I pulled up 2023 deal volume via Pitchbook for all Seed and Series A rounds for US based startups, was curious to see how 2023 went from a pacing perspective vs prior years. 4,668 companies raised a Seed or Series A round in 2023. As expected it was down from the COVID / ZIRP era of 2020 to 2022. In the peak year of 2021 8,206 companies raised a similar round, so in 2023 it was down 40% from this peak year. The last time the number of companies that raised a similar number of 2023, was going back 7 years to 2016.
In terms of 2024, I predict that we will see LESS companies raise than 2023, this is for a few reasons. One main reason is that many of the 2023 announced rounds , were actual rounds that took place in 2022 but the announcement of the round was in 2023, so I think 2023 data was actually much lower than the 4,688 companies that I found via the Pitchbook query. Another reason is that there are some funds that will be raising money from LPs in 2024 and I predict that their pacing is going to be slower than 2023. I don’t anticipate VC firms investing at a fast pace than 2023, so even if VC firms have dry power aka callable capital from LPs, I don’t see them increasing their pacing at this particular stage. Overall, 2024 will still be a good year to raise capital and many VC firms will be active, but it might look more like 2013, in which 3,889 startups raised a Seed or Series A round of financing.
There is a famous quote “Skate to where the puck is going to be, not where it has been.”
In terms of early stage startup activity , I wanted to take a look at which geographies in the United States were getting the most traction from an early stage venture capital deployment perspective. We know that COVID created some displacement and a shift in where early stage startups were being formed. I took a look at data available on Pitchbook to see the leading states , cities and zip codes. Given that I wanted to get the latest trends “where the puck is going” from a geo perspective, I queried all Seed and Series A deals in the 2nd Half of 2023.
From a state perspective, the leaders were:
California : 633 companies
New York: 295
Massachusetts: 128
Texas: 118
Florida: 78
Washington: 74
From a specific city perspective (not metro areas):
New York City: 265 companies
San Francisco: 216
Austin: 64
Los Angeles: 51
Boston: 39
Seattle: 39
Miami: 35
Palo Alto: 33
Cambridge: 28
Chicago: 25
In terms of Zip Codes, this is a good way to measure density:
94104: San Francisco : 23 companies
94114: San Francisco: 23
10013: New York City: 19
94306: Palo Alto: 16
10001: New York City: 14
As you can see from the data: California and New York dominate in terms of where early stage startups are being created. New York City is now the #1 city for startup formation. Historically it was San Francisco, but many startups moved during COVID due to several factors, mainly due to strict COVID restrictions and also increased homeless / drug / crime activity. San Francisco is gaining momentum with the surge of AI (artificial intelligence) related startup and Y Combinator (#1 accelerators in terms of exits) being back to in-person cohorts.
I will caveat that although the data is for announced rounds that took place the 2nd half of 2023, many rounds are typically delayed, so they could have taken place 6, 12, 18 months ago, which defeats the purpose of the post, as I wanted to share what is happening now from a geo perspective. Will revisit this post in 6 months and see if the data changes in term of trends.
2021 ended up being a good year for me and the family, experienced a lot of firsts. It was challenging in many ways as well but wanted to document some of the positives.
First major road trip with the family (NJ to FL, over 3 days)
First time visiting Richmond VA and Savannah GA (stops during our road trip)
First time visiting Miami (love it there)
First time setting up our own Airbnb (we bought a condo in Miami)
First time on a hovercraft, family went to see alligators in the Everglades
First time for the family to go out boating, using Boatsetter was easy, totally recommend
First time seeing Iguanas , we didn’t know they were all over in Miami
First time getting the covid vaccines (two shots and a booster), so thankful for the scientist who created it
First time our kids played organized sports (they both took to soccer and excelled)
First time my wife coaching soccer (and first time for me being a sort of unofficial assistant coach)
First time joining a VC backed startup (thank you Brex and my colleagues there for the opportunity)
First time setting up my own investing syndicate & angel investing (4 investments now, 350 folks in the group)
First time taking the kids on a jetski
First time buying a NFT and also selling one for a gain! (special thanks for Alex Taub and Drew Austin for getting me into the NFT space, really exciting)
First time creating and launching a new team from concept to reality (thanks to my colleagues for the trust & confidence)
First time seeing a EDM show with my Wife, we saw Black Coffee at Brooklyn Mirage, so good!
