Seed rounds are sprouting 🌱
Jan 29, 2025
Kaley Ubellacker
Market Stirrings 🚩
Here's what the week looked like in pre-seed:
$17.2M
14
Data aggregated from proprietary research and Crunchbase; valuation estimate based on 10-20% ownership stake.
As January startup season winds down, AI and fintech are dominating, accounting for more than 60% of the capital raised this month. In a surprising twist, manufacturing has emerged as a contender, capturing just over 10% of the total capital raised so far.
Good Reads 📖
For the rushed reader …
Madrona Ventures just closed on $770 million between two funds—its largest fundraise to date.
DeepSeek shocked the tech industry with its open-source chatbot, R1, developed for just $6 million compared to OpenAI’s $100 million for GPT-4.
Despite the downturn, seeds rounds are getting bigger, with larger deals (over $5 million) taking up a larger share of the total funding since 2021.
For the less rushed reader …
Getting something better than a pony
Madrona Ventures is turning 30, and instead of cake and a couple gray hairs, it’s celebrating with fresh capital. Madrona Ventures just closed on $770 million between two funds—its largest fundraise to date. That’s an 11% bump over its previous $690M raise in 2022, which might not make waves, but it’s still significant in a time when many VCs are struggling to close funds. This increase is likely a nod to Madrona’s strong track record, with recent exits like Lexion (sold to DocuSign) and Octo AI (acquired by Nvidia) returning capital to its investors. The firm, known for backing giants like Redfin, Snowflake, and Amazon, plans to deploy the new fund in AI, life sciences, and infrastructure, particularly in ways that reduce friction between foundational models and users. The $770M will be split between early and later-stage investments, with Madrona targeting 30 startups at the pre-seed, seed, and Series A stages, plus 12 in Series B and C. Now that’s a birthday present I would gladly accept.
A DeepSeek dive for LLM company valuations
A Chinese startup just broke through the system. DeepSeek shocked the tech industry with its open-source chatbot, R1, developed for just $6 million compared to OpenAI’s $100 million for GPT-4. With R1 topping the App Store and erasing $600 billion from Nvidia’s market cap, DeepSeek is forcing a rethink of the assumptions behind multi-billion-dollar bets on companies like OpenAI, Anthropic, and Cohere. Investors are now sweating over the viability of open-source models and the pressure it puts on LLM pricing, especially for titans like OpenAI. Looks like the AI gold rush might have just turned into a garage sale.
As far as the eye can seed
Seed funding is the cockroach of venture capital—surviving and even thriving when everything else is falling apart. Despite the downturn, seed rounds are getting bigger, with larger deals (over $5 million) taking up a larger share of the total funding since 2021. According to Crunchbase, while overall seed funding dropped to $13.2 billion in 2024, it remains more resilient than early- and late-stage investments, which have plummeted by 50%. However, the bar has certainly been raised: securing a true institutional $2.5-$3 million seed round is tougher today, and valuations are all over the place. An interesting shift is that more early-stage funds are now playing in the seed space, adding flexibility to the category and expanding it to include pre-seed, seed, and pre-Series A. So, while the market may be tough, the seeds are certainly being scattered far and wide.
Fire Up the Pre-Seeds🔥
Highlights from this week’s pre-seed raises:
climatetech
Addis Energy - Ironing out some chemical problems.
Addis Energy raised $4.3 million from Engine Ventures, Pillar VC, and Voyager Ventures. Addis Energy is building technology that produces ammonia cleanly, pulling it straight from the Earth by injecting nitrogen and water into iron-rich rocks.
fintech
Mesta - Coining a new fintech era.
Mesta raised $2 million from Garuda Ventures. Mesta is creating a global payments platform with hybrid fiat and stablecoin payment rails. Only 3 months post-launch, it’s already processed $12 million in total payment volume.
AI & Data
Glue - A test you want to take.
Glue raised $2 million led by Fortive. Glue is developing a platform that automates and accelerates product testing, helping companies bring products to market faster than ever.
Kaiden AI - Copping a new training program.
Kaiden AI raised $1 million led by focal. Kaiden AI is creating an AI-driven platform that provides immersive training for law enforcement and public safety professionals, enabling them to practice in realistic, high-stakes scenarios.
Outro🚪
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