Is Series A Dead? ☠️

The number of startups raising a Series A in under two years has been declining since 2022. 📉 Here’s why:

WHY?

☑️ Increased Competition: Over the past decade, a surge in seed funding has led to more startups vying for the same pool of Series A funds.

☑️ Higher Investor Expectations: Investors now demand more traction. A few years ago, a startup with $1M in ARR (Annual Recurring Revenue) could secure Series A funding. Today, the expectation is well above $2M.

☑️ Economic Uncertainty: Market volatility, inflation, and current conflicts in the Middle East have made investors more cautious, further tightening the availability of capital.

WHAT'S THE IMPACT?

Investors are bifurcating:

📈 Seed (High Risk / High Reward): Investors maximize upside with minimal due diligence. This stage acts as a call option where investors can make numerous small bets, take pro-rata rights, and follow on with significant funding later.

📈 Growth (Low Risk / Mid Reward): Investors prefer writing large checks with maximum confidence based on data and historical performance pre-IPO. Some funds find small ($50k) checks inefficient, making growth investments more appealing for big commitments.

Series A - Stuck in the Middle: This stage has more data than seed but isn't cheap enough to be a "call option." Achieving $1M ARR is no longer seen as a guarantee of Product-Market Fit (PMF), causing many investors to hesitate on making career-defining bets.