – do you have the right skills and experience to make it happen? Finally, they will assess how well you understand the business model and whether it can generate returns over time.
Seed stage investors want to take calculated risks when investing in startups. As such, they will be looking for evidence of traction (e.g., customer growth, revenue generation) that demonstrates potential success. If you can demonstrate this along with a sound business plan and passionate team, you have a better chance of securing seed stage investment.
When evaluating a startup, seed stage investors look for several key things.
First, they want to see that your product or service has potential in the market – is it addressing a genuine customer need?
They will also evaluate your team’s ability to execute on the vision – do you have the right skills and experience to make it happen? Finally, they will assess how well you understand the business model and whether it can generate returns over time.
Seed stage investors want to take calculated risks when investing in startups. As such, they will be looking for evidence of traction (e.g., customer growth, revenue generation) that demonstrates potential success. If you can demonstrate this along with a sound business plan and passionate team, you have a better chance of securing seed stage investment.
The size of seed investments can vary considerably, depending on the investor and the business. Generally, a seed round will be smaller than a venture capital (VC) round, but larger than an angel investment.
A typical seed investment could range from $250K to $2 million. However, some investors may offer more or less depending on their risk appetite and view of the opportunity. It’s important to do your research before approaching potential investors so that you have an understanding of what amount is suitable for your particular startup.
