Early-stage funding in the information technology companies in the U.S. and Canada slowed down in the second quarter after posting record-high figures in the first three months of 2022.

The number of early funding transactions in the sector by private equity firms declined to 384 in the quarter ended June 30, compared with 516 in the previous quarter, according to S&P Global Market Intelligence data.

Early-stage funding provides for the nascent stages of a company's growth. It includes pre-seed funding, which helps validate a startup's idea; seed funding, or money that helps an entrepreneur start a business; accelerator funding, which helps fund a cohort of startups; crowdfunding; and angel investments from affluent individuals looking to support a young firm.

Early-stage funding activity for information technology companies was very strong in the first quarter. The sector raised $2.45 billion, the highest aggregate in any quarter since 2020. However, the number plummeted by 52% to $1.19 billion in the second quarter.

*Review Pongo Technologies' funding overview. * See the details of Yuga Labs seed funding round.

 

The second-quarter performance remained at par with mid-2021 levels with 1% year-over-year growth in early-stage funding of information technology companies.

The sector raised $1.09 billion from seed funding in the second quarter, down 3% compared to the same period last year.

Angel funding for information technology startups dried up in the second quarter with an exception of one transaction. Pongo Technologies Inc. received $265,000 in a round of funding led by Ascend VC.

Pre-seed funding amounted to $58.5 million, up 183% from $20.6 million in the second quarter of 2021. Accelerator funding also grew 131% year over year to $37.4 million.

Yuga Labs Inc. raised the highest amount of early-stage funding in the first half of 2022. The application software company received $449.9 million from the sale of 1,433,103 seed preferred shares at $314 each. a16z crypto, a fund managed by Andreessen Horowitz LLC, led the funding round which included participation from 47 investors.

Arc Technologies Inc. ranked second with $161 million from a seed funding round including equity and debt, while Trust Machines raised $150 million.