Q1 2026 w/Carta: What you need to raise a Series A. | Peter Walker, Head of Insights at Carta

Peter Walker (00:00:00): There is no more consensus theme right now than LLMs are good, we should have more LLMs. It's not really a question of if this business is going to work out. It's, do I have the capital and the access to play in this space, or don't I? I have a feeling that what's going to happen is a lot of these companies are going to flop, and we're going to do what we did in 2021. With some major, major outliers that really work. Maybe that's the whole point, but I think there's pain coming for this. If the valuations have gone up, at least on the median basis, not just even the high flyers. Have gone up almost 2x over the last, call it, three years. So that's a massive difference. You know, it used to be that the amount raised was maybe more like $8 to $10 million in a Series A, and now it's much more. Call it, $13 to $15 million. So that's a fifty percent increase in the capital. Pablo Srugo (00:00:42): I mean, what I'm telling founders is, it used to be good enough. You get to an A, and you got to pitch this path to $100 million ARR. It's just not enough. You have to go in at Series A with a couple, you know, $2 million, $3 million. I think the median is like $3.5 million of ARR or whatever. And you got to pitch a story of half a billion, if not a billion, of ARR for you to be interesting enough to some of these guys. Peter Walker (00:01:00): There's just a concentration where higher valuations, more capital, but fewer companies and that's happening at stage after stage after stage. So, it takes a lot to get to Series A. It takes way more than it used to. The growth rates are higher. The competition is higher. The expectations from investors are higher, and that will definitely push people out along the way. In general, I think the bar for Series A is something like 2x what it was a couple of years ago. Pablo Srugo (00:01:24): I mean, we're in a bubble. We're a hundred percent in a bubble, right? Peter Walker (00:01:27): A hundred percent, yes. What do we usually do with the bubble? It usually pops. Pablo Srugo (00:01:31): Question is when. Peter Walker (00:01:32): You got a great S1 out there. A great, maybe not as great as people were expecting for SpaceX. We'll see. I expect that IPO to go well and then the next two. Maybe later this year, maybe the year after, I don't know. If one of those IPOs really flops, it's going to be a serious problem. Previous Guests (00:01:47): That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is Product Market Fit. Pablo Srugo (00:01:59): Do you think the Product Market Fit Show, has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests, thank you. Peter, welcome back to the show, man. Peter Walker (00:02:15): Oh man, great to be with you. Apologies in advance for the raspy voice here. Pablo Srugo (00:02:20): All good, man. Excited to see what the data has in store. As I think all you know, Peter by now. Famous on not just LinkedIn but everywhere in the startup world for the charts, visualizations, and just the quality of the data, honestly. Which has been before you and Carta, really hard to get a hold on. So let's start at the top, man. Let's chat a little bit about Q1 2026. It's a crazy market out there. Lots of things happening. I think everybody knows valuations are high. There's a lot of activity, but that's the headline stuff and we'll kind of dig in further. So maybe let's start with just the trend on valuations, you know, focusing on early stage, pre-seed, seed, Series A and how that's shaping up. You know, this last quarter. Peter Walker (00:03:02): Well, depending on where you are. It's kind of gone like parabolic, man. It's kind of tough to keep track of because so much of the attention is being driven by ten, fifteen, twenty names within privates, or even if you're just talking about like seed stage. There's always this cohort of mostly, candidly, AI infrastructure companies that are building foundational models or building the tech around foundational models and they are getting valued at just astronomical numbers. You know, I call it $160, $170, $180, $200 million post money on a seed stage. Which is just bonkers and that just affects everybody else's like mood and vibe. Pablo Srugo (00:03:42): This is the category of where you see a $2 billion seed kind of falls into this as well, right? Ex-OpenAI person. Peter Walker (00:03:49): A hundred percent, you know, it's always. We talked about this before. It's always the legible founders. They're spinning out of the right places. They're building something that is like, there is no more consensus theme right now than LLMs are good. We should have more LLMs. It's not something that you have to fight over and so it doesn't become a. It's not really a question of this business is going to work out. It's like, do I have the capital and the access to play in this space or don't I? If you're a fund manager and that's just a different kind of thing. Seed stage is not usually about that, but it's so, I don't know. I have a feeling that what's going to happen is a lot of these companies are going to flop and we're going to do what we did in 2021 with some major, major outliers that really work. And maybe that's the whole point, but I think there's pain coming for this. I really do. Pablo Srugo (00:04:34): The 2021 analog, we'll get more into the numbers for the rest of the market. But it's one I've been thinking about a lot. For me, for what it's worth personally, I was VC through 2021, 2022, and obviously now as well. It's lived differently in a way where I'm way more receptive to higher valuations now than I was then. Back then, my play was ignore a lot of the hype, and that might mean I do. And you talked about legibility, like founders who maybe are missing that spark on the fundraising side