Nobody Seems to Be Raising Series A Regardless of Industry

Founders — it's not just you. Nobody seems to be raising their Series A these days.

No matter the industry, no matter the location in the US, the percentage of startups that have made it from their Seed to their Series A in under 2 years has fallen every year since 2020.

𝗖𝗵𝗮𝗿𝘁 𝗘𝘅𝗽𝗹𝗮𝗶𝗻𝗲𝗿

• Percentage reflects the share of seed-stage startups that got to the A round in under 2 years.

• Year is the year they raised their seed round.

• Data includes both priced seed rounds and any SAFE round that raised more than $2.5 million (which we considered "seed on SAFEs")

If you combine these 6 industries, that pattern gets even clearer.

35% of the 2020 seed-stage startups made it to the A round in 2 years or less.

13% of the H1 2022 cohort did so.

So...what the heck is happening?

𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹 𝘄𝗼𝗿𝗿𝗶𝘀𝗼𝗺𝗲 𝗲𝘅𝗽𝗹𝗮𝗻𝗮𝘁𝗶𝗼𝗻𝘀

• The metrics needed to raise a Series A shifted underneath many of these founders and they've struggled to keep up with the new, higher requirements.

• Bridge rounds are happening at higher rates (both priced and SAFEs), but if a large percentage of a fund's portfolio is asking for a bridge - many won't get it.

• This lack of graduation has created a glut of seed-stage companies, which may make Series A investors even more choosy since the supply seems so large.

• "Nice" traction no longer turns heads - it's gotta be stellar traction. Or a repeat founder with successful exits.

𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹 𝗵𝗮𝗽𝗽𝘆 𝗲𝘅𝗽𝗹𝗮𝗻𝗮𝘁𝗶𝗼𝗻𝘀

• Companies that raised their seeds in H1 of 2022 have all become much more efficient and aren't even looking to raise Series A yet (or maybe ever).

I gotta say, I'm having trouble believing the happy explanation at this point.

Shout out to the founders stuck in this quicksand - staying afloat in this environment is an accomplishment in itself!

#cartadata #Seed #SeriesA #fundraising #startups #founders