Fewer Series A Deals Raise the Bar for Seed Startups

Large Series A financings can make the market look more open than it is. Crunchbase reported at least 114 global Series A rounds of $100 million or more so far this year, with more than 70% going to AI companies. For most seed-stage founders, the more relevant signal is that fewer companies are getting through the next funding step.

U.S. startups closed 272 Series A rounds in the third quarter, about 28% fewer than the 377 recorded a year earlier, according to Crunchbase data. Seed activity declined less: 984 rounds compared with 1,059. That gap matters. A healthy count of seed financings can coexist with a narrower path to Series A, leaving more companies to build for longer before they can raise again.

The amounts raised at seed have also climbed. The median U.S. seed round was about $3 million last year, three times its 2018 level, according to Crunchbase. But a larger first check hasn't made progression to Series A more likely. Of companies that raised a seed round of at least $1 million, 24% of the 2023 cohort had moved beyond seed; the share was 16% for the 2024 cohort. That compares with 55% or higher for cohorts through 2020.

Those figures point to a practical financing question: how much capital will it take to reach the next fundable milestone, with enough time left to raise? A bigger seed can buy more runway, but it can also increase the amount of progress founders need to demonstrate before the next round. The relevant measure is not the size of the seed check by itself. It’s whether the company can use that capital to reach a repeatable business and a clear case for further funding.

Set the seed target against the next milestone

Uncork Capital’s Andy McLoughlin told Crunchbase News that Series A investors now expect $2 million to $3 million in annual recurring revenue, sometimes $4 million, and that the interval between seed and Series A has stretched past two years. Founders need to plan around both parts of that hurdle: the revenue target and the time required to reach it.

McLoughlin’s guidance is to size the seed so the company can reach the Series A bar with six months to spare. That cushion matters because a company may hit a milestone later than planned, or fundraising may take longer than expected. If the amount needed to reach the target is larger than the company can reasonably raise, founders may need to adjust the plan, the spending pace or the timing of the next raise.

One example of a smaller seed supporting a later institutional round is Atomic, a New York-based supply chain planning software company founded in 2023. It raised a $3 million seed in April 2025, at the median cited above, led by Madrona and DVx Ventures. About 17 months later, it closed a $12.5 million Series A led by Madrona and Klass Capital. The example shows one route through the gap between rounds; it doesn’t establish a standard timetable or outcome for other startups.

Build relationships with likely lead funds early

Funds of $100 million to $500 million typically lead Series A rounds. Founders can identify which funds invest at their stage, learn when those funds are nearing the end of their investment period, and keep relevant partners informed well before a formal raise. Regular updates over a year give a prospective lead more context about the company’s progress and its ability to meet targets.

That relationship work is easier to do before fundraising becomes urgent. It also gives founders a chance to learn what a potential lead will want to see: revenue growth, customer retention, a defined market, or evidence that new sales hires can succeed. The source doesn’t specify a standard set of milestones for every company; the relevant bar will depend on the business and the funds it approaches. The useful step is to understand that bar early enough to plan for it.

Revenue quality matters alongside revenue size

When Series A expectations center on revenue, building a sales process becomes part of the financing plan. A company may have a strong product and still struggle to show that customers can be acquired consistently. Founder-led sales can produce early deals, but investors will want evidence that the process can continue as the company grows.

At MGV, the process described by its team begins with a “Sales Jumpstart” session: interviews with the founders and their team, followed by an assessment of the company’s current sales approach and what it needs to become scalable. The work can cover outbound outreach, customer qualification, prospect profiles, sales funnels, handling objections, hiring assessments, compensation plans, fundraising preparation, pitch materials, storytelling and introductions. These activities are presented as one firm’s approach; they aren’t a guarantee of results.

The distinction between revenue and a repeatable sales engine can shape how a company is judged. A startup at $2 million in ARR with a sales process that a new hire can run may present a stronger case than a company at $3 million whose deals depend on founder relationships and judgment. The second company has more revenue today, but may have less evidence that it can reproduce that performance without the founders leading every sale.

For seed-stage companies, the financing picture therefore hinges on several connected questions: whether the seed will fund a long enough runway, whether revenue can reach the levels prospective leads expect, and whether customers can be won through a process others can repeat. The founders best prepared for a Series A are already building for the demands of the round that follows it.

Related Crunchbase query

• US Seed Funding In 2026

Related reading

• Seed Funding Is Bigger Than Ever — And Harder To Get
• In Charts: Seed Deals Keep Getting Bigger As Odds Of Reaching Series A Fall Dramatically
• Data: The Seed Funding Boom Is Concentrating Capital In The San Francisco Bay Area
• These Are Sectors Where Seed Rounds Of $5M To $10M Are Clustering This Year
• The Billion-Dollar Seed Isn’t The Deal You Think It Is

Illustration: Dom Guzman