but still have something solid in terms of the business. And you kind of try to play that game, which is not an easy game to play at all, and it's got its pros and cons. But just paying so much for a lot of companies that were fundamentally. There's a whole fintech thing, which was like, oh, we have this fintech innovation, and really it was just cheap interest rates. That was a huge category. Then you had other companies that were selling a dollar for 90 cents and getting growth that way. Just something was broken about the model. Whereas this time, you think, great founder with clear value prop and the AI kind of wave behind them. And a lot of times I'm finding myself saying, you know what, maybe it is worth paying what seems like an absurd price, not $150 million, still above median price. Just because the opportunity of creating these hundred million dollar ARR businesses seems clearer than ever. Peter Walker (00:05:47): So you don't think that people are selling dollars for 90 cents right now? Pablo Srugo (00:05:52): Well, not in the same way. I guess to the extent that your margins are tight because of the tokens and these sorts of things, like there I have more of a belief that, you know, the token price will just continue to drop and you'll hit a point at which whatever you need to deliver crosses that good enough threshold for a certain number of tokens. And then that goes down in a way that if you were doing it in the physical world before, taking like a normal physical business and just being like, oh, now we're going to, you know, do it for less or doing something in finance and not minding the numbers. There wasn't like a clear technological shift happening behind that. Peter Walker (00:06:25): Yeah, I think you're right and I think that the debate about margins in this AI world. I think is candidly a little overdone. Pretty early, there's every indication that the economics might continue to change. I do think that some of the valuations are just completely off kilter, but it's also there's tons of competition. I mean, if you are a hot engineer spinning out of OpenAI, you have term sheets coming left and right, you know? So everything is priced to perfection and there's mega funds with billions to deploy. This is the market you get. I think it's kind of an output of the inputs that we have currently. Pablo Srugo (00:06:59): So if you're a founder right now, let's say not in that AI infra category but you're in AI. AI never started like most are, and you're raising a pre-seed, seed, series A. What can you expect? Peter Walker (00:07:10): So pre-seed, I mean, it depends on the definition here. You're still raising probably less than $2 million for an AI application company. We would call that a pre-seed. You're talking about a $10 million to $12 million cap. Hasn't changed that much, maybe it's gotten a little higher. If you're talking a seed round, you're raising between $4 and $5 million. You're probably valuing the company at $20 million to $22 million post. That's expensive relative to history, but it's nowhere near the AI infrastructure. So it feels cheap at the moment and then Series A, these are hefty rounds. You're talking $14 million, $15 million raised. You're talking $75 million or so post-money valuations on that. So that's already big money and you're only at Series A. And then I have a question for the investors, if you raised your fund two years ago and these round sizes have gotten so much larger. Does the portfolio construction still work? Or how do you adjust for the new size of rounds? Pablo Srugo (00:08:09): So the Series A is the part of the market that is most interesting to me right now, because it's changed so much. Just to get a handle on the data, like two, three years ago, five years ago. What's been the trend of Series A sizes and Series A valuations? My mind remembers them being very different. Peter Walker (00:08:23): Yeah, they're almost doubled. If the valuations have gone up at least on the median basis, not just even the high flyers have gone up almost 2x over the last, call it three years. So that's a massive difference. The amount raised, you know, it used to be that the amount raised was maybe more like $8 to $10 million in a Series A and now it's much more, call it $13 to $15. So that's a fifty percent increase in the capital. I agree with you, it's kind of the most interesting part of venture because it hasn't grown as much as the seed rounds. But it's also the part that as a seed manager, I'm always wondering how are they justifying the pro rata or follow ons into these Series A's if it's going to cost another $3, $4, $5, $6 million. It's very expensive and you haven't really learned that much. It's still a Series A company. I know they're growing fast, but it kind of feels like everybody's growing fast. So where's the defensibility? I struggle, some of these numbers shock me still. Pablo Srugo (00:09:17): Is that the seed valuation you're saying also doubled or more than doubled in the last three years? Peter Walker (00:09:21): Yeah, the seed valuations are actually going up higher. Series A saw a really significant decline, or at least a decent one, substantial one, from the old 2021 marks. Seed really didn't. I don't know, man, maybe all the stages are getting kind of silly and we should just break it up by how much did you raise. I'm actually experimenting with a lot more charts about how much did you raise versus what stage were you in. Because I think the dilution tends to map out to close to the same if you just do it on a fundamental capital raise basis versus a stage name basis and maybe we just get rid of the stage names altogether. Because they're confusing. But in aggregate, I think Series A is the place that I would be most cautious about investing right now. Because the money is really high and these are still very young, very, very