>> The bloom is off the rose for Seed Funding. I am Heather Summerville, technology correspondent with Reuters in San Francisco. After a four-year boom in Seed Funding, investors are pulling back. Seed funding is the first institutional money that goes into brand new startups. It's critically important for Silicon Valley.
But in the last two years, research shows there's been a 40% reduction in financing deals for these Seed companies. Now why is there this slowdown? It's not because investors are running out of money. On the contrary, they've raised plenty of money from Chinese family offices, Sovereign wealth funds, universities.
They're increasingly concerned that the start-ups they found aren't going to make it. They're not gonna raise future rounds of financing or they're not gonna be able to compete with incumbents like Facebook and Google which can fairly easily copy any feature a new startup comes up with. So what Seed stage investor are doing now is they're still investing a lot of money but they're putting larger sums into fewer companies.
And they're doing this for two reasons. One, they still have a lot of money that they are obligated to invest in text startups. And two they're trying to secure larger ownerships in these startups as a way to protect themselves in a future financing rounds. This Seed money is critical, it's the lifeblood of Silicon Valley.
It gives entrepreneurs their first shot at success and most every company get Seed money. Now that it's harder to get hat money, it is going to make some entrepreneurs think twice about starting a company. And it will probably cause some very young start ups to die at quicker death