Only 24 Percent of 2022 Seed Startups Have Reached Series A

Only 24% of startup that raised seed in 2022 have gotten to Series A so far.

Typically in VC-backed startups (and yes, I realize bootstrapping exists and is an awesome way to build a company - but not what we're talking about here), the estimate is usually a 50% decline between rounds.

Meaning if 100 companies raise seed capital, you should expect 50 or so to raise Series A rounds.

Is it true?

Mostly yes.

Data below looks at 13,466 startups in the US that raised a seed round. The year of the seed raise is indicated in the chart axis.

𝗞𝗲𝘆 𝗣𝗼𝗶𝗻𝘁𝘀

• About 6 in 10 startups from 2016-2018 raised a Series A after their seed round. Percentage is likely a little inflated due to sample heuristics at that time (Carta was quite young, our data was not as representative, etc). And a good market!

• For seed rounds raised in 2020:

- 51% raised at least Series A - but 85% currently sit at seed or A

• Look at the clear difficulty increase from 2021 onwards. Seed rounds raised in 2021 were much less likely to get to Series A than those in prior years, and the challenge has not really decreased in subsequent years.

• Also take a look at the number of companies. It really ballooned in 2021, contributing in no small part to the reduced graduation rates.

• Are we replaying the 2021 experience today with AI startups? Maybe but the picture is a little different. Lots of capital is flowing into fewer early-stage companies today than in the 2021 boom.

So when you are done celebrating the seed round, take a look at the founders to your left and to your right. About half of them won't get to the next checkpoint.

Not easy - respect to founders doing it anyway 🙏

#startups #founders