There are far fewer caps and gowns being handed out to seed-stage startups these days.
In a "normal" year (I mean, what is normal, but say 2018), something like 20-24% of startups that raised a seed round would graduate to their Series A in 24 months or less.
That's not everyone — many companies will end up raising their A; it will just take longer.
But it does give us a benchmark to judge more recent seed cohorts as they attempt to get to Series A. And recent cohorts have underperformed.
For companies that raised their seeds in H1 2022, only 13% have made it to Series A across the 6 industries in the chart above. 13%!
Okay — so what's happening?
My pessimistic take: The metrics needed to raise a Series A shifted underneath many of these founders and they've struggled to keep up with the new, higher requirements. So bridge rounds are completed at higher rates (both priced and SAFEs), but many will bridge to nowhere. Most will shut down but have extended lives for now.
My optimistic take: Companies that raised their seeds in H1 of 2022 have all become much more efficient and aren't even looking to raise Series A yet (or maybe ever).
I'm an optimist by nature, but my head says pessimism is the stronger argument right now.
Hang in there, seed stage founders!
(If you're actively raising your Series A, consider closing your round on Carta. More transparency into all those signature packets and cheaper to boot.)
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Peter Walker
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