The key insight this week
In this new world of venture capital, the earlier the better. And nothing is earlier than pre-seed.
To set a little context: at Carta, we define "pre-seed" as any company that has yet to raise a priced equity round.
Across our US client base, that turns out to be quite a lot of companies—11,000+ at last count, many of whom take advantage of our Carta Launch product which is free until a company raises $1 million.
We went deep on these companies for our new quarterly report, the State of Pre-Seed.
Here are a few key findings:
SAFEs have taken over the pre-seed space. About 80% of pre-seed investment in Q2 happened through SAFEs, unless the company in question was a medical device, biotech, or hardware company which still hew towards convertible notes.
Valuation caps have gently declined: The median valuation cap for post-money SAFEs was $10 million this past quarter, down from $15 million at the beginning of 2022. Don't miss the increase in discounts as well (highlighted in the chart above).
Legacy venture ecosystems dominate the pre-seed stage: Of the 2,103 companies that raised some form of pre-seed financing in H1 2023, over half are headquartered either in California or in New York.
I hear you - many people think that is an expansive definition of "pre-seed" and that really the term should only apply to companies raising their first $500K or so. No problem! We break that out in the full report, giving specific metrics for every tier of convertible financing.
As we all turn towards a (hopefully) more productive fall, I encourage you to share this with a founder searching for funding or angel investor hungry for data. It may be our best work yet.
Until next week,
Peter Walker
### Social Links
- Image: https://carta.stensul.com/images/customer/modules/studio//6352c8bbc8ed3-1666369723.823.png
- Image: https://carta.stensul.com/images/customer/modules/studio//6352c8c7ac7c6-1666369735.7065.png
- Image: https://carta.stensul.com/images/customer/modules/studio//6352c8d1c88f8-1666369745.8215.png
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.
