90% of founders raise their initial capital on SAFEs. Are you raising at the right valuation cap?
The State of Pre-Seed Report is live! Direct link here, but read on for the highlights: https://lnkd.in/gpJkbfUZ
𝗖𝗼𝗻𝘁𝗶𝗻𝘂𝗲𝗱 𝗱𝗲𝗰𝗹𝗶𝗻𝗲 𝗶𝗻 𝗽𝗿𝗲-𝘀𝗲𝗲𝗱 𝗮𝗰𝘁𝗶𝘃𝗶𝘁𝘆: For the third consecutive quarter, pre-seed investment declined, in terms of both total cash raised and count of instruments. Q1 saw a total of $737 million invested, down 20% from Q4’s $923 million.
𝗥𝗶𝘀𝗶𝗻𝗴 𝗽𝗿𝗲-𝘀𝗲𝗲𝗱 𝗵𝘂𝗯𝘀 𝗶𝗻 𝘁𝗵𝗲 𝗦𝗼𝘂𝘁𝗵: Out of the top 20 pre-seed metros by total cash raised in the past year, six were in the South: Austin, Dallas, Houston, DC, Atlanta, and Miami. The South took in 18% of all pre-seed cash raised from Q1 2023 to Q1 2025.
𝗦𝗔𝗙𝗘𝘀 𝘃𝘀. 𝗰𝗼𝗻𝘃𝗲𝗿𝘁𝗶𝗯𝗹𝗲 𝗻𝗼𝘁𝗲𝘀: SAFEs comprised a record high of 90% of all pre-seed rounds on Carta in Q1 2025, while convertible notes made up the other 10%. The share of pre-seed capital raised on SAFEs, though, fell slightly to 82%, suggesting that Q1 had some large convertible note deals.
𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗶𝗻𝗴 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗰𝗮𝗽𝘀: For post-money SAFE rounds above $500,000, valuation caps rose slightly in Q1 2025 compared to Q4 2024.
𝗦𝘁𝗲𝗮𝗱𝘆 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗿𝗮𝘁𝗲𝘀: The median interest rate on convertible notes held steady at 7% in Q1 2025, down from a high of 8% in Q2 2024.
𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝘆 𝗱𝘆𝗻𝗮𝗺𝗶𝗰𝘀: Startups in crypto, biotech/pharma, and hardware had the highest valuation caps in SAFE rounds. Hardware startups also raised the third highest amount of cash in Q1, behind only SaaS and healthtech.
#startups #preseed #SAFEs #angels #valuationcap
Read the full report at carta dot com / data right now 🙏
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