VC round sizes are exploding - or are they?
How much cash VC-backed companies raise in a given round is an interesting trend indicator. At the moment there are two competing theories of startup cash needs.
๐ง๐ต๐ฒ๐ผ๐ฟ๐ ๐ญ AI is making everything about company-building cheaper. Startups need less cash than ever before.
๐ง๐ต๐ฒ๐ผ๐ฟ๐ ๐ฎ AI is lowering the barrier to company creation, thereby increasing competition, thereby making the cash advantage actually more important as startups scale. Yes you can get started for less but ultimately winning a category will cost more than ever.
What does the data say?
In the chart below, we compared the size of a US primary round in each venture stage (seed through Series E) raised in 2020 vs 2024.
Of course lots of stuff has happened in those 5 years. So we show both the absolute difference (in the black bars) and the inflation-adjusted difference (in orange).
๐๐ถ๐ป๐ฑ๐ถ๐ป๐ด๐
Seed rounds (at least the priced version) have gotten much bigger. 53% bigger in aggregate, 31% inflation-adjusted, but any way you slice it seed rounds have done some healthy growing.
Every other stage besides Seed has either been effectively flat or actually shrunk when you look at inflation-adjusted round sizes. Late-stage rounds are 40%-50% smaller than they used to beโand yes, that includes many wildly large AI fundraises.
Not shown in the chart but important: pre-seed funding on SAFEs has ballooned over this period, meaning the standard venture saying "Seed is the new Series A" should actually be "Pre-Seed is the new Seed" probably.
Of course this is only comparing medians, so there's a whole range of round sizes across every stage. But it's fascinating to see that scale rounds seem to abide by Theory 1 while Seed is playing its own game.
Final idea here: the increased Seed round size ๐ฎ๐ข๐บ be due in part to companies explicitly raising a seed-strap round (name from Natasha Mascarenhas) where they only expect to raise a single venture round ever. New company build unlocked, perhaps.
How much cash does your business need?
#startups #founders #venturecapital #ventureround #roundsize
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