unproven businesses. Pablo Srugo (00:10:05): It's funny, Series A has gone to me as being the most, the best place to invest to not the worst. But a very risky place to invest today because, you know, it used to be, and now we're going way back. But I remember Series A's, let's say eight years ago at seven on, thirty sort of thing. These kinds of things, and then you're like, okay, well the business went from not having product market fit to clearly having product market fit. From having no ARR to having $1 million, $2 million ARR. There's a big shift in the risk you're taking and you still position yourself with good ownership, even in a hundred, multi-hundred million dollar type exit. Now it's like some of these, you know, these Series A's. I mean Series A coming in at post of eighty and I'm doing the math on that. I'm like, you think every Series that you do has to be a $5 billion outcome. You know, netted dilution, I think to make it make sense. Because at a billion, that's a 10x without dilution. You assume fifty percent dilution to exit even from the A. Now you got a 5x, that's not worth the risk of investing in Series A. So the mindset of what an exit has to be, must of, I don't know if people are doing this math or not doing this math. But implicitly, this is kind of what's going on. Peter Walker (00:11:12): I hope they're doing this math. It's not that complicated. I'm with you that I think the number one thing that's changed in venture over the last, call it two years is a radical upsizing in what potential exits could be. How can you argue with that given what SpaceX, and Anthropic, and OpenAI are going to do? I think it's fair. The question is how many companies can get to that level because you're right to say that getting to a $1 billion, if you're investing in this kind of Series A. It doesn't even come close to returning the fund. Unicorns are not the vibe anymore. It's Decacorns plus. Pablo Srugo (00:11:45): That’s why, I mean, what I’m telling founders is, it used to be good enough. You get to an A, and you got to pitch this path to $1 billion, pitch this path to $100 million ARR. It’s just not enough. I mean, you have to go in at Series A with a couple, you know, $2 to $3 million. I think the mean is like $3.5 million of ARR or whatever, and you got to pitch a story of half a billion, if not $1 billion of ARR for you to be interesting enough to some of these guys. Peter Walker (00:12:06): Yes, exactly and I think it pushes founders to do that. The climate is to keep pushing, keep pushing, keep pushing and maybe that's going to leave a lot of stranded startups along the way. Pablo Srugo (00:12:18): Yeah, I mean, this is the key question and it's a feature, you know, of venture is that when there's a big opportunity like there is with AI. Everybody just presses on the gas pedal and some people really get there in a massive way and a lot of people are left to die. Versus some kind of in between situation where you don't get these insane home runs, but a lot more companies kind of make it or something like that, right? It's just venture is not optimized for that at all. Peter Walker (00:12:38): No, it's the exact opposite and maybe that's I can't tell if that's better or worse for society at large. Pablo Srugo (00:12:44): That's a deeper question. Peter Walker (00:12:46): Yeah, exactly. I think it's worse for individual investors. I think it might be better for America. I'm not sure, I can be convinced of either side of that. Pablo Srugo (00:12:52): What else are you seeing in the data? What else struck you in Q1? Peter Walker (00:12:56): The concentration within not just a theme, which is AI. But then the infrastructure versus application layer has become two completely separate markets and the second one is just the concentration, and location. I mean, the Bay is a gravity magnet for talent, for founders, for high valuations, for capital. All the stuff that we talk about, the $500 million post money seed rounds, they don't exist anywhere else. Ninety percent of them are in the Bay Area. So it's like this, you know, agglomeration of this little amoeba that just keeps growing and growing, and growing in San Francisco. And everywhere else has to either play that game or decide not to play that game. I mean, I think that there's a lot of opportunity outside of the Bay right now that just isn't getting the level of attention that probably it deserves. Pablo Srugo (00:13:44): Do you have a sense of the median seed or A valuations if you just strip out the Bay Area from the data set? Peter Walker (00:13:52): Yeah, I mean they're thirty percent lower. The median Series A in the Bay right now is $85 million post money. The median in Austin is probably more like $65 million. Pablo Srugo (00:14:02): OK. Peter Walker (00:14:03): The median in D.C. probably more like $60 million and on down the line. So the Bay is a completely different beast. It functions in different ways and the Bay is probably at least a quarter, if not close to a third of all Series A's. So it's higher and there's far more of them, which is kind of weird. You would expect maybe the opposite, but it is the center of things right now. Pablo Srugo (00:14:23): But that means also for seed, like if the median is twenty, the median out. If you're not in the Bay Area, your median is probably like fifteen. That's more realistic in terms of a target. Peter Walker (00:14:32): Yep. Pablo Srugo (00:14:32): It's wild to see all the remote, all the venture going different places, everybody getting super excited about building ecosystems, and none of it. None of it really shows up. None of it really matters. Peter Walker (00:14:43): It didn't stick at all and it makes me wonder, what's the right advice to founders in terms of should they move? Should they care? All that kind of stuff. My instinct is to say they shouldn't unless they