附近上门

Stories about seed funding often contain sappy metaphors about planting seedlings and nurturing them to maturity. In reality, it鈥檚 a brutally Darwinian business: most companies fail, successful ones get diluted, and exits commonly take a decade or more.

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That said, seed also has the highest potential returns of any investment stage. Unlike most VCs, seed and angel investors can do a lot of deals with a few million dollars. And no one complains it鈥檚 boring.

So far this year, the relative turnoffs of seed-stage investing seem to be outweighing the draws. Fewer North American seed funds launched in 2017 compared to year-ago levels, according to an analysis of 附近上门 data. Total investment and round counts are also down sharply over the past twelve months from the year-ago period for seed and angel deals, even as late-stage investment is on the rise.

So who are the brave souls venturing out with first-time seed funds? 附近上门 News culled through this year鈥檚 new fund data to unearth more than 30 interesting new U.S. and Canada-based funds. We identified some areas particularly in vogue with seed-stage newcomers, most of whom share a sense that the window for backing early movers in select areas will only be open a short time.

Some of the fashionable seed investment sectors should come as no surprise to anyone familiar with the buzz around artificial intelligence and virtual reality. Other trends were less predictable, including rising funding for some geographies long considered underserved by venture and angel investors.

Here are some trends we observed.

Invest In The Midwest

There鈥檚 nothing new about venture and angel investors talking up the merits of the Great Lakes region, given the rich technical talent and less rich startup valuations that can be found there. However, there鈥檚 a difference between talk and action. What we鈥檙e seeing recently is new Midwest-based seed firms actually raising capital in the area, not just saying nice things about founders there.

So far this year, 附近上门 identified several Chicago-based seed funds. backs startups affiliated with alumni of Northwestern University. , as the name would imply, invests in agtech. , meanwhile, is seeking out accredited investors who want to invest in Chicago-area startups.

It鈥檇 be incorrect to classify interest in Chicago as solely a 2017 phenomenon, as it鈥檚 something that鈥檚 been percolating for the past few years. 附近上门 at least ten Chicago-based seed investors that have cropped up in the past year or two. Their geographic focus areas vary, with several concentrating on the Chicago area, others on the Midwest, and still others looking at deals nationwide.

Other Midwest-focused funds founded this year include , a Grand Rapids, Mich.-based fund that invests in Midwestern technology startups, and , a tech seed investor with offices in Minneapolis and New York.

鈥淏eing in Minneapolis and working to establish our network among other VCs, there鈥檚 no question that there鈥檚 a lot of excitement about the Midwest,鈥� , a partner at Loup, told 附近上门 News. Compared to coastal tech hubs, the Midwest 鈥渋s underinvested, prices are better, and the opportunities are fewer in volume but no different or better in quality.鈥�

Hearty Appetite For Hard Tech

Start cheap and build fast has long been a popular mantra for seed-stage startups and their investors. Lately, however, there seems to be a pendulum swing back to more seed investment in so-called hard tech, targeting companies working on complex technical problems with lengthy development time horizons.

Probably the poster child for this approach is MIT鈥檚 , which closed a $200 million debut fund in September. The fund鈥檚 stated mission is to help founders develop, commercialize, and scale scientific discoveries in 鈥渢ough technologies,鈥� with a focus on Boston-area startups. So far it鈥檚 backed startups working on satellite communications, a digital approach to sensing smells, and technology to deliver drugs more effectively to the GI tract.

Hard tech isn鈥檛 something that seed and angels have exactly shied away from in the past. Life sciences startups, which are well-known for their long development cycles, have traditionally snagged a good-sized share of seed-stage dollars. Hardware, medical devices, space tech, and other areas known for long exit timelines have also been popular with the angel crowd.

Yet a rising profile for hard tech may indicate investors鈥� interest diminishing in quick-to-market, consumer-facing startups that proliferated amid the rise of the app economy.

That perspective is echoed by , managing director at , a New York-based seed and early-stage tech investor that launched this year

鈥淚 sense we鈥檙e nearing a saturation point when it comes to startups with mass consumer appeal, like social sharing apps, ride sharing, as well as fintech and adtech,鈥� Cahill told 附近上门 News. 鈥淵et in industries such as transportation, clean-tech, waste collection, and even publishing, I鈥檓 extremely excited by what I鈥檓 seeing and by the volume of opportunities.鈥�

The Engine and McCune are two out of several seed investors that鈥檚 raised a first-time fund in the past year. We put together a .

AI Is Under-Hyped

Seed investors don鈥檛 seem to think AI is over-hyped. A lot of new seed funds list artificial intelligence as a core focus area. We counted North American ones this year. There are probably more.

鈥淭here鈥檚 definitely a timing element,鈥� Loup鈥檚 Murphy says of AI investing. For Loup鈥檚 partners, the decision to start a seed fund now stemmed in large part from founders following Apple and other large-cap technology companies in their prior gig as analysts at Piper Jaffray. The big tech companies have been investing heavily in AI (as well as robotics and VR), and it鈥檚 reasonable to expect them to continue along these lines. That鈥檚 a sign of confidence in the sector and also means there are plenty of deep-pocketed acquirers.

Yet while seed investors are excited about the potential of artificial intelligence, they鈥檙e also skeptical about a lot of the self-described AI startups out seeking funding.

Founders, after all, have caught on that AI is an area that attracts more funding, says , founding partner at , a seed investor launched this year to focus on fast-move, very early stage startups. That鈥檚 led a number of companies to 鈥渁ttempt to backfill some sort of AI story, when they are actually not an AI company.鈥�

Fertile Soil?

It remains to be seen, of course, whether the currently sprouting crop of Midwestern, AI-enabled, hard technology startups will bear fruit for investors. As previously noted, most seedlings don鈥檛 make it. However, the ones that do promise could bring some game-changing technologies to the forefront, not just another app to make your shopping more convenient.