Fintech Funding Up — Q3 2018 LA Seed Deal Report
We’re excited to share the most recent update of our LA Seed Report, encompassing all seed funding to LA companies in Q3 2018.
Q3 saw Seed activity remain steady, with a slight increase in deal volume as 27 LA startups brought in $59.4mm in Seed funding. Average round size was down slightly to $2.2mm, but above the national average of $1.7mm. More broadly, Q3 saw LA companies raise $825mm across 85 deals (from seed through growth), making Q3 2018 one of the least active quarters in the past two years. The sharp decline in funding is in large part due to a decrease in “mega-rounds”, with fewer LA startups raising $100mm+ rounds than in the previous two quarters. That said, Q4 has already seen one such “mega-deal” with ZipRecruiter announcing a $156mm round last week.
At a macro level, however, Seed stage activity is showing signs of rapid growth, with total funding up 23% QoQ and 70% YoY. This has been influenced by both a 67% YoY increase in average deal size and a 38% increase in deal volume. We’ve seen this scene grow increasingly competitive, as round sizes and valuations edge upwards and later-stage funds increasingly show interest in participating at the earliest stages.
Below are a few highlights from Q3:
SaaS was the most-funded sector. Over the past few quarters, we’ve continued to note increasing activity in categories like SaaS and Marketplace, and the seeming decline of investment into eCommerce and Mobile technologies that once dominated the LA ecosystem.
Consumer Products & Services was the most-funded category. We’ve previously seen this one top the list as a perennial favorite in the LA ecosystem, but this is the first time in several quarters. Q3 saw 6 companies in the category raise a combined $19.1mm in funding.
Fintech saw a resurgence in seed funding. 5 fintech companies raised $12.6mm in total seed funding, a significant upswing in activity. A number of these companies were decentralized financial applications, building on the trend we noted last quarter.
For Q2’s seed activity, click here.
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(Our report covers seed deals defined as $500k-$5mm that have been publicly announced in the quarter. Please reach out to connor@amplify.la with any questions or comments.)