absolutely have to or really, really, really want to. But I could be wrong. I could be, you know, there is such a thing as the ecosystem sort of defining the limits of your ambition and certainly there's a lot of ambition in the Bay. Although there's a lot of play acting at ambition here too. It's not a perfect place. Pablo Srugo (00:15:11): Well, I mean, the question, and I don't know how this could or could not show up in the data. But, you know, can you get the benefits of the Bay without being in the Bay? Can you go to the Bay every quarter or every six months or just enough that you're kind of there without really, you know, having to relocate there and you build a little bit of a network? I've seen this happen, but it's kind of these one offs. So I don't know if this is a true story, but it's like, you know, person from Toronto building real business. Okay, time to fundraise. Cool. I'm going to the Bay Area for a month. My numbers are great, people are going to take the meeting and I'm going to get more or less the Bay Area valuation as a result. Because I'm going to build the same kind of FOMO, the same sort of process and that works maybe at the 90th percentile of what you might get if you were in the Bay and get a hundred percent of it, but you don't have to be there. Peter Walker (00:15:50): I think it's a great strategy. I think that more founders, I don't think you should move and I do think you should visit is the way that I've been telling founders lately. Pablo Srugo (00:15:57): Yes, and then the other thing I want to touch on is the graduation rate. We're talking about the Series A especially. How is that trending from seed to A? And what does it take? You know, what are you seeing in the data in terms of what it takes to raise an A? Who's getting it? Peter Walker (00:16:11): I mean, it's getting a little bit better. So that's good, there are more companies graduating from recent cohorts. If you look at, right, we're sitting here, call it the end of Q1, beginning of Q2, 2026. You've got the companies that raised about a year ago, so Q1 of 2025 or so. How many of them have gotten a Series A so far? It's something like ten to eleven percent, which in a year is actually pretty good. It's much better than it was in 2022 or 2023, where it was dead down to like four or five percent. Pablo Srugo (00:16:40): Wow. Peter Walker (00:16:41): It's not where we were back in 2021. So the frenzy isn't quite there and that's because the other half of your question, there's just a concentration where higher valuations, more capital, but fewer companies and that's happening at stage after stage after stage. So it takes a lot to get to Series A. It takes way more than it used to. The growth rates are higher. The competition is higher. The expectations from investors are higher and that will definitely push people out along the way. You can talk about what those, stranded seed companies do. But in general, I think the bar for Series A is something like 2x what it was a couple of years ago. Pablo Srugo (00:17:17): It's what? The median, I think, from SVB is $3.5 million ARRs, is that about right? Peter Walker (00:17:21): Yep. Pablo Srugo (00:17:21): It used to be, again, you go back. The seven million A's I'm talking about, you needed a million ARR for, so. Peter Walker (00:17:27): A million dollars, right? Exactly, that was always the benchmark. Pablo Srugo (00:17:29): So it really is the tripling. I mean, now you get a bit more than twice the money and you need more than twice the ARR. Peter Walker (00:17:35): Then there's this cohort, you know, those AI infrastructure companies might be earning zero dollars and they're raising hundreds of millions. Because they haven't come out with their new world model yet, or whatever it is. It's very weird, it's a weird time. Pablo Srugo (00:17:47): Oh, you're such a selfish person. I actually can't believe how selfish you are because you've been listening to the show, you listened to this episode, you loved it. You've listened to a bunch of other episodes and you haven't told anyone about it. You haven't told any of the many founder friends that you have about it. Think about how many founders have helped you out when you're building your startup. So don't be selfish. Tell your friends about this episode. Tell them about the show and help me help them. Those are almost like you said, they have to be treated completely differently. They just don't apply. I think for most, unless you're in that world, most founders are not building those sorts of businesses and so they suffer from. One of the things that I'm seeing, even growth is not the same as it used to be, in the sense that growth alone isn't even enough now in terms of that bar for Series A. Not only do you need $3.5 million in ARR, not only do you need to have gone there very fast, you also need to have a reason for why you can compete. For why not everybody else is going to do this, because now everybody can build product, everybody's moving super fast. What do you have that others don't? In a sense, the AI infra ones, they don't suffer from that in the same way. There's something about the DNA that from the get go is supposed to make them differentiated. So it's part of that origin story. Whereas a lot of these AI apps, it's like, yeah, I'm gonna solve this problem for this. Oh my god, it's working. Oh my god, I'm growing so fast and now I got to figure out how come ten other founders aren't gonna eat my lunch and tell this story so I can raise a Series A. Peter Walker (00:19:11): What's the story that you hear from founders that how bad they can do that? Because I don't, I'm with you. I think the defensibility has never been lower. Pablo Srugo (00:19:18): It's totally case by case. A lot of this I do think is just straight up, story in the sense that part of how you're going to out compete is going to be