SVB’s State of the Markets H1 2025 – Advice for Seed Stage Companies

If you’re building a seed-stage company in 2025, you’ve probably heard some version of this sentiment: “AI is the new internet.” And while the headline VC numbers look great—$204B invested in 2024, AI companies leading the way—the reality for non-AI startups, especially at the seed stage, is far more nuanced.

I’ve worked with dozens of SaaS founders across North America and Europe. Many raised their first rounds in the “grow-at-all-costs” era and are now struggling to land their Series A. Others are running lean, focusing on efficient growth, and questioning whether they should raise at all.

This post breaks down what seed-stage founders need to know now. Using the latest findings from SVB’s “State of the Markets H1 2025” report, I’ll guide you through the trends, metrics, and strategies to help you secure funding—or skip it and still win.

🔥 TL;DR: What Seed-Stage Founders Must Know in H1 2025

• Seed extensions are more common than ever—more rounds, more capital, and more time to Series A.
  
• Revenue benchmarks for Series A are way up ($2.5M median ARR).
  
• Growth matters, but efficiency is king—investors want sustainable burn and signs of early profitability.
  
• AI dominates funding—50%+ of all VC deals are AI-related. Non-AI startups must prove differentiated value.
  
• Startup programs (like YC, Techstars) are essential feeders—24% of 2024 VC deals came from incubator alumni.
  

1. 📈 Seed Extensions: The New Normal

Let’s start with a hard truth: the average seed company now takes much longer to reach Series A. In fact, many aren’t getting there at all. The 2021 cohort of seed startups—the “hot class” that raised fast and high—are now relying on seed extensions to stay alive.

According to SVB, seed extensions have reached all-time highs, both in deal count and capital invested. This isn’t necessarily a bad thing. If done right, a seed extension can help you buy time to hit real milestones: revenue, retention, or a clear GTM motion.

Actionable Insight:

If you’re considering a seed extension, be transparent with investors. Frame it as a “bridge to traction,” not a “delay tactic.” Show a 12–18 month runway and make it clear what milestones you’ll hit before the next raise.

2. 🚧 Series A is Harder—and Later—Than Ever

The bar for Series A is sky-high. The median Series A round now happens at $2.5M ARR, up 75% from 2021. And those who make it? They’re running tighter, not faster.

Gone are the days of 150%+ YoY growth and big burn. SVB reports the typical Series B company only increased burn by 8% YoY in 2024. Investors want you to grow into your burn, not raise into it.

What That Means for You:

You don’t have to be a unicorn-in-waiting, but you do need:

• A clear, repeatable acquisition channel
  
• Lean ops with low CAC and short sales cycles
  
• Solid LTV/CAC and at least 30%+ YoY growth with flat burn
  

3. 💸 Don’t Chase AI Hype—But Don’t Ignore It Either

Yes, AI is sucking up all the oxygen in the room: 48% of VC-backed companies now identify as AI-driven. AI deals received 61% of mega-deal funding in 2024. And top AI startups like xAI and Anthropic are raising $6–12B rounds. That’s not a typo.

But if you’re not building foundational AI or verticalized LLMs, that’s okay. The key is incorporating AI intelligently—as an enabler, not your identity.

Smart Moves for Non-AI Founders:

• Add AI to improve efficiency (e.g., auto-tagging, anomaly detection)
  
• Show how AI gives your SaaS a 10x user or operational improvement
  
• Avoid fluffy claims—investors can sniff out “AI-washing” instantly
  

4. 🛠 Startup Launch Programs Are Back in the Spotlight

Startup incubators and accelerators aren’t just for “wannabe” founders anymore. They’ve become power centers of seed activity, with 24% of VC deals in 2024 involving companies from a program like YC, Techstars, or Plug and Play.

More importantly, SVB found that incubator alumni enjoy valuation premiums at every stage, especially at seed and early growth.

Should You Join One?

If you’re pre-seed or just closed your first angel check, yes—strongly consider it. Even mid-tier programs offer invaluable access to:

• First customers
  
• Demo-day VCs
  
• Product validation with peers
  

Just make sure the program is aligned with your category and has recent fundraising success.

5. ⚖️ Efficiency Is the New Growth

A decade ago, startup wisdom said: “Get big fast.” Today’s mantra? Get efficient, then get traction.

VCs are rewarding companies that:

• Keep burn flat while growing
  
• Show path to profitability even at <$5M ARR
  
• Use every dollar as if it were their last
  

SVB found the typical company raising Series B in 2024 grew revenue but kept burn nearly static. That’s a playbook worth studying.

Practical Tactics:

• Audit your GTM spend: Are you overspending on outbound that’s not converting?
  
• Optimize pricing for value, not volume—raise prices if churn is low
  
• Use AI and global talent to reduce costs in dev and support
  

6. 🌐 Global Talent Is a Superpower—If You Use It Right

Tech hiring in the U.S. has stalled. Salaries are down. Meanwhile, India, Nigeria, and Brazil are producing tens of thousands of new devs per year. In fact, India is expected to surpass the U.S. in developer population by 2030.

Over 60% of startups now outsource part of their dev work. And it’s not just about cost—it’s also about speed and flexibility.

Advice:

Build a blended team. Use in-house talent for product leadership and design, and supplement with offshore engineers for implementation. Just make sure you build cultural and timezone bridges to keep velocity high.

7. 📉 Your First Exit Isn’t IPO—It’s Liquidity

Here’s something I wish more founders knew: your first real “exit” might be secondary liquidity, not acquisition or IPO.

Platforms like Forge and Carta are enabling private liquidity programs so early employees and founders can get some cash off the table. More and more startups are using these to:

• Retain key team members
  
• Give founders a small reward without rushing to exit
  
• Push off pressure to sell too early
  

Pro Tip:

Ask your investors (especially multi-stage ones) if they support structured secondary programs. A small 5–10% secondary at Series A or B is increasingly normal.

8. 💥 How to Win in a Bifurcated Market

One of the most powerful insights from the SVB report is that the VC market is bifurcating—big funds dominate, and small niche funds are thriving. But mid-sized firms are being squeezed.

That has two implications for seed founders:

1. Target micro-VCs and specialists at seed—especially those focused on your vertical or geography.
   
2. Position your next round for the big leagues by hitting clear benchmarks (ARR, Rule of 40, AI integration).
   

If you’re caught in the middle—too small for top firms, too generic for niche funds—you’ll struggle. Pick a lane and lean into it hard.

9. 📊 Metrics That Matter in 2025

Here’s a cheat sheet of where you should be if you’re prepping for a Series A or a strong seed extension:

Remember, investors don’t expect perfection. But they do expect clarity, intentionality, and trendlines that point in the right direction.

10. 📍 Final Takeaways: Navigating Seed in 2025

The innovation economy is recovering—but it’s uneven. For seed founders, this means you can’t just ride the wave. You have to build your own surfboard.

✅ Embrace seed extensions as strategic—not shameful
✅ Focus on efficiency, not just top-line growth
✅ Integrate AI smartly, not superficially
✅ Leverage incubators for acceleration and signaling
✅ Align with niche investors early; aim for big ones later

This is not a market for tourists. It’s a market for builders—efficient, focused, data-driven founders who can chart a path through ambiguity.

If that’s you, 2025 might just be your year.

💡 Need Help Positioning Your Seed Startup?

I work with seed-stage SaaS founders to craft investor-ready narratives, GTM motions, and funding strategies. If you want to raise smarter—or not raise and still grow—let’s talk.

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Also published on Medium.