8 Takeaways from Carta’s State of Seed Report
Our friends at Carta put together a fascinating report on the trends they’re seeing in the markets for seed stage startups. Here's our top takeaways.
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When speaking with founders, we often explain speedrun as a16z’s “first check in” program for brand new startups. But what happens after teams raise that initial capital, get some early traction with customers, and find their first strong signals of product-market fit?
For many, the answer is: you want to raise a seed round. Capital unlocks hiring, accelerates growth, and gives startups the runway needed to build something for the long haul. So understanding the state of the seed market is critical for founders building at the early stage.
This year, we asked our friends at Carta what trends they’re seeing in the markets for seed stage startups. They kindly produced a comprehensive 40-slide report drawn from an aggregated and anonymized sample of Carta customer data. You can download it in full from the Carta website. If you’re a founder you’re going to want to check it out.
Below, we’ve highlighted a few points from Carta’s report that caught our attention.
1. There’s more cash available at seed, but it’s going into fewer rounds
Note the line indicating the full year estimates (FY Est) on these charts. 2025 is set to be the biggest year since 2022 in terms of cash raised, but that feature is split among slightly fewer teams—perhaps just just of 2,000 from Carta’s sample by the time the year is up.
2. Raises and valuations vary widely by sector
When splitting seed round data by sector, we see clear breakouts in round size and valuation among startups focused on semiconductors, hardware, and analytics tooling.
But what about AI startups? The chart shows how things might look if you treated AI-focused software companies as their own industry. Unsurprisingly, it’d be among the biggest targets for capital.
3. Seed rounds = 20%
Across all sectors and throughout the last 7 quarters, startups have consistently been selling around 20% of their companies when raising a seed round. Though some extreme outliers in AI sell as little as 10.5%, the 20% median figure has been consistent.
4. After raising a seed round, the road ahead is long
After raising a seed round, what are your odds of raising a Series A? This figure has been taking a dive after 2020, though there are early signs of improvements for the most recent cohorts.
Still, we’re seeing the median time between seeds and series As going up across the board in recent years. The pattern holds for the gaps between Series A and B rounds as well.
5. Where you build your startup matters
If you’ve ever wondered why so many investors put a disproportionate amount of energy and attention into SF startups, here’s one quantitative reason: Startups in just two cities, New York and San Francisco, capture two thirds of the top decile seed rounds when looking at US startups.
6. Teams are getting smaller
Funding may be going up, but Team sizes are trending lower at every stage. The average seed stage company now has 6.2 equity-holding employees, down from 10.3 at the 2021 peak.
As you might expect, the trend toward smaller team sizes is also reflected in the hiring data. The first half of 2025 has had the lowest hiring rate since before 2019.
7. More founders are going it solo
We’ve speculated before that the rise of AI tools would enable more small and even solo teams. There’s some evidence that this is already happening, as the number of solo-founded startups goes up and the relative proportion of teams with three or more founders drops proportionately.
But many VCs still express a preference for teams with cofounders, and that preference shows up in the funding data. Solo founded startups in 2024 were about half as likely to have VC funding as teams with two cofounders.
8. Founding team breakups are common.
It’s not all wine and roses for teams with cofounders, though. From 2017 to 2021, about a quarter of all 2-founder startups suffered through a founder breakup within their first four years.
It may be too early to say whether this trend is easing, though even in the best of years measured (2015 and 2016), nearly a fifth of 2-founder startups had a breakup by year four.
That’s it for our summary, but there’s far more where that came from in the full report from Carta. Let us know what surprised you most about their findings!
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This is great
Do you think only LLMs (AI) are the real cause of this shift over the last three years in terms of team size, founders' structure, rounds, and runway?