The number of early-stage VC rounds worldwide dropped from about 13.3K in 2014 to about 5.9K this year, with mobile app and SaaS startups hit hardest
Amid record amounts of capital raised by VCs worldwide, and a sharp rise in the number of private “unicorns” valued at $1 billion-plus …
Context & Ripple Effects
The headline number is only half the story: the same coverage notes VCs raised record amounts of capital and unicorns multiplied, so the industry isn't running out of money — it's reallocating it. Later reporting confirms the shape of that reallocation: VCs raised $55B in 2018, matching 1999 levels, with most of the increase flowing into growth rounds that function as private IPOs rather than early-stage bets.
At the other end of the funnel, 60% of US VC funds raised every year since 2011 have been seed funds while non-seed fund formation stayed flat — meaning the seed stage got crowded just as the follow-on rounds thinned out. The squeeze lands on categories like mobile app and SaaS startups, where low differentiation makes them first casualties when Series A discipline returns.
First-order effects
- Founders raising A and B rounds — especially in mobile apps and SaaS — face far fewer available checks than in 2014, forcing longer stays at seed or earlier exits.
- Firms sitting on record committed capital must deploy it somewhere other than early-stage equity, pushing it toward larger, later, more concentrated positions.
Second-order effects
- Seed-stage competition intensifies as the proliferation of seed funds collides with a narrowed path to Series A, pressuring seed valuations and terms.
- Growth-stage assets become the scarce good: late-stage rounds start behaving like private IPOs, drawing in non-traditional capital — a shift later visible when non-VC funds took part in a record 42% of tech deals in Q2 2021.
Third-order effects
- If the pattern holds, venture splits into a barbell: thousands of small seed bets at one end and a handful of giant growth checks at the other, with the traditional multi-stage mid-fund squeezed out — consistent with PitchBook later counting $93B raised by US seed and early-stage startups in 2021, up from $30B in 2016, i.e., dollars recovering while round counts stay compressed.
- A thinner early-stage pipeline eventually constrains the supply of companies reaching growth scale, which is where the unicorns everyone is bidding on have to come from.
The trend: Venture capital is barbelled into a crowded seed market and a mega-round growth market, with the middle stages — and commodity software categories — starved of rounds even as total dollars hit records.