Funding to the earliest startups typically flows through SAFEs - but whether you raise a SAFE round or a priced round, dilution per dollar is pretty much the same.
It's fun to find a part of venture that's rational! What a neat trick.
But overall the market in SAFEs and Convertible Notes (which together comprise the "pre-seed" portion of venture) showed a few signs of weakness in Q1.
The highlights from our State of Pre-Seed report:
Continued decline in pre-seed activity: For the third consecutive quarter, pre-seed investment declined, in terms of both total cash raised and count of instruments. Q1 saw a total of $737 million invested, down 20% from Q4's $923 million.
Pre-seed hubs in the South: Out of the top 20 pre-seed metros by total cash raised in the past year, six were in the South: Austin, Dallas, Houston, DC, Atlanta, and Miami. The South took in 18% of all pre-seed cash raised from Q1 2023 to Q1 2025.
Increasing valuation caps: For post-money SAFE rounds above $500,000, valuation caps rose slightly in Q1 2025 compared to Q4 2024.
Steady interest rates: The median interest rate on convertible notes held steady at 7% in Q1 2025, down from a high of 8% in Q2 2024.
Read the full thing for a treasure trove of data, graphics, and analysis.
Onwards!
Subscribe here if you're new to the Data Minute. Forwarding encouraged!
Peter Walker
DISCLOSURE: This communication is on behalf of eShares, Inc. dba Carta, Inc. ("Carta"). This communication is for informational purposes only, and contains general information only. Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein. © 2026 Carta. All rights reserved. Reproduction prohibited.
