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Disentangling what, exactly, a “seed” round is these days is kinda tough. Not so long ago, a company might’ve raised a little bit of money from friends and family to get off the ground, and raised their first institutional investment round at Series A. But institutional capital has moved further and further upstream. In many cases today, seed is the first institutional round a company raises.

But that doesn’t begin to address the full semantic complexity of the funding landscape for fledgling ventures. Yes, there’s seed, but now, for even earlier-stage companies, there’s an emerging class of specialized pre-seed investors. Already seed-funded companies may opt to raise a “seed-plus” or “seed extension” round if they’re not quite ready to pursue a proper Series A round.

This doesn’t even get into whether the round is priced or unpriced. If priced: What metrics were used to derive the company’s valuation? If unpriced: What sort of financial instrument is being used? A Simple Agreement for Future Equity (SAFE) or convertible debt? Capped or uncapped? Discount or no discount? What are the triggers for conversion into honest-to-goodness equity shares? What’s the likelihood that a convertible debt instrument or SAFE will actually convert?

Suffice it to say there’s a lot of complicated stuff happening in the earliest stages of a company’s life as an investible asset.

But one thing’s for sure: most rounds aren’t very big, but they are getting bigger.

Sizing the swarm of seed

To bear this out, we analyzed 15,538 funding rounds labeled as seed in Crunchbase’s dataset, which were raised by 12,772 unique U.S.-based startups between January 2015 and mid-February 2020. Rounds without listed dollar amounts were excluded from our sample set. We then segmented our data by the size of funding round, bucketing the numbers in half-million-dollar increments, inclusively. (e.g. a $500,000 seed round would be in the “$0 to $500,000” category, whereas a $500,001 seed round would belong in the “$500,000 to $1,000,000” bucket.)

Here are the numbers in chart form.

This is a surprisingly neat-looking chart. It’s pretty darn close to a perfect exponential decay function, up to a certain point.

In our sample set, just a bit over 60.5 percent of recent U.S. seed rounds came in at less than $1 million. On the one hand, that’s not surprising. At least in Crunchbase’s data, most of the rounds in which the big accelerator programs invest in are labeled seed. And since theirs is a business of seeding at scale, the influence of accelerators can be seen in the market. writes $150,000 checks these days, to hundreds of companies per year. , , and other large-scale accelerator programs write similar-sized checks. Smaller programs, especially those located outside major startup hubs, tend to write even smaller checks. In our sample set, 9.4 percent consisted of seed rounds that were $50,000 or less.

A rising tide for recent seed

If you follow startup funding news closely, you might have the feeling that seed rounds are getting larger. On the whole, current data suggests that they indeed are.

In the chart below, we plot the same set of 15,538 rounds–still segmented by $500,000 increments–but this time we split the distribution into two chunks of time: rounds raised in the three years between 2015 and 2017, and those raised in the little more than two years between 2018 and mid-February 2020, when we pulled the data. You’ll note in the legend of the chart that we’re dealing with significantly different sample sizes between the two time periods, due in part to the fact that the actual amount of time included differs between the two sets of data, and due to known reporting delays in private company financing data.

You’ll notice that the distribution of round size decays somewhat exponentially for both subsets of seed rounds. However, in the case of rounds struck between 2018 and very early 2020, the long tail of the distribution is a little fatter.

In other words, the majority of rounds are still pretty small. Of the rounds reported between 2018 and early 2020, 70.3 percent were $2 million or less. But of the seed rounds announced between 2015 and 2017, 83 percent were $2 million or less. More recent seed rounds, as a population, are bigger than seed rounds raised by a previous generation of startups.

A small set of the most recent seed rounds are creeping up toward the size of small Series A rounds. In relative terms, the proportion of seed rounds that were larger than $3 million more than doubled from one cohort to the next. Of the seed rounds raised in the 2015-2017 period, 7.8 percent raised over $3 million, and 17 percent of the seed rounds raised between 2018 and early 2020 were greater than $3 million.

What does one make of all this?

First, this is hardly new information. Crunchbase News has tracked the rising size of seed rounds in its quarterly reporting over the course of several years. It’s a global phenomenon; the U.S. seed scene is not a hotspot in an otherwise tepid market. It seems that seed investors around the world are warming to the idea of funding larger rounds.

