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Less than 1 in 3 startups that attract seed funding manage to raise follow-on funding
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IANS | 04 Jun, 2023
Less than one in three startups that attract seed funding manage to
raise follow-on funding in the form of a 'Series A' round, a study by
Venture Intelligence shows.
Out of the over 2,500
startups that had raised seed funding between 2015 and 2022, only 29 per
cent (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
per cent 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 per cent succeeded in obtaining a Series C
round.
Of the Series C funded companies, 70 per cent managed to raise rounds that were Series D and beyond, the study found.
The
number of companies raising a Series A round grew at a CAGR of 8 per
cent 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 per cent compared to 2021 (which saw 269
investments) and 30 per cent above the average of 224 deals recorded in
the recent seven years.
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