The pre-seed funding landscape has clearly evolved over the past few years. Similar to priced equity rounds, there has been a reduction in the overall number of deals and cash raised at the pre-priced stage.
In Q1 2025, pre-seed startups in the United States that use Carta raised a total of $737 million across 5,119 convertible instruments, a notable reduction from Q4 2024’s $923 million across 6,251 instruments. Pre-seed funding in Q1 2025 also lagged behind Q1 2024 by both metrics.
Smaller rounds continue to make up a larger percentage of all pre-seed rounds. Q1 2024 had nearly 3,800 rounds under $1 million and 2,900 above $1 million, while Q1 2025 had 3,400 under $1 million and only 1,700 above $1 million. This illustrates that the decline in pre-seed investment is largely the result of fewer large deals being signed.
On the other hand, Carta data shows that valuation caps have risen for both SAFEs and convertible notes at most round sizes. The pre-seed startups that are raising under the current environment aren’t getting larger check sizes than their predecessors, but they are gaining more favorable valuation caps.
SAFEs continue to be the preferred pre-priced instrument over convertible notes across industries, even in biotech/pharma and medical devices, which used to lean more towards the use of convertible notes. The rest of this report dives into major pre-seed trends, including dilution, discount percentages, industry comparisons, and more.
Q1 2025 highlights
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.
SAFEs vs. convertible notes: SAFEs comprised a record high of 90% of all pre-seed rounds on Carta in Q1 2025, while convertible notes made up the other 10%. The share of pre-seed capital raised on SAFEs, though, fell slightly to 82%, suggesting that Q1 had some large convertible note deals.
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.
Industry dynamics: Startups in crypto, biotech/pharma, and hardware had the highest valuation caps in SAFE rounds. Hardware startups also raised the third highest amount of cash in Q1, behind only SaaS and healthtech.
Key trends
SAFEs
Convertible notes
Industries
Methodology
Carta helps more than 50,000 primarily venture-backed companies and 2,400,000 security holders manage over $3.0 trillion in equity. We share insights from this unmatched dataset about the private markets and venture ecosystem to help founders, employees, and investors make informed decisions and understand market conditions.
Overview
This study uses an aggregated and anonymized sample of Carta customer data. Companies that have contractually requested that we not use their data in anonymized and aggregated studies are not included in this analysis.
The data presented in this pre-seed report represents a snapshot as of May 5, 2025. It encompasses over 110,000 convertible instruments raised by more than 10,000 startups in the United States from Q1 2020 to Q1 2025, with a focus on the 5,000+ instruments raised in Q1 2025.
Historical data may change in future studies because there is typically an administrative lag between the time a transaction took place and when it is recorded in Carta. In addition, new companies signing up for Carta’s services will increase historical data available for the report.
Definitions
This report defines “pre-seed” as any fundraising activity that occurs on convertible instruments prior to a company’s first priced equity round. Convertible notes and SAFEs are the two types of convertible instruments analyzed.
A pre-priced “round” (or “deal”) is defined as encompassing all of the convertible instruments that a given company has raised with the same valuation cap, prior to raising any priced equity.
