Heads up for seed founders trying to raise Series A: it's rough out there.
I'll walk through a few of the dynamics below with data from B2B SaaS companies, but I think the general points hold mostly true no matter the sector or business model.
𝗧𝗵𝗲 𝗗𝗮𝘁𝗮
Plotted the change over time for ARR, pre-money valuation, and total rounds raised by Series A companies on Carta. Shout out to Silicon Valley Bank for the ARR data!
All figures are median, though there are wide ranges of course. Only primary rounds, no bridges or extensions.
Basic takeaway: ARR is up over 100% since 2021 for Series A companies, while valuation are only slightly up and total rounds down by nearly 50%.
In other words, rough out there!
𝗕𝘂𝘁 𝗪𝗵𝘆?
Obviously investors have raised their expectations of what "a Series A company looks like" in terms of traction, growth, etc etc.
Beyond that, there seems to be some trepidation on what these metrics really mean. Sure, more ARR is usually better - but does that mean the company really has product-market fit? Read Nnamdi Iregbulem on this.
Seed valuations have risen more than Series A ones, which may be making some VCs feel like Series A is "expensive" on a relative basis. But there are also many who are now playing in seed themselves who traditionally focused on Series A.
Perhaps some of the decline in Series A rounds is due to seed startups deciding to refrain from raising more capital beyond the first priced round. Could be a growing segment of companies through this year and 2026.
Whatever the specifics, founders should be aware that the market has changed. VCs are expecting more revenue, better metrics, and stronger momentum than they ever have.
Know the game you're playing 🙏
#startups #founders #SeriesA #Seed
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