First time catching a toad (went fishing with the kids , didn’t catch any fish)
First time our daughter went to an art gallery, we did a Dad/Daughter day, what a treat (recommend Whitney Museum in NYC)
First time eating at Bojangles (not really good, stopped during our road trip in Dillon, SC)
First time eating a Rao’s (a NYC institution, thank you Michael Martocci)
First time doing eFoil
First time meeting Aaron Hirschhorn, a great person and family man, who was killed in a boat accident in March. He took me and a few other tech/startup folks out to learn the sport of eFoil. I know his family and friends miss him so much, I appreciate the small amount of time that I had with him and he is missed greatly.
I’m very thankful for life, family, friends, experiences and opportunities.
Several tweets today stuck out to me and they all involved taking NFTs from online to offline. I have actually been thinking about this for the past week I was listening to the NFT Community show on Upstream, the hosts are Alex Taub and Drew Austin, they were talking about NBA Top Shot, which are video NFTs of real NBA highlights from a game. The online to offline components was around having a potential new ability to only purchase NBA Top Shot NFTs from games that you have attended in person, meaning if you didn’t attend the game, you are not able to purchase a particular NFT from the game, which got me thinking about the opportunities the flow between online <> offline.
Below are several tweets related to online to offiline.
The first tweet is self explanatory, I did respond in the tread that a collaboration between OpenSea (NFT marketplace) and SwagUp (enabling swag / merchandise) would be really interesting.
The second tweet is about a NFT collection where I just recently purchased a piece, which are virtual playing cards, the get you into to cool real world experiences. I’m attending my first IRL experience with them next week, a rooftop party in NYC for their card holders. The offline component and extension is a collaboration with Select, a cool real world credit card, that gives you unique perks to restaurant, clubs, etc.
The third tweet was a brand extension with one of hottest NFTs right now, Bored Ape Yacht Club, which would allow you to purchase wine with your Bored Ape on it.
I think all of these are really cool new online <> offline NFT experiences. I recently went down the rabbit hole of NFTs and excited about what is ahead. Here is my NFT collection BTW.
Someone can make a real killing right now doing high quality merch for your NFTs. You own all the commercial rights – someone needs to sync with your metamask and show you what they can do. Inspired by @TheSmarmyBum
Royal Society has an unreal new benefit launching!
We’ve partnered up with SELECT, the next-generation black card offering exclusive, unlimited benefits across dining, hotels, retail brands and events. 👑
— Royal Society of Players (@RoyalSocietyOP) August 13, 2021
It’s official , I have joined Brex! I’ve been sitting on this news for two months now, so it feels great to share it with you. I enjoyed my time off, it was much needed as I needed to recharge given the covid world we live in now and all the challenges around that. Was able to spend more time with the family and also work on some personal projects.
There are several reasons why I jumped on this rocketship of a startup.
Brex officially launched their first product to the world only three years ago! The first product was a corporate credit card for early stage startups and now they have a built a suite of financial services for ANY business from a one person consulting firm to a VC backed startup to a large enterprise. There is an exciting roadmap of additional products/services, can’t wait for us to share that with the public.
One of the reasons I joined Brex was the impressive background of the Founders and the mission of the company. The Founders are immigrants from Brazil, who developed technical expertise as teenagers and started a payments company there. The left Brazil to attend Stanford University but they quickly dropped out to purse their already developed passion for entrepreneurship. They got into Y Combinator and after a pivot, launched Brex.
A side note, my family has a special connection to Brazil. My wife and I got engaged in the city of Salvador and I bought the engagement ring in Rio. Many years later, we brought both of our children to experience Brazil as a family and looking forward to future visits.
Due to the Founders’ background, they have built an engineering and product led startup, with a focus on solving the financial challenges of entrepreneurs. If you look at the composition of the 700+ employees at Brex, almost half have a technical background. You won’t find many companies in the financial services sector to have this ratio of engineering, which I believe is critical in this quickly evolvoing industry.
Covid changed how we work and Brex was decisive in how they would move forward in supporting their employees. Nearly a year ago, they made a decision that they would become a remote company, meaning that going into a Brex office was not a requirement and that you would have a lot of flexibility on where you want to live (and work). This was an important aspect for me, having flexibility on where I can work/live opens up a lot of possibilities. While Brex is a remote company , they still offer physical space if you do want to work in person. In NYC, they have a brand new office in SoHo that I will be utilizing on some days.
