Carta’s latest data reveals a bifurcating market where AI dominates, solo founders struggle for capital, and the rules of seed-stage fundraising have fundamentally changed.
The Carta State of Seed Winter 2025 report just dropped, and it contains critical data that every pre-seed and seed-stage SaaS founder needs to understand. As someone who advises early-stage enterprise software companies on competitive positioning and exit strategies, I’ve analyzed this report through the lens of what actually matters for founders trying to navigate today’s funding environment.
Here are the seven most important takeaways—and what they mean for your fundraising and growth strategy.
1. The Solo Founder Paradox: Rising in Numbers, Struggling for Capital
One of the most striking trends in the data is the dramatic rise of solo founders. In 2024, 35% of new startups had a single founder, up from just 17% in 2015. This represents a doubling of solo entrepreneurship over a decade.
Yet here’s the paradox: VCs aren’t buying it. Among startups that actually received VC funding in 2024, only 17% had solo founders. The disconnect is stark—solo founders are increasingly common but remain systematically disadvantaged in fundraising.
This matters because AI tools have made it more feasible than ever for a single talented individual to build a product. Y Combinator has explicitly acknowledged this shift, stating that “thanks to new AI tools, we believe it’s now possible for small, high-agency teams—even solo founders—to build multi-billion dollar companies with as little as just $500k in funding.”
Strategic implication: If you’re a solo founder, recognize that you’re swimming against the current with institutional VCs. Consider alternative paths: angel investors, accelerators like a16z Speedrun that accept solo founders, or bootstrapping with AI leverage until you have undeniable traction.
2. SAFEs Have Completely Conquered Pre-Seed
The convertible note is effectively dead at pre-seed. 92% of pre-seed rounds now use SAFEs, with convertible notes accounting for just 9%. This isn’t a gradual shift—it’s a complete market takeover.
The dominant structure is now clear:
- Post-money SAFE: 88% of SAFEs in 2024 (up from 39% in 2020)
- Valuation cap only: 61% of SAFEs (no discount, just the cap)
- Standard discount when present: 63% use exactly 20%
This standardization is actually good news for founders. The terms are predictable, the documents are well-understood, and there’s less room for investor gamesmanship. As I covered in my analysis of pre-seed funding trends, SAFEs have become the instrument of choice precisely because they reduce friction in early-stage deals.
Strategic implication: If an investor insists on a convertible note at pre-seed (outside of biotech or energy), ask why. They may be operating from an outdated playbook—or trying to extract terms that aren’t market standard.
3. Fewer Rounds, More Capital: The Barbell Effect
The seed market is bifurcating in a way that should concern founders who aren’t positioned for AI or aren’t exceptional performers.
In 2025, Carta estimates approximately 1,494 priced seed rounds—down from a peak of 2,438 in 2022. That’s a 39% decline in deal count. Yet total capital deployed remains robust at $8.1 billion.
The math is simple: larger checks going to fewer companies.
The valuation data confirms this barbell effect:
| Percentile | 2019 Valuation | 2025 Valuation | Change |
| 50th (Median) | $11.0M | $20.0M | +82% |
| 75th | $23.9M | $30.0M | +26% |
| 95th | $28.5M | $80.5M | +183% |
The top decile is pulling away dramatically. If you’re commanding an $80M valuation at seed, you’re in a fundamentally different market than the median company at $20M.
As I’ve noted in previous analyses of seed funding trends, this concentration reflects investors doubling down on perceived winners rather than spreading bets across a broader portfolio.
Strategic implication: The “average” seed round is increasingly a myth. You’re either raising a premium round with strong AI positioning and traction, or you’re grinding for a smaller raise with tougher terms. Plan accordingly.
4. Time Between Rounds Is Extending—Plan for 24+ Months
Here’s a number that should reshape your runway planning: the median time from seed to Series A is now 2.2 years, up from 1.5 years in 2019.
That’s not a minor adjustment—it’s a 47% increase in the time you need to survive between rounds.
AI startups move slightly faster (1.9 years to Series A), but even they’re taking longer than the historical norm. The 75th percentile extends beyond 3 years, meaning a quarter of funded companies are waiting 3+ years for their Series A.
This has profound implications for how you structure your seed round:
- If you’re raising $3M at seed, you need that capital to last 24-30 months minimum
- Your burn rate assumptions need to factor in a longer fundraising cycle
- The “18-month runway” rule of thumb is now dangerously optimistic
I’ve written extensively about how SVB’s latest data confirms these extended timelines and what it means for seed-stage strategy.
Strategic implication: Raise more than you think you need, or plan for a bridge round. The market is telling you that patience, not speed, determines who survives to Series A.
5. AI Is Eating Everything—41.7% of Seed Capital
The AI concentration in venture funding has reached a level that demands acknowledgment from every founder, whether you’re building with AI or not.
In 2024, 41.7% of seed capital went to AI companies, up from 23.1% in 2020. By Series E and later, AI companies are now capturing 70.2% of capital.
