Apoorva Mehta, CEO of Instacart speaks during 2016 TechCrunch Disrupt in San Francisco, California, U.S. September 14, 2016. REUTERS/Beck Diefenbach
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The bloom is off seed funding, the business of providing money to brand new startups, as investors take a more measured approach to financing emerging U.S. technology companies. Seed-stage financing has been sliding for the last two years, with the number of transactions down about 40 percent since the peak in mid-2015, data show. Seed and angel investors completed about 900 deals in the second quarter, down from roughly 1,100 deals in the second quarter of 2016 and close to 1,500 deals during that time period in 2015, according to a report released last month by Seattle-based PitchBook Inc., which supplies venture capital data.San Francisco seed fund Initialized Capital, for example, has slowed its investment pace to about 20 companies a year, down from 50 to 60 just a few years ago, even though its fund size more than tripled to $125 million, according to managing partner Garry Tan.In return for writing bigger checks – and assuming bigger risks – seed investors are also demanding larger ownership stakes in new companies.In the last year or so, at least nine seed firms have gone out of business, according to PitchBook.
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