around capital and execution. So you got to get the capital to get. Let's say you're selling something that people truly want. People are really buying it. Go to market is a matter of execution, doing it right and putting in the energy, and capital. The fact is, if your competitor can go to ten events and you can go to one. That's going to have an impact even if you do much better at that one event. Same with search spend or whatever other channel that you're going to drive at. So capital becomes part of that thing, and then that creates a brand. And we're simplifying here because obviously you can be underfunded and still win, but I'm just kind of as a rule. So you almost have to find a way to be compelling enough as a storyteller. Sell a vision that captivates the minds of VCs enough that, by the way, they also know it's a story. They're not stupid, but they also think, well, if they can captivate my mind, then maybe they can captivate talent in the same way and customers in the same way. So fine, I'll give you a bunch of money to go do that. Which, if you can kind of use that wisely, gets you to the next step and if you're just like a couple of steps faster than the next person behind you, maybe that's enough, right? Maybe it isn't, but for many AI apps, you're not building your own model. Why would you? And the product we all know can be copied relatively easily in most cases. So what else do you really have? Peter Walker (00:20:49): I think it's a really deep question, and I think it's very hard for many founders to paint the right picture of expanded defensibility. The other thing that's happening very clearly is that a lot of these startups are expanding into use cases quicker than they used to. So the product suites in a world where products is less than, I wouldn't say trivial, but less difficult to build than it used to be. They just kind of overlap with each other again and again, and again. And so, it's more competitive and the defensibility is lower. And like you said, maybe the premium to capital is higher. But you could also get to a point where it looked like you were on a hockey stick growth. You have one bad six month period and you just kind of get wiped. Yeah, I am impressed with people building AI application companies and then choosing to take venture capital. Pablo Srugo (00:21:36): Well, yeah, but the thing is, if you don't, then the risk is if you're not the winner in that category. Then you're kind of fighting for scraps and if you're fully bootstrapped, you can make a lot of money doing this, too. So maybe it's fine and who cares? Yeah, they're a billion or $2 billion or $3 billion, and I'm a $50 million exit, but I own a hundred percent of it. I don't care, that's totally fine. But to the extent that you're trying to compete for that number one or two position. At some point it's all relative and you might show up and be like, dude, I grew one to four last year. Obviously I'm raising and then they're like, yeah, but your competitor is at thirty, right? And they grew ten to thirty. So actually you're number two or maybe you're worse than number three. Why do you deserve to get funded? And you just get caught in this vicious cycle. I guess that for me that's the big thing is on that side, the competitive front, how do you get yourself into that virtuous cycle where you start winning, you leverage that to get more capital, get more talent, so you win more. At some point it's the self-fulfilling prophecy where you're just the winner versus you aren't able to kind of get that capital. Which makes it harder to get the talent. Which then puts you in a place where you're like, oh, my product's so good, my customers love me, but I'm not signing the biggest enterprise, they're signing it. I'm not signing ten, I'm signing one for every nine they sign, and then it just gets harder and harder. Not to say this is the Holy Grail, but there's something to that mindset, I think, that can get you to be that category leader, and all of a sudden, you're out competing because you're out executing. Peter Walker (00:22:56): Yeah, it's a good question as to whether or not the returns will flow to places two through five in a lot of these industries. I mean, historically, even though we said they were winner take all, we never actually believed it. You can do pretty well as number two. Now, I think that is an open question, especially at the scale that you need to go, back again to the Decacorn plus kind of scale. If you are not the clear market leader, the worries compound on themselves a lot faster. Pablo Srugo (00:23:22): And then you have data on the employee front, like team sizes. I know that's been a trend, and obviously people talking a lot about, the single-person unicorn, Which I know is more kind of story than reality. But what are you seeing in terms of team sizes, you know, ESOP, All these sort of things? Peter Walker (00:23:38): Well, I don't know. Maybe, you know, the open claw founder got there. We don't know. We don't know what the purchase was. Pablo Srugo (00:23:44): That's true. Peter Walker (00:23:44): But perhaps Pablo Srugo (00:23:45): One out of seven billion has accomplished it. Yes, great, right? Peter Walker (00:23:48): Outlier case for sure. Team sizes are getting smaller. We're seeing the median seed stage company on Carta has four employees, not counting the founders. The median Series A company probably has between fifteen and seventeen, but probably closer to twelve to fifteen by the end of the year. So definitely the case that they're doing this with fewer people. Pablo Srugo (00:24:09): Do you know what it might've been like three, five years ago for median seed, median A? Peter Walker (00:24:13): Yeah, median seed would've been more like six or seven, median A would've been more like 45. Pablo Srugo (00:24:17): Okay. Peter Walker (00:24:18): Yeah. Pablo Srugo (00:24:18): Four is small and again, I think it's great if we end up with more seed companies, each one is smaller, right? That would be the best possible outcome in my opinion. Peter Walker (00:24:28): I hope that's the case. I mean, the data from Stripe Atlas suggests that that is the case. We're seeing it, you know, more and more companies are signing up for Carta at our launch stage. Where they're not, you know, they're getting it for free until they raise $1 million. I think it's a big question as to why more companies are not being venture backed. Pablo Srugo (00:24:44): Oh, interesting. Peter Walker (00:24:45): So, it's a question of, do you just like, is the thousand flowers blooming mostly bootstrapped angel-funded companies or is it going to be VC-backed companies as well. Because we really haven't seen the VC part of the market change all that much. It hasn't experienced the same sort of rapid growth that the bootstrap side of the market has. So I think that's an open question and then as you said, yeah, each one of those companies is going to be smaller in terms of headcount but net, will they employ more people? The employment question is everyone's favorite one. I go back and forth on any given day about what I think the impact of AI is going to be on employment but right now, it seems hiring is at a low ebb across VC-backed startups. So maybe that'll change, but I'm not sure. Pablo Srugo (00:25:26): I mean, my fully anecdotally backed kind of thesis is, assuming you can get more or less the same done because of AI. You're, all else equal, better off with four people at seed than seven in terms of those odds of success. Just because not only is potentially your burn lower, though it depends on the salaries, but only is potentially your burn lower just in terms of the overhead that it means, like you and two other people in a room is one world. You and six other people, potentially not even in a room, is a different world, and obviously a twenty, and so on. But every single time you add, you double the team size. It might seem like a small difference, four or seven but it's almost a doubling of the team size. The amount of communication, the amount of interpersonal problems, the amount of non-related to finding product market fit issues you might have just grow and so again. All else being equal, I like the odds better if all seed startups somehow are able to do it at four versus needing seven in terms of their ability to figure something out. Peter Walker (00:26:22): I do too. I think it's probably better overall and more capital efficient and a lot of little things. I mean, it's just a question of, is that enough net employment for startups as a whole? I mean, I guess it's not the job of an individual founder to care about that but across the industry, you know, there's a lot of worries. There's just a lot of anxiety. I don't know if you feel this as much, but in SF, it's exciting, yes, but people are really anxious too. There's just an undercurrent of uneasiness that is all over tech right now, it feels like. Pablo Srugo (00:26:52): Yeah, I think there is. I think it goes like, again, it's not where my, given what I do. Where I spend most of my time thinking about. But there's also a wide spectrum though, of how much people, especially outside of tech. Really leverage these things and use them and rely on them. I mean, we're in a bubble. We're one hundred percent in a bubble, right? So. Peter Walker (00:27:10): one hundred percent, yes. What do we usually do with the bubble? It usually pops. At some point, it usually pops. Pablo Srugo (00:27:17): Question is when? Peter Walker (00:27:18): You got a great S1 out there, a great, maybe not as great as people were expecting for SpaceX. We'll see. But I don't know. I expect that IPO to go well and then the next two, maybe later this year, maybe the year after, I don't know and then it's all on the table. If one of those IPOs really flops, it's going to be a serious problem. Pablo Srugo (00:27:37): Yeah, for sure. But it's hard to imagine, you look at the amount of interest in my, again, no expert, but like OpenAI, Anthropic, plus the numbers, and the multiples on those numbers are high, but not crazy high relative to their growth. So it's not as clear as ninety-nine type bubble stuff. We're just not, the multiples at least are not at that level. Now, what could happen is it just plateaus, like that's where things really hit the fan. Because all of a sudden a multiplier looks great when you're 10-xing, looks absolutely ridiculous when you're growing ten, twenty percent a year, right? We saw it in SaaS, like we just saw it in SaaS. So that could happen, but who knows. The other thing I was gonna ask about is if you have any data on solo founders? That's related to that other question, but that's been a big topic, especially for potentially non-technical people. You know, I went through this not long ago, where it's like, you start playing with Co-worker Claude, and all of a sudden. You're building an app, and it was a shitty little app I'm never gonna deploy, but I'm like, man, I've never built anything on my own. It's a true zero to one moment, and I can imagine you know, many different founders across the world saying, holy shit, I don't need anybody else. I can just do this. Peter Walker (00:28:38): A hundred percent. We're seeing a lot of that. We have, I think at last count in 2026, something like thirty six or thirty seven percent of the companies on Carta that joined us this year are solo founded. A lot of those companies will end up not being venture backed. So the venture backed percentage, it's probably more like a quarter maybe, but that's still very high relative to where it was ten years ago and I just think we're going to continue to see that expand. What I hope. Pablo Srugo (00:29:05): And what would it have been five, ten