Seed to Series A Gap 2025: What Carta Data Reveals

Only 15% of seed-stage companies now reach Series A within two years — down from 40% in 2020. Carta's Peter Walker joins the Product Market Fit Show to explain what the data really means for founders navigating today's split market.

Key Facts

• Seed-to-A graduation rate (2023 cohort): 15% within two years (Peter Walker)
• Seed-to-A graduation rate (2020 cohort): ~40% within two years (Peter Walker)
• Series A conversion — no bridge needed: ~50% (Peter Walker)
• Series A conversion — SAFE bridge after priced seed: 4% (Peter Walker)
• Median seed valuation (2025): $16M pre-money (~$19–20M post) (Peter Walker)
• Median Series A valuation (2025): $45–50M pre-money (Peter Walker)

The Seed-to-Series A Gap Is at a Historic Low

Only 15% of seed-stage companies from the Q1 2023 cohort reached Series A within two years — down from nearly 40% in 2020. This is the lowest graduation rate Carta has ever recorded, driven by a crowded seed market and tighter Series A standards.

Carta tracks graduation rates every quarter by asking: how many companies that raised a seed round made it to Series A within two years? That benchmark matters because most seed rounds are sized for 18–24 months of runway, making the two-year mark a meaningful signal of momentum.

The numbers are stark. In early 2020, close to 40% of seed-stage companies made the jump within two years. By Q1 2023, that figure collapsed to just 15% — a more than 50% haircut. Peter Walker attributes this partly to an oversupplied seed market: 'You are, as a seed-stage company, competing with probably the deepest pool of startups you've ever competed with for that dollar.'

Macro timing also plays a role. Walker notes that cohorts hitting their two-year mark during disrupted markets — like those graduating into the early pandemic — saw abnormally low rates. That same dynamic is at work now, compounded by AI distorting investor attention and valuation expectations across the board.

"In 2020, something like close to 40% of seed-stage companies made the jump to A within two years. If you raised that same seed round in Q1 or so of 2023, only 15% have gotten to A after two years." — Peter Walker

Why Bridge Rounds Destroy Your Series A Odds

Carta data shows founders who avoid bridge rounds have a ~50% chance of reaching Series A. Those who take a priced bridge drop to 30–32%. But founders who take a SAFE or note bridge after priced funding have just a 4% Series A conversion rate — a devastating signal about company health.

Bridge rounds are commonly framed as a vote of confidence — investors getting more ownership before the next primary round. Walker is skeptical: 'Our data seems to suggest that people are just kind of fibbing about that. A lot of the time, the bridges are actually because the company is not doing well.'

The data splits into three clear tiers. No bridge needed: ~50% reach Series A. Priced bridge round: 30–32%. SAFE or note bridge after a priced seed: 4%. The SAFE bridge number is especially alarming because it combines smaller capital infusions, potentially weaker investor quality, and a clearer signal that the company missed its targets without a credible reset.

Walker suggests investors bridge for three reasons: belief in an upcoming inflection, founder relationship maintenance, or fund optics during a new fundraise. 'Only one of those reasons is a good reason,' he says. For founders, the implication is clear — a bridge is not a neutral event. It fundamentally changes your odds, and founders should use that moment to honestly reassess whether the path forward is still a Series A or something else entirely.

"Founders who are listening, I deeply apologize about this, but I got to be honest about the data. The data for bridges is not great." — Peter Walker

"The bridges on SAFEs or notes are generally smaller and more scattershot. Less money, maybe less high-quality companies, perhaps less sophisticated investors — all of these things kind of resolve." — Peter Walker

• No bridge: ~50% reach Series A.
• Priced bridge round: 30–32% reach Series A.
• SAFE/note bridge after priced seed: only 4% reach Series A.
• Smaller bridge amounts correlate with worse outcomes.
• New investors setting a price is a stronger signal than existing investors bridging on a SAFE.

Seed Strapping: Real Strategy or Convenient Narrative?

Seed strapping — raising a seed round then growing to profitability without raising a Series A — is widely discussed but rarely executed. Both Walker and host Pablo Strugo are skeptical that it's happening at scale, though it may be the right honest choice for founders after a bridge who've lost their venture-scale trajectory.

The conversation around seed strapping has exploded, but Walker draws a sharp line between talk and action: 'I have a deep-seated skepticism about how often it's actually happening versus how often it's being spoken about. I think those two rates are very different.'

Strugo pushes back on the narrative for high-growth founders: 'If you're a founder growing over 100% year over year and you've got things you could spend money on to grow even faster, I don't think you're going to give up raising that A because seed strapping is cool now.' The incentive structure of venture simply doesn't reward restraint for companies with real momentum.

Where seed strapping may genuinely apply: after a bridge round, when the data suggests a company is no longer on a venture-scale trajectory. Walker frames it as a rational reorientation — not a failure. 'It's not that seed strapping is a bad way to build a business. It's actually a fantastic way to build a business. It's a bad way to get venture returns.' Founders who reach that honest conclusion earlier protect themselves, their team, and their investors from a slow drift toward zero.