Going back to the impressive background of the Founders, this drives who they bring on board. While I’m just joining the company, I have had opportunities to meet employees there and have been impressed on the caliber of talent in the organization. There are nearly 100 open positions available at Brex, so encourage anyone that is looking, to check out the roles. The team that I’m a part of will be hiring as well , stay tuned on that.
My role will be to work closely with Founders and their Investors, support existing products, help launch new products and listen to the community on what they want see from us.
Thanks for reading this far and ping me if you want to catch up IRL or Zoom. New email is sgoldman at brex.
If you are looking for short term rental, at least two stay minimum, please reach out to me at goldman dot shai at gmail dot com. Please provide specific dates that you are seeking. The unit is at least $200+ per day, depending on your visit, if you are looking to stay at least a month, we can discuss a lower price depending on the season.
The unit is located in a very central area called Midtown, it is one block from Wynwood, three blocks from the Design District , three blocks from Edgewater. It’s is a 5 mile / 15 minute drive to Miami Beach. Within a block of the unit, there is a Target, 15+ restaurants, coffee shops, clothing stores, grocery stores, etc. Everything you need is very close and makes your stay easy. There are a lot of scooters, mopeds and bicycles that are available next to the unit and Uber/Lyft is very active, so you won’t need a car to get around.
Here is the address: 3250 NE 1st Ave, Miami, FL 33137
It is 2 bedroom and 2.5 baths, 1250+ square feet. It has a king bed in the main bedroom, two extra long twin beds in the second bedroom and a queen pull out in the living room. It can house six people comfortably. The unit has a washer and dryer. The building allows up to two dogs, we will consider that depending on breed and size. The unit includes a dedicated parking spot in the building , which is covered and secure. The unit also comes with an adult bicycle , helmet and lock. The amenities in the building include swimming pool, gym, bbq area, outdoor lounge area and 24 security and front desk. We have three balconies in the unit, two which overlook Wynwood, see photo below. We have two desks, one of which is standing desk, monitor and printer are included. We have weights, yoga mat, strength bands and bicycle for those who are into fitness.
We don’t allow parties, neither does the building. You are allowed to bring guests but there is a quiet time from 10pm to 8am , where loud noise isn’t tolerated. If you are professional, responsible, you will be a welcome guest. This unit is also great if you are traveling with a family. As you will see in the pictures, there is a stair case in the unit, so if you have very young toddlers, you might consider another place or buy a baby gate. We can recommend activities, restaurants, destinations, etc, you will be in great hands.
On Jan 4, 2021, I will be celebrating 10 years of being in NYC, so I guess that makes me a real New Yorker finally. Here is a post on why I moved to this great city. I still vividly remember the day (Jan 4 2011) we landed here on a very cold and windy afternoon. We arrived at JFK with a ton of luggage, two yorkies and there was snow all over the ground and it was in the 30s. Given we were coming from California, we didn’t have the proper attire but we quickly fixed that we a much needed trip to the North Face store in UES.
Thinking back about the past decade for me , family and the startup community, it has been an epic journey. Moving here was the best professional and financial decision that I have made. Both of our children were born in Manhattan, how cool is that for them to say when they get older. We spent seven years in Manhattan and Queens, then moved to the suburbs in New Jersey, have been here for three years now. When we decided to move to NYC, it was a calculated decision as I knew something exciting was brewing in the startup community and I wanted to not only be a part of it but also make a contribution. The growth of the community has been much larger than I anticipated though, I knew it would be big but not this big, what a wonderful surprise. There is a lot of chatter now about what the startup scene will be in NYC and other major tech hubs, given that the pandemic has forced everyone to recognize that we can in fact work remotely and be productive. I remain very bullish on the NYC startup scene, this great city will continue to be magnet for people who thrive in a high pace, high energy environment and are risk takers. The contrarian move right now would be to come here, those are individuals that I would bet on.
Here is some data via NYC HQ’d CB Insights that clearly shows the rapid increase in activity the past 10 years. The first image is amazing, a clear rapid acceleration of deals and dollars. The second image shows an acceleration of median and mean deal sizes. The third image shows which investors were the most active during the stated time periods, it a high quality list of VCs, so of which aren’t based here but are heavily investing in this community (YC, SV Angel, Founder Fund). NEA didn’t have an office here at the time but now have an established team on the ground. General Catalyst had maybe one person on the ground ten years ago if I recall correctly and have since built a team locally.