years ago? Peter Walker (00:29:08): For the venture backed, it would have been ten percent. So it's more than doubled. Pablo Srugo (00:29:12): And what about the non, if you just look at. Let's say three years ago, number of companies started by solo founders, venture backed or not. What would that have been like instead of thirty seven percent? Peter Walker (00:29:19): That would have been more like twenty five percent, twenty-six percent, and now it's thirty-five percent. Pablo Srugo (00:29:25): So still a fifty percent increase. Peter Walker (00:29:27): Yeah, over the last five years, material increase for sure. What I hope is that these companies, what I haven't seen so far, what I hope happens is that these companies that are being built by a solo founder grant equity to their early team in a different way. They're just higher levels of equity granted to those founding engineers, etcetera. We really haven't seen it. I was expecting it to be like. Pablo Srugo (00:29:48): Interesting. Peter Walker (00:29:50): The main way that a solo founder got to throw around their weight differently. It's a competitive advantage. Pablo Srugo (00:29:55): Yes. Peter Walker (00:29:56): Right? I haven't seen it very much. So that's a shout to solo founders. If you have that extra forty percent of equity, use it on the early team. Pablo Srugo (00:30:07): And even in the, you know, I can see it in the non but if you look at the solo founders, twenty five percent that do end up venture backed. In that group, you're still not seeing a difference in terms of those first few grants relative to your normal venture backed company? Peter Walker (00:30:18): Not massively. I mean, they're a little bigger. They're not a lot bigger. Maybe the fact that they're a solo founder doesn't really play into that compensation conversation. There's other criteria and I think it probably eventually should if you're competing with the same equity resources for another fantastic candidate that some other startup is super interested in, or maybe I'm missing a part of the market. Pablo Srugo (00:30:40): I would agree with you. But I would also understand. Again, you look at the data first and you explain the story. But it does make sense to me that it wouldn't just happen right away because a solo founder is certainly not going to think, oh, I've got extra equity, let's give it away. It's just not the mindset. They're going to say, I don't care what I started with. What does it cost me to get a Head of Sales or a Head of Engineering or whatever it is that I need? Okay, it costs this, I'm giving that. That's what I'm giving. But what might happen over time is, the fact is if you give more, you can get more in terms of the bar, right? That's just, you know, you pay more, you can get better talent is a very obvious thing and so like, I'll give you an anecdote to tie back to this. I had a solo founder who's a salesperson, you know, they, they build, they have a few engineers that are doing this stuff, great. Great engineers and then it just became obvious that they needed like a VP Eng., a Head of Eng. And it was funny talking to, trying to recruit someone and obviously talking to other founders to get like, hey, who do you know that's great? And some people said to me, this is a seed stage startup, dude. Why are you looking for a VP Eng.? It's way too early for a VP Eng. I'm like, you have to understand that this was a technical founder. You're a technical founder. Not only that, if you think about your average startup in your mind, you're thinking there's two or three founders and one of them is a CTO or technical founder. In which case, yeah, a seed stage is way too early to hire a VP Eng. But you have to think of this more like, if you're starting a company, as a sales business person, it's very classical advice to get a technical co-founder. Very classical advice. So if you're not going to do that because you don't need to and you don't want to part with thirty percent, you're going to need to fill that gap. There's just a bigger gap for you than somebody else and then the question is, are you going to go for your average. Let's say, the grant is two percent normally for a VP Eng. But if you're kind of this hybrid co-founder and you just need to fill that gap more, you can maybe reach up. That's the competitive dynamics that you're talking about and do a five percent grant. Maybe that becomes an edge, but like, it'll take time for, I'm sure some founders are doing that, but it's like for that to show up in the data, because it becomes the standard thing that people do. I could see how that would take time, but it seems like a natural endpoint. Peter Walker (00:32:40): Yeah. I mean, I agree that the logic seems to make perfect sense to me and I don't know why. We haven't seen it more, but maybe as you said, maybe it'll take time. The other point on teams that I think is interesting is that there was a little bit of a wave that went through private tech when the Windsurf stuff happened and what it means to be part of an early team. I just think that startup employees, at least the ones that are super in the know, are like, hey, what is the advantage of me not starting my own company? You know, I think that the best alternative used to be work at Google, whatever and now it's start your own thing. And I think that, I've been hiring the number one, number two, number three engineer, the business has almost never been harder because the alternatives are so obviously like hitting you over the head. If you can be a founding engineer at a startup, why couldn't you be a founder? Pablo Srugo (00:33:29): Although walk me through that, because my thinking has been AI has changed product. Obviously, AI agents you can use them for go to market and stuff, but I would argue getting a customer is not easier because competitively everybody's doing it. Getting