Thriving Seed Sectors in a Turbulent Market

We explore early-stage investment opportunities that are attracting significant capital

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While 2022 has introduced challenges to the macroeconomic environment, seed investing continues at a brisk pace among VC firms.

According to a Crunchbase report, seed companies have proved to be resilient amid lagging late-stage investment activity. The result is a heightened focus to backing early-stage startups from Alumni Ventures and other established VCs like Tiger Global and a16z.

The capability to navigate fast-changing market conditions to source seed opportunities for our investors has never been more important and is something our investment team excels at. Our team monitors a wide variety of industries to find promising young startups as they emerge. These opportunities often exist at the intersection of talented innovators and cutting-edge technologies. We leverage the network of AV’s ~50 investment professionals and our own community of ~600,000 members to source high-potential, early-stage investments.

Below is a sample of high-potential sectors and examples of innovators in the space from our portfolio.

Seed Fund Closing December 31

Alumni Ventures’ Seed Fund lets you invest in a fund of ~20-30 diversified, venture-backed companies at the earliest stage, where the opportunities for value creation are typically highest and company valuations are usually at their lowest.

Metaverse

The metaverse isn’t a single technology, but rather a constellation of technologies including virtual and augmented reality software and hardware, blockchain, and software platforms that will ultimately link together into a single cohesive “metaworld.” The fundamental promise of the metaverse is that it will also introduce entirely new markets for digital assets with opportunities ranging from digital fashion lines to NFT-backed digital real estate. Mark Zuckerberg, CEO of Meta, has staked the future of the company on realizing this transformative technology, investing $10 billion into the space, which is a projected value of $800 billion by 2026.

Sample Metaverse Investment from AV’s Portfolio

The following is a past investment AV has made, but reflects the type of promising companies we aim to include in this year’s Seed Fund.1

AV portfolio company Pixelynx has developed technology designed to transform the way music is consumed in the metaverse, while also building a network of complementary businesses. Pixelynx’s metaverse platform makes it easy for artists to launch their own interactive environments and monetize them through NFTs, playable experiences, and virtual performances. Alumni Ventures participated in the company’s $4.5 million seed round in December 2021 led by Animoca Brands.

Fitness Technology and Wellness Monitoring

An area of VC investment that has steadily gained traction over the past three years is healthtech, specifically fitness technology and wellness monitoring. A report from Deloitte saw rapid growth in the sector across 2018 and 2019, with additional investing spurred by the pandemic. The momentum in healthtech investing continues today, albeit at a slower pace than 2021, which has proven to be a historical outlier. Advances such as machine learning and artificial intelligence, as well as leading-edge health-monitoring devices and wearables, continue to attract investment.

Sample Fitness Tech Investment from AV’s Portfolio

The following is a past investment AV has made, but reflects the type of promising companies we aim to include in this year’s Seed Fund.1

Levels is a dashboard for your body’s metabolism. Users receive personalized insights into how different foods affect their body and health through a wearable metabolic device that monitors real time glucose levels. Alumni Ventures invested in the company’s $12 million seed round in November 2020 led by a16z. We re-invested in the company’s $38 million Series A in April 2022.

Climate Tech

Investments in alternative and renewable energy have continued to perform strongly in 2022, despite shifting marketing conditions. According to TechCrunch, average deal values have held steady at $23.6 million, and analysts estimate that the entire market value is on track to achieve $1.4 trillion. These key indicators reflect a belief among investors that sustainable and renewable energy sources are becoming foundational parts of the economy — especially in light of the turmoil in European energy markets caused by Russia’s invasion of Ukraine.

Sample Climate Tech Investment from AV’s Portfolio

The following is a past investment AV has made, but reflects the type of promising companies we aim to include in this year’s Seed Fund.1

As part of our Seed Fund 3 portfolio, we invested in Nitricity, an energy startup whose technology produces nitrogen at the point of use, drastically simplifying fertilizer supply chains for agricultural applications. By eliminating fossil fuel-consuming transportation, Nitricity’s tech reduces the overall carbon footprint of farming industries while promoting sustainable fertilizer production. Alumni Ventures invested in the company’s $5 million seed round in November 2021 led by Energy Impact Partners.

Fintech

A staple sector in VC portfolios,fintech accelerated in recent years through disruptive innovations in digital currencies, blockchain technology, anti-money laundering regulations, and more. In 2021, global fintech startups raised a record $131.5 billion across 4,969 rounds, up from $49 billion across 3,491 rounds in 2020. In early September 2022, the fintech space saw a surge of activity amid the slumping venture market. FinTech Global reported nearly 50 rounds across the globe, with the top three rounds — Ratio, Power, and Axle Payments — raising $853 million.

Sample Fintech  Investment from AV’s Portfolio

The following is a past investment AV has made, but reflects the type of promising companies we aim to include in this year’s Seed Fund.1

Tilled, a fintech in AV’s portfolio, provides payment facilitation services intended to support the financial backend of marketplaces, SaaS companies, and integrated software vendors. Alumni Ventures invested in the company’s $2.2 million seed round in November 2020. Less than a year later, the company announced an $11 million Series A led by Canvas Ventures.

Software as a Service (SaaS)

Much like the VC landscape as a whole, seed-stage investments inSaaS startups have slowed in 2022. However, the space is still on track to outperform the $38 million raised in 2020, with $37 billion raised as of June 2022. SaaS startups that have gained traction and demonstrated strong fundamentals – profitability, revenue growth, and addressable market – will continue to see backing from VCs as more mature startups with heightened valuations may see interest diminish. VCs also see plenty of opportunities for mergers and acquisitions in the SaaS space, borne out by blockbuster M&As such as Adobe’s acquisition of Figma.

Sample SaaS  Investment from AV’s Portfolio

The following is a past investment AV has made, but reflects the type of promising companies we aim to include in this year’s Seed Fund.1

Alumni Ventures has secured multiple investments in Wasabi, which provides hot cloud storage that is compatible with Amazon’s S3 API at a fraction of the cost. We first invested in the company’s $2 million seed round in 2017, leveraging a long-standing relationship with Co-Founder and CEO Dave Friend. AV most recently participated in a $112 million Series C in April 2021, led by Fidelity and raised at a $700 million valuation.

Seed Fund Closing December 31

Alumni Ventures’ Seed Fund lets you invest in a fund of ~20-30 diversified, venture-backed companies at the earliest stage, where the opportunities for value creation are typically highest and company valuations are usually at their lowest.

Contact [email protected] for additional information. To see additional risk factors and investment considerations, visit av-funds.com/disclosures.

1For illustration purposes only. These investments are not intended to suggest any level of investment returns; not necessarily indicative of investments invested by any one fund or investor. Many returns in investments result in the loss of capital invested. These investments are not available to future fund investors except potentially in certain follow-on investment options.