Acting on those narratives, many investors have flocked to fund new startups while leaving late-stage companies in the cold.Investor appetite for nascent companies remained so strong that they poured more capital into angel and seed deals than in 2021.The buoyancy was supported in part by multi-stage VCs who pulled back from later stages and increased their participation in seed deals. While firms like Greylock Partners and Andreessen Horowitz raised dedicated seed funds in 2021, other investors at large firms have also increased their focus on the seed stage. Quentin Clark, a managing director at General Catalyst , used to spend a lot of his time on Series A deals, but he recently shifted his efforts to the seed stage startups, he said.While valuations of seed companies remain high compared to historical levels, these companies can adapt their business models to grow cost-efficiently. While valuation data gathered by PitchBook could lag the actual deal by a quarter or two, investor interest in young startups helped keep their pricing relatively steady.VCs curtailed their late-stage investing in reaction to sharply lower prices of technology stocks. Many of these investors have found more lucrative investment options, Navis said.As a result, the median valuation of a late-stage deal fell nearly 17%, from $12 million in 2021 to $10 million last year.
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