customers is no easier today than it was five years ago. It's still just as hard. What's gotten easier is building the product. If you're a technical engineer, you're a technical founder, building a product's even easier than it used to be, let's say. Because it helps you but getting customers, I don't see how that's changed. Peter Walker (00:34:00): I think that they kind of underrate how hard it is to get customers overall. Pablo Srugo (00:34:03): Yeah, that's a different thing. Peter Walker (00:34:04): That's probably one thing, which is a good point. The other part is just that it's not so much the equation has changed on how hard it is to be a founder or build a good business. The equation has changed on how valuable it is to be in the early team. If we get acquired, and for some reason, I'm not a part of the golden circle that gets taken to the next place, and I've accepted a lot of risk, even if my equity grant is high, it's not, it's kind of like a different sort of another variable on the equation. And I think it's, there's a lot of acquisitions happening right now, mostly for AI talent. So I think there's, candidly, I think there's a lot of companies quietly, not saying it, that are quietly being built to get acquired earlier. Pablo Srugo (00:34:44): I think that's a good point. I mean, frankly, the monetary advantage of being an early employee has always been questionable. That's just the reality of it and then when you see acquisitions, kind of like side acquisitions that happen in a way where not everybody's compensated the same way, it just adds, fuel to a fire that's already. It was not like a crystal. I would say it's way more fun to work at a startup. I'm like all about small teams. You have more agency. There's a lot of upside, but like money is not what. You will make more money at Google more easily doing less. You just will. Peter Walker (00:35:16): The expected value is much higher at Google. Pablo Srugo (00:35:18): Way higher. Peter Walker (00:35:19): Yeah. Pablo Srugo (00:35:19): Awesome, man. Anything else that we didn't touch on? Anything else? Any other trends you're seeing that you're digging into? Peter Walker (00:35:24): I think there's a lot of conversation right now about what happens to the traditional $200 to $400 million Series A fund, and whether or not those fund managers need to go down earlier. Whether they can compete with the rounds from the mega funds. Everyone seems to have assumed that mega funds will continue to attract the most money and that super early funds have an advantage and so, what happens in the middle is one of the bigger conversations around venture managers that I'm listening to right now. Pablo Srugo (00:35:52): Well, actually on that, I was going to ask, we're seeing, you're seeing more companies created and you mentioned but not necessarily more companies being backed. What do you see in terms of fund formation, like number of funds and total dollars raised? What does that look like? Peter Walker (00:36:04): I mean, it's OK. It's definitely down from prior years. There's a group of funds that are being started that are under $50 million that are, you know, probably is going to come in to about equal to last year. Maybe slightly down from last year, at least in our data. But in general, you know, I think one of the stories of the last couple of years has been a lot of VCs who got started in 2020 and 2021, they're on their last funds and they're not going to be able to raise again. Pablo Srugo (00:36:29): So I mean, in a sense, you've got way more founders chasing the same or maybe smaller number of VCs. Sure, some of those VCs have massive AUM, which maybe makes your total dollars available be high. But they're not going to, spread them. Probably, you know, if you have one mega fund, it's just not going to be able to spread it as far as a hundred or a thousand little funds, which each one's going to do thirty deals. Peter Walker (00:36:54): Yeah, exactly right. Is that good or bad for the ecosystem? I don't know, but it's definitely on the mind of a lot of emerging managers who are finding this market pretty frigid. Pablo Srugo (00:37:02): I think it's just, for me, again I go back to the founder mindset, this is the bar. You see the headlines, you see the medians, you're like, wow, $15 million at $80 million post-money. The world couldn't be any better, I just got to get there. But getting there, just understand what that means because of all these dynamics, the bar is just very high. ARR is one of those things. Growth is another. Competitive dynamics is another one. The size of your potential exit, like all these things really have to align for you to be the one that gets counted in that meeting. Because, by the way, everybody that didn't raise an A is not part of that data set, so. Peter Walker (00:37:36): Bingo. It's a rough, rough world out there. Pablo Srugo (00:37:38): Listen, Peter, it's been great having you on the show. I'll let you rest your voice a little bit, man, and appreciate you sharing the insights with us today. Peter Walker (00:37:46): Yeah, dude. Always good to see you. Pablo Srugo (00:37:48): All right, dude. Chat soon. So picture this, it's months from now, years from now, and one of your founder friends, a really close founder friend of yours, guess what? Their startup went bankrupt and it turns out, if you had just shared the Product Market Fit show with them. They would have learned everything they needed to, to find Product Market Fit and to create a huge success. But instead, their startup has completely failed. You have blood on your hands. Don't let that happen. You don't want to live like that. It is terrible. So do what you need to do. Tell them about the show. Send it to them. Put it on WhatsApp. Put it on Slack. Put it where you need to put it. Just make sure they know about it and they check it out.