Getting From Seed to Series A Is About a Coin Flip

What percent of startups make the leap from Seed to Series A?

It's about a coin flip. 50% yes, 50% no.

But timing matters in this discussion, as does fundraising pace. Not just because the seed round cash is being depleted but because the fund metrics on the VC side are highly time-dependent.

Data below looks at the graduation rate from Seed to A over time for each quarterly cohort. So for example, for companies that raised their seed round in Q4 of 2020, 34% had gone on to raise a Series A after 8 quarters.

We've spent a lot of time talking about the decline in these graduation rates for more recent batches of seed companies - no surprise that the easy money era of 2021 and 2022 bumped the percentages up for cohorts in that sweet spot.

But no matter the year, there seems to be a pretty firm cap on the eventual graduation rate. It varies a little, but it always ends up around 50%.

This doesn't mean that all companies that don't graduate end up failing. Some will be acquired, some will continue on absent any more external funding (a path that's becoming more attractive to many founders).

𝗧𝘄𝗼 𝗤𝘂𝗲𝘀𝘁𝗶𝗼𝗻𝘀

1. Will the cohorts that have started slow (2022, 2023, etc) end up around the 50% mark or will a smaller share of companies get through to A?

2. Does the pace correlate strongly to future fundraising, i.e. if a startup raises the A in under 1 year does that make the B materially more likely? My instinct is yes, but I need to dig deeper here.

Founders - 50% of your seed-stage compatriots have raised their last round. It's not easy!

#startups #founders #seed #SeriesA #fundraising #venturecapital

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