Shhhh don’t tell anyone - but there’s some optimism seeping back into seed startups.
Startups that raised their seed rounds in 2024 are graduating to Series A a bit faster than their counterparts did in 2023. The trend is positive.
But time has almost run out for those that raised their seeds in 2021 and 2022.
𝗖𝗵𝗮𝗿𝘁 𝗘𝘅𝗽𝗹𝗮𝗶𝗻𝗲𝗱
Each row is a group of companies that raised their seed round in that quarter.
Each column shows the time elapsed since that seed round.
Percentages reflect the share of seed companies from that cohort that raised a Series A in that timeframe.
For example: of the startups that raised their seed round in Q1 2021, 32.7% had gone on to raise a Series A in 2 years (Q8 in the columns)
The reduction of green and gold cells, along with the steady march of red and pink into Year 2 and Year 3, make it clear that the boom times of venture fundraising are behind us.
But for the first time in a long time, graduation rates are picking up.
12.9% of seed rounds from Q3 2024 have made it to Series A after 1 year. Best graduation rate for a quarterly cohort since Q3 2021.
Optimism!
On the gloomy side, I'm not hopeful for the seed round companies of 2022. Only ~25% or so have made it to Series A after 3 years. These companies raised just before the AI wave into a downward trending market...really tough to beat the odds.
Last point - what about "seed-strapping"? Those startups that raised a seed round and planned to never raise an A.
1) I don't think that was nearly as common as people think.
2) Many who thought they would seed-strap end up trying to raise more later on.
Startups go through waves. We're at the launch point in another (AI-driven) swell.
#startups #founders #seed
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