Seed Investments Take A Hard Hit in 2014 — Globally

So the seed bubble has popped in the U.S. — but what about the rest of the world?

After finding that the number of U.S. seed rounds raised in 2014 went down 30%, Mattermark‘s Danielle Morrill suggested that artificially low interest rates and other key economic indicators might be to blame.

An analysis of CrunchBase data paints a slightly less drastic picture — a very sparse 4th quarter brought 2014’s yearly total down, but Q1 and Q3 numbers were on par with what we saw in 2013.

A difference in opinion on the definition of a seed funding could account for the discrepancy in the results. Either way, it’s clear there’s something strange going on here — as amount invested continues to rise across the board, seed rounds are lagging far behind.

And on an international level, the problem worsens — the data coming out of countries with the top number of internet users (the same countries that are often identified as up-and-coming startup hubs) is even less encouraging. The number and size of seed investments is declining, with frontrunners Germany, India and China taking the hardest hit.

The top 3 countries by number of internet users are China, the U.S., and India — not an unexpected figure. But Brazil ranks 5th, Nigeria 8th, and Mexico 11th, with hundreds of millions of connected users in aggregate.

And according to We Are Social‘s latest Digital Social & Mobile report, the number of active mobile connections surpassed the total world population just last month.

Seed rounds in these regions should be increasing as more local startups raise venture money to tap the growing market, but instead we’re seeing the opposite.

What’s going on here?

Are investors reacting to mounting concerns about valuations, or are good risk/reward opportunities in the Series A and Series B stages pushing them to invest later?

Share any hypotheses or predictions with us here, and send over any seed rounds you haven’t announced to

  • Originally published January 28, 2015, updated April 26, 2023