Archive

Click to enlarge

The key insight this week

I had a few cold chills this week - the kind of shivers you get when you worry you've been saying the wrong thing to a multitude of people.

Having looked into this dynamic a number of times, I was certain that the SAFE had dethroned the convertible note across pre-seed investing. After all, nearly 80% of investment into pre-seed companies came through the SAFE route!

But a number of polite and supportive readers expressed some doubts. Is the SAFE is really the default? Everywhere, for everything?

So back to the lab. And as the graphic above shows, you all were right to question!

SAFEs occupy the top spot for pre-seed investment primarily on the back of their adoption within standard SaaS tech startups. But the convertible note remains a major part of many industry conversations, in particular Medical Devices, Hardware, and Biotech.

(I know it says 40% on the Gaming bar above as well, but that's actually more like 19% if I had removed a major outlier round).

The other potential confounding factor in this analysis is, of course, location. And it's true that SAFEs are more highly adopted within Silicon Valley and New York than, say, Boise. But the industry distinctions seem to be more impactful on this one than the geographic.

Short plug for any founders raising right now - you can model your SAFE or note round using a free calculator from Carta. Get an estimate on your future ownership in 1 minute or less.

Feedback is genuinely appreciated here - so don't hesitate when I visualize something that seems a bit off from your vantage point. I might just be wrong.

New to Data Minute? Subscribe here for one venture insight per week. Forwarding encouraged!

Peter Walker

Carta Insights Team

Click to enlarge

The key insight this week

Move to Miami. If you're not in New York, you're missing out. It doesn't count unless it happens in Los Angeles.

I revisited the Twitter (X?) debate around where the startup action lives this week after a few local reporters called asking about their hometowns. I wondered: if we split the data by vertical, do we get more intriguing answers than "Bay Area wins"?

Turns out, not really. Bay Area took the top spot for capital invested so far in 2023 (across Seed, Series A, and Series B rounds) in 8 of the 11 listed verticals.

It may be that Carta's client base is weighted more heavily towards Silicon Valley than startups as a whole - but overall I think the data is fairly indicative of the continued primacy of SV.

Still - lots of interesting details!

Boston has a very healthy lead in biotech, more than doubling the Bay in second place. Add in a strong showing in medical devices and it's clear where lifescience startups find their home.

Interesting to see Austin break into the top 3 in both energy and fintech. I got a chance to get granular around Austin startup data with Jason Scharf on the Austin Next podcast recently.

Healthtech seems to be the most evenly dispersed of the major verticals with 8 cities accruing over $50M invested.

For those of you wondering "where's the AI data" - it's a fair question, and we're working on it! Should have the full H1 dive into AI and its impact across startups ready in a few weeks.

If you didn't get a chance to join our recent event with Maren Bannon of January Ventures, I highly recommend the linked recording. Maren gave out a number of tactical tips for founders headed into the fall fundraising season (which we are all hoping is busier than last year).

New to Data Minute? Subscribe here for one venture insight per week. Forwarding encouraged!

Peter Walker

Carta Insights Team

Click to enlarge

I'll be honest, we don't usually highlight data from outside Carta in this space.

(Probably a personal hangup - don't worry, already chatting to my therapist about it).

But this data from Silicon Valley Bank's H1 2025 report is too good not to discuss.

They looked at ARR for US B2B companies (almost all software startups) by year and quartile. So for example, the median ARR for a Series A company in 2021 was $1.3 million, according to their sample.

Two things jump out at me:

Obviously ARR has increased rather a lot for your average Series A company. Nearly $3M at the median last year.

ARR values have increased more quickly at the lower quartile than the upper quartile. This means that companies the used to have mediocre traction in revenue terms for their Series A are just no longer being considered. Many rounds not done, in other words.

I'm scrounging for 2025 data, so if you all run across great revenue data on startups for this year please send it my way. Hopefully Carta can also start dipping our toes into this sort of reporting in the near future.

To all you seed founders - onwards!

Subscribe here if you're new to the Data Minute. Forwarding encouraged!

Peter Walker

Carta Insights

Click to enlarge

The key insight this week

Our full State of Private Markets report for Q1 should drop next Tuesday - but we couldn't keep the headline from our loyal readers.

It's not a fun headline. Down rounds accounted for nearly 20% of all rounds completed by companies on the Carta cap table platform in Q1.

Typically, down rounds hover around 10% of rounds. In the high times of recent years, that percentage fell to a record low of 5.2% in Q1 2022.

As you can see in the chart above, that's some real valuation whiplash. Founders looking for funding in order to keep their companies afloat are now willing to accept that valuations assigned in 2021 may no longer be viable in 2023.

What's more, this increase in down rounds was paired with a simultaneous increase in rounds where investors were granted participating preferred stock. This is a logical outgrowth of the power dynamic swinging back to VCs after the ecosystem as a whole grew more founder-friendly in recent years.

More down rounds. More rounds with onerous terms. Fewer rounds overall. Here's to the founders sloughing through it all!

New to Data Minute? Subscribe here for one venture insight per week. Forwarding encouraged!

Peter Walker

Carta Insights

Click to enlarge

Sharing is caring, right? Not always for venture capital deals.

‌

Chart above tracks the percentage of primary venture capital rounds that were pari-passu for a given stage and year.

(Pari-passu, from the Latin "equal footing", is a type of investor preference where all preferred shareholders in a company have equal distribution rights during a liquidation event.)

In the boom times of 2021, everyone was happy to have equal distribution rights. Sharing is easy when everything is up and to the right.

In 2022 and 2023, however, new investors were a lot less chummy. They signed a higher share of deals that gave them preferential rights over earlier investors in the event of an exit.

It's heartening to see that trend reverse itself so far in 2024 across basically every stage. Pari-passu deals are a reasonable measure of ecosystem health, in my view. Tougher times bring out sharp elbows and sunny periods make for cleaner, more equal deals.

Who knew kindergarten lessons would apply so directly?

By the way - new data on valuations and round sizes in Q3 to be published in the coming days at our new home for startup data: carta.com/data. Stay tuned!

Subscribe here if you're new to the Data Minute. Forwarding encouraged!

Peter Walker

Carta Insights