C
arta released its Winter 2025 State of Seed report, delivering 10 critical insights for B2B founders:

    **1. Solo founders are rising, but VCs still favor teams**

    - 35 % of all 2024 startups are solo‑founded, up from 17 % in 2015.

    - Only 17 % of VC‑backed companies are solo; two‑founder teams dominate at 34 %.

    - Solo founders can launch, but venture funding becomes tougher.

    **2. SAFEs dominate pre‑seed financing**

    - 92 % of pre‑seed rounds use SAFEs (vs. 54 % in 2019).

    - Convertible notes fell to 9 %.

    - 61 % of SAFEs are post‑money with a valuation cap only; 63 % of those with a discount use exactly 20 %.

    - First‑time founders should question any push for convertible notes.

    **3. Pre‑seed capital remains strong**

    - $815 M deployed in Q2 2025 for sub‑$5 M SAFE/Note rounds.

    - The market is selective but healthy.

    **4. Seed valuations split sharply**

    - Median seed valuation: $20 M.

    - 95th percentile: $80.5 M (4× median).

    - 25th percentile: $13.8 M.

    - AI deals pull the high end; others compete for modest terms.

    **5. Co‑founder attrition is common**

    - 24 % of VC‑backed two‑founder teams lose a co‑founder by year 4.

    - Attrition rises to ~30 % by year 5, ~35 % by year 6, ~40 % by year 8.

    - Co‑founder vesting and team dynamics are critical.

    **6. Time to Series A lengthens**

    - Median seed‑to‑Series A: 2.1 years (up from 1.5 years in 2019).

    - AI startups: 1.9 years, still longer than 2023 lows.

    - 75th percentile: 1,251 days (3.4 years).

    - Plan for ≥24 months runway at seed.

    **7. Graduation rates stabilize around 50 % by year 4**

    - ~50 % of seed companies reach Series A by Q16.

    - Recent cohorts (Q2 2024) show 8.9 % graduation by Q4 of year 1, better than 2022 cohorts.

    **8. Founders stay leaner longer**

    - Average seed team: 6.2 employees (down from 10.3 in 2021).

    - Median time to first hire: 284 days (vs. 214 days in 2019).

    - Series A teams: 16.8 employees (down from 25.9).

    - Series B teams: 48.2 employees (down from 72.3).

    - AI efficiency thesis: smaller teams, same outcomes.

    **9. SF and NYC dominate top‑tier valuations**

    - 66 % of top‑decile seed valuations in SF (44 %) or NYC (22 %).

    - Only 6 % of bottom‑quartile valuations are in the Bay Area.

    - Raising outside these hubs makes top‑tier valuation harder.

    **10. Founder ownership dilutes rapidly**

    - Post‑seed: 56.2 % ownership.

    - Post‑Series A: 36.1 %.

    - Post‑Series B: 23.0 %.

    - Post‑Series D: 11.4 %.

    - Dilution averages ~20 percentage points per early round.

    **Quick data highlights**

    - AI engineering equity up 15‑40 % since Jan 2024; senior directors 40 % higher.

    - Seed‑to‑Series A median valuation jump: 2.6× in 2025 (down from 4.2× in 2021).

    - First hire equity: median 1.5 %; drops sharply thereafter.

    - Advisor equity lower than expected: median 0.24 % pre‑seed, 0.12 % seed.

    - AI captures 42 % of seed capital, 35.5 % of Series A, 40 % of Series B, 70 % of Series E+.

    - Median seed raise: $4 M; 95th percentile: $16.6 M (4× median).

    **Takeaway**

    The seed market is healthy but bifurcated: AI firms enjoy higher valuations and faster timelines; others compete for modest terms with leaner teams and longer runways. SAFEs are the standard; solo founders face fundraising hurdles; top valuations cluster in SF/NYC. Build demand‑driven products, hit key metrics, and raise when you have leverage—benchmarks shift, but the fundamentals stay the same.