Take the pulse of the Northeast seed market with Kerty Levy from Techstars

Kerty Levy of Techstars know a thing or two about where seed money is and where it goes in the Northeast.

Speaking at TechCrunch’s Early Stage in Boston last month, Levy took a brief look at the number of deals and valuations before delving deeper into what the obstacles to funding are right now and what founders will need to expand to cut back on a deal.

From 2021 to 2022, the total number of deals in the Northeast was down about 25%. It may not be surprising, but it’s kind of grim. If you look specifically at seed funding, things are even more contracted.

“Even if you extrapolate past this quarter, even if we have a great second half of the year, I’m afraid the deal count looks bad,” she said.

In the first quarter of 2023, most investments in New England were in the productivity, business productivity, software, healthcare, climate, energy and fintech sectors.

But according to Levy, founders looking for investment are expected to jump through a series of hoops to access a pot of money that has dwindled in size.

“In 2021, you would go through this list of things to think about,” Levy said. “Traction: check. Founder/market fit: check. That was the attitude of investors at the time. But this time, what we’re seeing is really, really rigorous, hurdle jumping to get through the fervor and even through a few investor meetings. And I think that’s because investors have money to invest and want to spend it, but they want to spend it on the companies they think have the best chance of success.”

While investments may be lower overall, there’s still a lot of buzz around the companies that do get through all the hoops.

“As always, there’s a little bit of FOMO there,” Levy said. “So those companies that tick those boxes heavily and endure that diligence, those are the ones that you hear the buzz about valuations that are still out there.”

The hurdles are high.