"Seed strapping is not a bad way to build a business. It's actually a fantastic way to build a business. It's a bad way to get venture returns." — Peter Walker

"Incentives are incentives. If you're a founder growing over 100% year over year, I don't think you're going to give up raising that A because seed strapping is cool now." — Pablo Strugo

2025 Valuations: What Seed and Series A Actually Look Like

Carta's Q1 2025 data shows median seed valuations at $16M pre-money (~$19–20M post), with rounds of ~$3.5M. Series A median pre-money valuations are $45–50M. These numbers are high — and they carry serious growth obligations that lock founders into the VC path.

Pre-seed rounds — defined by Carta as $1–2.5M raised on a SAFE before any priced funding — typically close around $1.3–1.5M at a $10M post-money cap. Walker notes that roughly 90% of pre-seed rounds are on SAFEs, giving founders 10–15% dilution at this stage.

At seed, priced rounds are averaging $16M pre-money with ~$3.5M raised, pushing post-money valuations to $19–20M. 'It's pretty pricey,' Walker says. The AI/non-AI split means these medians mask significant variance — AI companies skew meaningfully higher.

Series A is where the math gets uncomfortable. At $45–50M pre-money, with typical dilution of 40–50% between A and exit, founders are implicitly signing up for billion-dollar outcomes just to deliver a 10x return to their investors. As Strugo puts it: 'Anything less than that is just going to be a mismatch in terms of what I want to back it at and what they're going to take.' Once you take a Series A, Walker argues, you are firmly committed to the venture growth path — making seed the last realistic off-ramp.

"Seed stage is getting pretty pricey. The median valuation of those companies is now right around $16 million pre-money. Series A, we're seeing the same dynamic — primary valuations are, call it $45 to $50 million." — Peter Walker

"Once you take an A round, it's really hard to get off the VC train. If you're going to make that choice to get off the train, seed is basically your last exit." — Peter Walker

Do Founders Need to Move to the Bay Area to Raise?

Bay Area investors offer higher valuations, especially at the top of the market. But Carta data shows meaningful overlap between Bay Area and other ecosystems at the 30th–75th percentile of valuations. At early stages, founders don't need to relocate. At Series B and beyond, Bay Area access becomes nearly essential.

Walker confirms that Bay Area investors do pay more: 'If you are able to raise, you are likely to get a higher valuation from Bay Area investors.' But the nuance matters. The 90th percentile of Bay Area valuations is essentially exclusive to the Bay. The middle 50%, however, is achievable in many US cities.

On talent costs, Walker estimates the gap between tier-one (Bay Area, NYC) and tier-two (Austin, LA, Boston) employee compensation is around 15%. That delta creates real runway arbitrage for founders who raise comparable rounds outside the Bay — though Bay Area advocates argue the talent quality gap exceeds the cost gap.

The clearest dividing line is stage. 'There are a lot of places around the US where you can raise a pretty decent pre-seed, seed, even Series A,' Walker says. 'If you're raising Series B, Series C — really serious capital — you're talking to Bay Area investors.' The practical advice: stay where you are early, build investor relationships remotely, and plan for in-person Bay Area engagement as you approach later-stage rounds.

"I think people underrate how much overlap there is, especially at pre-seed and seed, between these ecosystems. If you just take the middle 50% of Bay Area valuations, there's a ton of places across the US that you can get those valuations." — Peter Walker

• 90th percentile Bay Area valuations: essentially Bay-only.
• 30th–75th percentile valuations: accessible across many US markets.
• Tier-1 vs. tier-2 employee pay gap: approximately 15%.
• Pre-seed through Series A: location flexibility is real.
• Series B and beyond: Bay Area or New York investor access becomes near-mandatory.

AI's Double-Edged Impact on Early-Stage Fundraising

AI is simultaneously inflating headline valuations and making fundraising harder for most founders. Giant AI rounds distort market perception while non-AI companies struggle for attention. Even AI-native startups face new scrutiny over revenue defensibility and whether their traction is sustainable.

Walker describes the current market as a clear haves-and-have-nots split: 'It is AI and everything else. That applies to valuations, but it also applies to deal frequency, activity, demand.' Founders who don't fit a legible, exciting category find the market particularly brutal.

The paradox is real. AI headlines dominate, suggesting a hot market. Yet Walker notes: 'I know a lot of founders who are saying it's actually more difficult to fundraise right now than it has been in a couple of years.' The mega-rounds are real but distorting — they don't reflect the experience of the average seed-stage founder.

Even for AI companies, scrutiny is intensifying. VCs are now probing whether strong-looking metrics are durable: 'This number looks really great, but is it sustainable? Is kind of the new question around a lot of those diligence conversations.' Walker warns that AI companies can get 'tail whipped by investor expectations that move quicker than their businesses are able to change' — a risk that compounds the already-difficult Series A environment.

"People underestimate how much the board and startups has basically just been tipped over by AI. People are all over the place on the defensibility of it, the reliability of the revenue, what they consider an actual AI company versus just an AI-enabled one. It is messy out there." — Peter Walker

Bridge Round Type vs. Series A Conversion Rate (Carta Data)