Massive Series A Funding Masks The Real Crunch For Seed Startups

Global startups have finalized at least 114 Series A financing rounds worth $100 million or greater over the course of the year up to late September, according to Crunchbase reports, with artificial intelligence companies capturing more than 70% of those transactions. For the average seed-stage founder, that milestone serves as a cautionary signal.

Data from Crunchbase indicates that U.S. startups closed 272 Series A rounds during the third quarter, which represents a decline of approximately 28% compared to the 377 deals finalized during the same period in the previous year. Seed-stage activity demonstrated more resilience, recording 984 rounds versus 1,059. These massive megarounds tend to mask the underlying scarcity of actual Series A transactions being completed.

Meanwhile, seed-stage check sizes continue to expand. Crunchbase notes that the median U.S. seed round reached roughly $3 million last year, representing a threefold increase over 2018 figures. Nevertheless, merely 24% of enterprises that secured a seed investment of $1 million or more in 2023 have successfully advanced past the seed stage, while only 16% of the 2024 cohort have done so—a sharp drop from the 55% or higher progression rates recorded through 2020.

Size your seed against the Series A

Andy McLoughlin of Uncork Capital shared with Crunchbase News that Series A investors now anticipate annual recurring revenue (ARR) between $2 million and $3 million, and occasionally reaching $4 million, while the duration required to transition from seed to Series A has extended beyond two years. If a seed financing cannot sustain a company up to that revenue benchmark with a six-month buffer remaining, securing a smaller funding amount is often the more prudent option.

A larger seed round is not an absolute requirement for success. Consider Atomic, a supply chain planning software startup based in New York that was established in 2023 (and operates independently of MGV’s portfolio). The company secured a $3 million seed round—matching the median figure—in April 2025 with backing from Madrona and DVx Ventures, and subsequently finalized a $12.5 million Series A led by Madrona and Klass Capital approximately 17 months later.

Map your Series A leads now

Venture funds ranging from $100 million to $500 million generally act as lead investors for Series A rounds. Founders should identify which specific funds take the lead within their particular sector, track when their existing funds are scheduled to close, and provide the appropriate partners with consistent updates for a full year prior to making any funding requests.

Sell your way to the bar

Because the threshold for a Series A is now defined by revenue, the challenge has fundamentally transformed into a go-to-market issue. The majority of seed-stage businesses encountered possess a product that is significantly stronger than their sales mechanism.

At MGV, operations commence with an initial engagement termed Sales Jumpstart, which involves interviewing founders and their operational teams. The enterprise is then evaluated using a proprietary matrix measuring its current standing, target positioning, and the exact requirements needed to transform into a scalable go-to-market organization.

Following this evaluation, founders participate in workshops covering outbound prospecting, lead qualification, prospect profiling, pipeline management, handling objections, hiring assessments, compensation structuring, fundraising strategy, pitch deck creation, storytelling, and investor introductions, accompanied by continuous mentorship.

An enterprise generating $2 million in ARR equipped with a repeatable sales process that a newly hired employee can execute represents a far superior Series A prospect than one bringing in $3 million in revenue derived entirely from founder-led transactions that cannot be replicated by others. Founders who ultimately succeed are already looking ahead and planning for the subsequent financing round.

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As the co-founder and managing partner of MGV, Marc Schröder is committed to establishing MGV as the premier venture firm for world-class tech entrepreneurs to accelerate their visions. Under Schröder’s stewardship, MGV has swiftly ascended to a top-quartile firm, surpassing the performance of 95% of venture funds. Business Insider has recognized him as one of the Top 100 global seed investors, and his perspectives are published regularly in Crunchbase News and other leading publications.

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

Frequently Asked Questions

What is the current trend for Series A rounds?

While massive megarounds—particularly in AI—grab headlines, the overall volume of completed Series A rounds has dropped significantly compared to previous years.

How much ARR do Series A investors typically expect now?

Series A investors generally look for $2 million to $3 million in ARR, and sometimes up to $4 million, with the timeline from seed to Series A stretching past two years.

Are larger seed rounds always better?

Not necessarily. A smaller seed round can often be a better deal if it is carefully sized to carry the startup to the Series A revenue milestone without excessive dilution.

What makes a startup a stronger Series A candidate?

A company with lower ARR powered by a repeatable, scalable sales process is often viewed more favorably than a company with slightly higher revenue driven entirely by founder-led deals.

How is the transition from seed to Series A changing?

Transitioning to a Series A has become primarily a go-to-market challenge, requiring structured sales motions rather than just a strong product.