Second, it shows a shift in investor strategy over time. From the investor standpoint it makes good business sense to back larger rounds, because unless valuations are rising faster than round size (which is hard to tell given limited available data) bigger rounds redound a bigger chunk of equity to seed investors. If that larger position can be defended through negotiation and exercise of pro-rata rights in the rounds that follow, seed funds backing bigger rounds may end up generating higher returns over time than their counterparts backing comparatively smaller seed deals.

Third, despite all the anecdotal evidence that seed rounds are getting bigger, and despite the numbers presented above, it’s important to note that the significance of the change between the two cohorts might be attenuated by reporting delays. This is not to say that the shift toward bigger seed rounds, as of late, isn’t real. It’s just that it can sometimes take several quarters (heck, occasionally a year or more) for seed funding to be disclosed and ultimately added to a set of private company data like Crunchbase. Data reporting delays are a known phenomenon across all private company datasets, to varying extents. So, if in a couple years we look back at the same windows of time (2015-2017 and 2018-February 2020) the numbers may have shifted slightly as smaller, currently undisclosed rounds surface and get integrated into the dataset. That being said, it’s still a safe bet to say that, on the whole, seed rounds got bigger.

As a parting thought, it’s important to think about what happens to this big seed trend if and when the world economy starts to slow down. So much more capital has flowed into seed-stage ventures over time, but what happens when it eventually ebbs?

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Rumors swirled over the weekend that was on the verge of closing on a buy of personal finance company . for about $7 billion in cash and stock. ( .)

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As the WSJ reported, such an acquisition would help propel Intuit further into the consumer finance space.

By Monday afternoon, Intuit had confirmed the news , saying it plans to buy Credit Karma for about $7.1 billion in cash and stock.

We thought this would be a good time to take a look at Credit Karma’s funding history. The San Francisco-based company has raised since its 2007 founding by , according to Crunchbase data.

Most recently, in March 2018, Credit Karma skipped an IPO and cashed out for some of its existing investors via from at a $3.5 billion pre-money valuation. With that deal, Silver Lake acquired a significant minority stake in the company from existing equity holders through an organized secondary process.

Credit Karma does a whole slew of things like help people keep up with, and improve, their credit ratings. It also helps people prepare and file their taxes, monitor their identities and track and manage vehicle information. It also uses advanced data modeling to analyze and identify the best financial products available for its members. As of 2018, it had originated more than $40 billion in credit products including credit cards, personal loans, mortgages, automotive financing and student loan refinancing.

And as of this month, Credit Karma says it has more than 100 million members in the United States, U.K. and Canada, including almost half of all U.S. millennials. Part of the company’s growth goes back to the fact that it offers all these things for free, making it easy for people to become members. The company makes its money when members take an offer through its site (such as for a credit card or a loan). In the case of a credit card, it gets a cut from the bank issuing that card, and in the instance of a loan, the company gets a cut from the lender who funds it.

In 2017 TechCrunch reported that the company earned the previous year and was profitable. In its statement today, Intuit noted that Credit Karma had “nearly $1 billion in unaudited revenue in calendar year 2019, up 20% from the previous year.”

Funding rewind

In 2008, put $500,000 in Credit Karma in an . The startup went on to raise $2.5 million in a (back when Series As were actually this small) financing that was led by and included participation from Ìý and , among others.

It took Credit Karma three and a half years to raise its next round: a March 2013 $30 million Series B investment led by . also put money in that round.

By the following year, the company had raised $155 million across two tranches of a Series C round, more than five times the round of its Series B the previous year. The second tranche of that Series C, led by SV Angel in September 2014, gave Credit Karma a $1 billion valuation.

In June 2015, the company raised a $175 million Series D financing at a pre-money valuation of $3.3 billion.

The deal going through is a validation for the fintech space, which only saw one IPO last year in ’s public debut.

As put it, (thanks to Axios for calling out this nice excerpt):

“Intuit could try to match all the tax data its TurboTax customers provide with the credit-scoring data that Credit Karma holds. That could let Intuit serve up better customer prospects to credit card issuers—and eventually let Intuit charge lenders more for access to its hoard of data.”

In confirming the deal, Intuit CEO Sasan Goodarzi said the company’sÌýmission is “to power prosperity around the world with a bold goal of doubling the household savings rate for customers on our platform.

“We wake up every day trying to help consumers make ends meet,” Goodarzi continued. “By joining forces with Credit Karma, we can create a personalized financial assistant that will help consumers find the right financial products, put more money in their pockets and provide insights and advice, enabling them to buy the home they’ve always dreamed about, pay for education and take the vacation they’ve always wanted.”

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