Early stage venture capital investment has boomed globally over the past five years, according to investment tracking group Preqin, but follow-up series A funding has dropped slightly.
A Preqin report shows that the number of annual angel/seed venture capital investments has increased 375% between 2008 and 2012, while the number of annual series A financings has fallen by 5% across the same period.
Ignatius Fogarty, Preqin’s head of private equity products, says in a statement: “With an increased level of angel and seed funding in recent years, the pool of companies aiming to raise the next round of funding, Series A, has grown significantly.”
“Series A investment activity has failed to keep pace with the volume of angel/seed funding, resulting in an environment in which it is increasingly difficult for companies to progress seamlessly to the next round of investment and causing concern in the industry over a `series A’ crunch,” Fogarty says.
The Preqin report says that in the year to November there were 1313 seed/angel deals worth US$1.1 billion, up from 788 deals worth US$633 million in the same period in 2011.
It also says the aggregate value of series A financing has fallen to 872 deals worth US$4.9 billion in the year to November, down from 896 deals worth US$5.5 billion in the same period in 2011.
The report says 62% of seed and angel investment funding in the year to November has gone to companies in the internet or software industry.
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The most active early stage venture capital firms in the last five years have been leading American incubator and accelerator programs 500 Startups, Y Combinator and SV Angel. These three funds made up 14% of the activity.