Seed-stage companies are a lot like grapes. They tend to form in bunches.
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The clustering effect is clear in this year’s vintage of seed-funded startups. A handful of categories accounted for an outsized number of investments.
What were some of the standout areas? Using Crunchbase data, we scoured through hundreds of the largest seed and pre-seed rounds in 2023 to identify trends. The following is an assortment of a few that stood out, from AI assistants to clean power to esports.
No. 1: Generative AI
Of course, we couldn’t make a list of trendy seed-stage categories without including Generative AI.
So here it is. Below, we put together a sample set of 16 companies in the space that raised seed funding this year, in categories from coding to insurance underwriting to identifying AI-generated text.
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The biggest funding recipient, Seattle-based XetHub, pitches itself as a platform for developing Generative AI apps and pulled in $7.5 million from VC firm Madrona in January.
Several other list members, meanwhile, are developing AI assistants. NinjaTech AI is working on a “personal assistant” focused on automating admin tasks like meeting scheduling and inbox management. Portrait Analytics is targeting investment research. And Altius is working on AI tech support.
Another interesting startup that made the list is GPTZero, a ChatGPT detection tool that a Princeton University student built out of his dorm room. A few months later, after amassing 1.2 million users, GPTZero also picked up $3.5 million in seed funding.
No. 2: Power Generation
Modern life consumes copious amounts of power. To wit, considerable sums of venture capital have gone over the years toward developing energy sources that are greener, cheaper, and more easily deployable.
At the seed stage, it’s clear appetites for next-gen energy technology remain robust. We identified a list of several companies that have raised some of the year’s larger seed rounds:
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Renaissance Fusion, a French magnetic confinement fusion startup, was the top fundraiser, pulling in $16 million in a January financing led by LowerCarbon Capital. Next was Burbank, California-based Terraform Industries, which has raised $11 million toward its goal of scaling technology to produce cheap natural gas with sunlight and air.
Fusion-focused startups accounted for about half of the seed investment on our list, marking the continuation of an ongoing trend. While fusion energy — created when two atoms are merged — has been talked about for a century, many feel that recent advancements have made commercialization something that could be years away and no longer decades.
No. 3: Esports
Esports and online sports forums are a growth industry, and that’s driving investment at the seed stage.
Using Crunchbase data, we identified at least eight companies funded this year that raised $3 million or more in seed funding for online sports-related endeavors:
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San Francisco-based Matchday stands out as the most heavily funded name on the list, with $21 million in backing from investors including Soccer legend Lionel Messi’s Play Time investment vehicle. The company plans to combine Web3 and mobile gaming for an online soccer platform.
Blacktop Hoops, a VR basketball game, also picked up a good-sized $5.1 million in seed funding from investors including Twitch co-founder Kevin Lin.
Meanwhile, the global esports market size is projected to multiply. While the industry was valued around $1.4 billion last year, its forecast to grow to $4.5 billion by 2030, per a recent report published by Cognitive Market Research.
No. 4: The Future Of (Finding) Work
Quite a bit of seed financing is also going toward tools and platforms aimed at filling jobs.
In our sample set, we feature 11 companies that raised seed rounds this year in categories ranging from construction work planning to cannabis industry recruitment to recruiter productivity tools.
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The most heavily funded of the bunch is Rivet, a Detroit-based startup developing software for construction contractors to manage and schedule crews. Most recently, it pulled in a $5.3 million February financing led by Defy.vc.
Not surprisingly, several startups also touted their artificial intelligence focus. Sinecure.ai describes itself as an AI-powered industry specific talent acquisition tool. Moonhub boasts of the “cutting-edge AI and automation solutions” it pairs with recruiting expertise to help you help companies with hiring. And Engin Sciences, prominent in cannabis industry hiring, calls itself an “AI-powered recruitment software startup.”
Notably, one area that did not look popular for seed funding was tech industry recruiting. With the industry hit hard by layoffs and falling valuations, it appears this isn’t a favored theme currently for first-time funding.
What’s not hot
As we look at hot seed funding sectors for 2023, it’s hard not to also observe the opposite: What’s not getting funded.
While it’s rare to see a broad sector that’s completely fallen out of favor, certainly some of the hotter areas in 2020-22 no longer seem so appealing. This includes alternative proteins, consumer products, fast delivery, e-commerce aggregators, and cannabis companies.
Luckily, seed-stage founders are a resilient group. Those who get funded know how to craft a pitch that resonates with the times.
*Survey was limited to companies founded no earlier than 2019 that raised $100,000 or more in seed or pre-seed funding.