Given covid-19, we have been pushed to WFH environment for people in the startup world. The longer we stay in WFH, people are either contemplating about moving or have already moved to other regions. I was interested to comparing various states and regions from today to ten years ago, as a way to think about what region/state might breakout in the next 10 years.
The data below is from Pitchbook. I took a look at companies that are HQ’d in these regions and have raised an aggregate of $1M+ of funding from VCs. I compared two date periods: Jan 1 2009 through Dec 21 2010 and Jan 1 2019 to Dec 5 2020 (today’s date). Here is the data.
I have been living in the NY Metro area now for 10 years, so the NY numbers were not a surprise, almost a 4x growth in 10 years, truly remarkable at the growth but also aggregate, being in the #2 spot overall. Was surprised to see the growth of Chicago / IL region. In terms of the future, I believe that Atlanta has a lot of upside and could catapult to the 5th position. There is a lot of chatter of about Texas and Florida, there are a fair amount of startup people moving there from the Bay Area and NYC, so there certainly is a chance that they could move up quickly. I do wonder if these moves are temporary due to COVID or are permanent. Texas and Florida are a bit challenged as they have a handful of large cities within the state which makes impacts the concentration of talent. If you look at the top regions above , it is usually one large market in a state that has the concentration of talent. In Texas, you have Austin, Dallas, Houston, etc and in Florida, you have Miami, Tampa, Orlando, Jacksonville, etc. It will be interesting to see who move up the chart in the next 10 years, who do you think has the best shot, feel free to post your thoughts on twitter or comments section below.
Who: you and Jon Ossoff and Reverend Raphael Warnock
What: Runoff for two seats in the U.S. Senate
When: January 5, 2021 is the final day of voting. Last day to register to vote is December 7, 2020. In person voting starts December 14th.
Where: State of Georgia
Why: Two seats are available for the U.S. Senate in the State of Georgia. Democrats are in a position to take control of the Senate
The Senate currently has 50 seats for the Republicans and 48 seats for the Democrats.
To recap the November 3, 2020 election. In Georgia, 5 million people voted out of 7.6 million people who were registered to vote, which was an amazing turnout (66%)!! The put into perspective, the entire state of Georgia has 11 million people and there are still people who haven’t registered to vote as of yet. The goal in the next few weeks is to get more people registered but more importantly, we need to have a great turnout like we had on Nov 3, if you are going to focus on organizations to contribute to, that is where we need the money.
The two candidates for the Democratic party are John Ossoff and Reverend Raphael Warnock, see links below:
There are four organizations that are helping get people registered and/or helping get folks out to vote: Voter Participation Center, BlockPower, The New Georgia Project and Fair Fight, see descriptions and links below. I’m going to contribute to several of these organizations and have already contributed to both candidates. In terms of dollars, I’m going to be contributing more with BlockPower, as they are less well known than the others and there only focus is to increase voter turnout, which is critical for this race. I hope you can donate and/or volunteer for this candidates and/or organizations.
The Voter Participation Center is a U.S.-based 5013 non-profit organization that seeks to increase voter registration among young people, people of color, and unmarried women, a group it calls “The Rising American Electorate
BlockPower is a nonprofit focused on increasing voter turnout among Black citizens who don’t vote regularly.
BlockPower pays people in majority-Black neighborhoods to be “Voting Ambassadors” and talk with their friends, family members, and neighbors about the importance of voting.
We promote fair elections in Georgia and around the country, encourage voter participation in elections, and educate voters about elections and their voting rights. Fair Fight brings awareness to the public on election reform, advocates for election reform at all levels, and engages in other voter education programs and communications
2020 has been the year of SPACs led by Venture Capitalists (VC) firms and individuals. Some people have compared SPACs to ICOs, in terms of hype and also potential outcome (ICOs flared up with a lot of drama and gov’t scrutiny). I believe SPACs can play an important avenue for specific companies, typically those that are more capital intensive and take a while to get to maturity. From a retail perspective, it provides an opportunity for investor to get access to technology companies that still have a lot of upside.
Here are the active SPACs in market today, including the amount of it:
I know of several other VC led SPACs coming online. More to come for sure.
Relative to all the SPACs that have been raised this year and previous years (see below), the number and total value of VC related SPACs is tiny percentage. Image is via https://www.spacresearch.com/
Shai's Blog 