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Severe strains start showing in early-stage venture funding

The great startup funding orchestra that hit a crescendo in 2015 seems to be fast losing its tenor in the new year. While mid-stage venture funding deals had hit a speed bump a few months ago as galloping valuations made investors tizzy, early-stage funding had remained robust keeping hopes alive for startups looking for initial financing support.

However, if the first month of the new year is anything to go by, even angel and seed-stage investors seem to have tightened their purse strings. This is bad news for startups as this could indicate that the investors’ risk appetite has been shaken.

“Yes, overall there’s a bit of a slowing down of fresh cheques being cut; 2015 was a year of rapid deployment, this year will see more consolidation,” said Sanjay Nath, co-founder of Blume Ventures, a seed-stage investor that is looking to come in at Series A stage under its second fund.

Angel, seed and Series A stage venture funding transactions that peaked with 100 deals or one every seven hours in November halved to just 51 last month. This is the lowest level in 15 months, as per data collated by VCCEdge, the data research platform of VCCircle.

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