Will you make it to Series A depends a whole hell of a lot on when you raised your Seed round.
And if that seed-stage raise was in the last few months of 2021 — or the first half of 2022 — you're playing on hard mode.
Each line in the chart below represents a set of companies that raised their seed rounds in a specific quarter. So Q2 2020, for instance, is the blue line leading the pack at the top.
Y-axis: the percentage of companies from that seed quarter set that made it to a Series A X-axis: number of quarters since the cohort began
By placing all the cohorts along the same timeline, patterns become easier to spot. Seed-stage cohorts in 2020 made rapid progress - every single one of the 4 had at least 40% of the underlying startups get to Series A in 3 years or less.
Recent cohorts are lagging behind. Only 15% of companies that raised their seeds in Q2 2022 made it to Series A in 2 years, the lowest such percentage in the last 20 quarters.
So yes, the macro conditions matter a lot when you look at startup funding success.
And yes, this picture makes a pretty good case for startups to get to a place where they control their own destinies through quality revenue and not needing another injection of VC cash. It's just very difficult to build a VC-scale business ($100M ARR +) at VC speeds (5-7 years) without VC money.
Doable! But very, very difficult.
Hang in there, founders. My suspicion is that funding is going to improve, if only gently, in the back half of this year. Fingers crossed!
Give me a shout in the comments if you'd like a high-res version of the core graphic below, without the animations 🙏
#cartadata #seed #SeriesA #fundraising #founders #startups
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