The premium is real and quantifiable:
| Stage | AI Pre-Money Valuation | Non-AI Pre-Money Valuation | Premium |
| Series A | $55.0M | $42.0M | +31% |
| Series B | $149.5M | $100.9M | +48% |
This creates a strategic question every non-AI SaaS founder must answer: Can you credibly incorporate AI into your narrative without “AI-washing”? Investors are sophisticated enough to distinguish between genuine AI integration and marketing veneer.
As I explored in my piece on generative AI and competitive research, AI isn’t just a feature—it’s becoming a requirement for investor attention in many categories.
Strategic implication: If AI genuinely enhances your product, make it central to your pitch. If it doesn’t, don’t fake it—focus on other differentiators like capital efficiency, regulatory expertise, or deep domain knowledge.
6. Team Sizes Are Collapsing
This is perhaps the most underappreciated trend in the data: seed-stage teams are dramatically smaller than they were just a few years ago.
Average team size at seed in 2025: 6.2 employees Average team size at seed in 2021: 10.3 employees
That’s a 40% reduction in headcount at the same stage.
Founders are also delaying hiring significantly:
- Median days to first hire: 284 days (up from 214 in 2019)
- Median days to second hire: 407 days (up from 304 in 2019)
- Median days to third hire: 487 days (up from 413 in 2019)
January 2025 saw the lowest startup hiring figure for any January in seven years, with just 28,299 new hires across Carta’s platform.
This connects directly to the AI thesis: founders are betting they can accomplish more with smaller teams by leveraging AI tools. Whether this bet pays off remains to be seen, but the market is clearly moving in this direction.
I’ve tracked this pattern in my analysis of startup compensation trends, and the implications for both founders and early employees are significant.
Strategic implication: Don’t hire for the headcount; hire for capability. Every early hire should be a force multiplier. And if you’re an early employee considering a startup, recognize that equity grants for first hires (median 1.5%) come with the expectation of extraordinary contribution.
7. Geographic Concentration Is Intensifying at the Top
If you’re not in San Francisco or New York, the path to a top-decile valuation is significantly harder.
66% of top-decile seed valuations (90th percentile and above) go to startups in SF or NY. The concentration increases as you move up the valuation distribution:
| Valuation Tier | SF + NY Share |
| 0-25th percentile | 6% |
| 25-50th percentile | 19% |
| 50-75th percentile | 21% |
| 75-90th percentile | 36% |
| 90th+ percentile | 66% |
This isn’t about talent—there’s exceptional talent everywhere. It’s about network effects: the investors who write the largest seed checks are concentrated in these markets, and warm introductions still matter enormously.
As I’ve written about targeting the right investors for pre-seed and seed rounds, geography shapes your realistic investor universe.
Strategic implication: If you’re outside SF/NY and targeting a premium valuation, budget for relationship-building travel, consider accelerators that provide Bay Area network access (like a16z Speedrun or Y Combinator), and be realistic about your likely investor pool.
What This Means for Your Seed Strategy
The Carta data paints a clear picture: the seed market has matured, consolidated, and become significantly more competitive. Here’s how to adapt:
If you’re pre-seed:
- Focus on demonstrating founder-market fit before worrying about co-founder pressure
- Use SAFEs with standard terms—don’t get creative on structure
- Build with AI tools to extend runway and capability
- Target realistic raise amounts: $250K-$500K with a $10M cap is market standard
If you’re raising seed:
- Plan for 24+ months to Series A, not 18
- Understand whether you’re competing for premium capital (AI, exceptional traction) or standard seed (solid business, reasonable terms)
- Keep your team small and high-leverage
- If you’re outside major hubs, invest in network building or consider accelerator participation
If you’re advising seed-stage founders:
- The benchmarks have shifted—use current data, not 2021 comparisons
- Geographic and AI dynamics now create fundamentally different investor conversations
- Equity allocation for early hires and advisors should reflect new team size realities
The Bottom Line
The seed market in 2025 is healthier than the headlines suggest—$8B+ in annual capital deployed to seed-stage companies is substantial. But it’s a different market than it was three years ago.
The winners are AI-native or AI-enhanced companies, led by strong teams (co-founders preferred), located in or connected to major startup hubs, who understand that raising capital is a marathon, not a sprint.
If that’s not your profile, you can still build a successful company—but you need a different playbook. One focused on capital efficiency, alternative funding sources, and the patience to build value before the market comes to you.
The data doesn’t lie. The question is whether you’re reading it correctly.
John Mecke is Managing Director of DevelopmentCorporate LLC, an M&A advisory and strategic consulting firm specializing in early-stage SaaS companies. With over 30 years of enterprise software experience, he helps pre-seed and seed-stage CEOs with competitive intelligence, win-loss analysis, pricing studies, and acquisition strategies.
Related Reading:
- Q1 2025 Private Markets: What Pre-Seed SaaS Founders Must Know
- SVB’s State of the Markets H1 2025 – Advice for Seed Stage Companies
- Why Your Pre-Seed SaaS Startup Probably Shouldn’t Pursue Top-Tier VCs
- The Ultimate Guide to SaaS Benchmarks for Pre-Seed Funded Startups
- Enterprise Value of Pre-Seed and Seed Stage SaaS Acquisitions in 2025
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