The Ledger, every show

“If you took a bridge on a safe or a note after you had already raised price funding, so this is all about priced seeds to price series A, the percentage on the convertible bridges was four percent.”

“The percentage of companies that raised a seed round in twenty-twenty and then have raised some sort of bridge capital since then on a safe or a note. Only four percent of companies that fall into that bucket have gotten to a series A. Four percent versus like…”

“There's always this cohort of mostly candidly AI infrastructure companies that are building foundational models or building like the tech around foundational models, and they are getting valued at Just astronomical numbers. You know, I call it a 160, 170, 182 …”

“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. …”

“Then there's this toward, you know, those AI infrastructure companies might be earning zero dollars and they're raising hundreds of millions because they're, they haven't, you know, come out with their new world model yet or whatever it is.”

“Cause 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.”

“What I hope is that these companies, what I haven't seen so far, and 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. Like there are just higher levels of equity granted to…”

“A lot of VCs who got started in 2020 and 20 21, they're on their last funds, and they're not gonna be able to raise again.”

“At Seed, for instance, they're higher than they were in twenty-twenty-one, which was our most recent peak bubble era. And they're higher by a considerable amount. You know, the median seed valuation on Carta these days is probably something like 16 or seventee…”

“What it showed is that on a percentage of graduation basis, yes, the highest valued companies graduate to Series A little bit more often than the other companies. But it's not a massive difference. It's within a couple percentage points.”

“And there was a theory for a little while there that AI companies would spend a lot less money. We're not seeing that. I think AI companies are spending as much money as they've ever spent.”

“We're in the definition of a bubble period right now. And there is no way that this bubble doesn't pop.”

“Something like 58% of two founder teams split unequally, so not fifty-fifty.”

“The general gist of it was that if you raise a small seed round, that is less highly correlated with your ability to raise an A round. So it looks to be that the smallest, and there's a bell curve here where, you know, at the smallest seed rounds tend to make …”

“Like, you're talking 14, fifteen million dollars raised. You're talking seventy-five million or so post-money valuations on that.”

“Like, you know, the median Series A in the Bay right now is eighty-five million, post-money. The median in Austin is probably more like 65. The median in D.C., probably more like 60, and on down the line.”

“You've got the companies that raised about a year ago. So Q one of 20, 25 or so, how many of them have gotten to series A so far? It's something like 10 to 11%, which in a year is actually pretty good. It's much better than it was in 20, 22 or 23, where it was…”

“We're seeing like the median seed stage company on Carta has four employees, not counting the founders.”

“36 or 37% 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.”

“Insofar as we can tell, if you take that core B to B software company, you know, used to be, you have a million bucks in ARR. You can start talking about a series A. Now it's three on median and the top end is more like seven or eight.”

“The biggest venture funds in the planet are fundraising Better than they ever have. But it's almost as though there's two separate venture markets. There's the emerging manager, smaller fund market, and then there's the massive manager, mega fund market. One i…”

“That's probably 80% of the total transacted volume in secondaries for venture these days is eight to 10 names that everybody already knows.”

“You know, the median, so if you look at Series A companies on Carta, the ones that raised Series A in twenty-twenty-one, they had 25 people working for them. The ones that, that raised Series A in twenty-twenty-five had 16, and by the end of this year we think…”

“When you look at the data, yes, there's more capital being invested, but the number of rounds at seed stage for us this year is actually going to go down.”

“The companies that didn't had a big, big change were the lowest valued companies. So the lowest quartile, if you were raising a seed round and it's in the zero to call it 25th percentile of valuation, so on the very low end, those companies made it to series A…”

“The conversation that I'm having more than any other with founders today is if I'm not in this super hot quartile, in this super hot AI circle, do I have a chance? There's like a, I wouldn't call it fatalism, but there's a definite strong negativity or sense t…”

“Like safes are the dominant way to get money into a business. Now, anything under four million dollars is dominated by safes. Where it used to be, you'd start on safes and then you'd raise a seed, but if you're raising two and a half, three, four million dolla…”

“Series A, 20, 21, you had 25 people working for the company, full-time equity holding employees working for the company. Now you probably have 17. 16.”

“Actually, AI ML engineers over the last 18 months on Carta, their pay packages have risen between 25 and 40%.”

“I'll say upfront, the number of founders taking secondary after their seed round is twice as high this year as it was in 2021, which was the highest we'd ever seen.”

“While we're seeing, call it close to double the amount of founders taking something out at seed, like almost none of them have employee participation.”

“The latest data has it at 20% of companies got from seed to A in two years or less.”

“Weirdly, in the last year, there's been a couple quarters where the companies that took a bridge More of them have made it to the next stage and the companies who haven't taken a bridge yet.”

“We're showing a chart right now that shows seed stage valuations for AI companies being 40 to 50% higher.”

“I am pretty sure that in the next two years, I'm just gonna stop reporting on AI.”

“So it used to be in 20, 21, that the median amount of CAT or median amount of ARR for a Series A company is like just above one million bucks. In 20, 24, that was nearly three million dollars. And on the top quartile, so 75th percentile ARR used to be in 21, a…”

“However nervous and anxiety ridden you are about this market, just know that your VCs are equally anxiety ridden unless they work at Andreessen or Sequoia because their fundraising process is super hard right now.”

“If you raised on a priced bridge, meaning that your investors who are already on the cap table gave you more money. But they did so in a priced round, which set a new valuation, had actual, you know, lawyers involved, et cetera, a real round. Then the percenta…”

“If you're talking about the 90th percentile, Yeah, those basically only exist in the Bay, but if you're talking, you know, from say, 30 or 40th to 75th, you can get that in a lot of places.”

“Series A, we're seeing the same dynamic, fewer rounds, but primary valuations are Call it. 45 to fifty million.”

“So you've got AI in seed in series A, it's probably something like, you know, 30 to 35% of all the capital that we see or saw last year is going to AI companies. But the weird part is if you look late stage, it's actually much higher. So, 50% almost of every d…”

“And then 20, 22, it was very low. Like even after two years, only about 16, 17% of those companies had got from C to A. Usually that's 30%.”

“What you need to raise a series A has gotten what conservatively two times higher, three times higher than it was three years ago.”

“Something like 30% of the time you don't exceed it and you raise on a valuation that's less than the valuation cap of your most recent save.”

“That's kind of how like auditors sometimes compare startups to their growth rates when they're setting four or nine A's or things like that. Like they're using data sets that include only the absolute major successes and not actually the full data set that inc…”

“Investors at least as far as we can tell, are being a little bit more discerning about, hey, this is an, a core AI infrastructure, dev tool, whatever company whose fundamental existence is predicated on AI existing first, and we're going to give them one valua…”

“So the share of all rounds on Carta that were down rounds, it peaked at like one out of every four rounds on Carta was a down round, which is obviously not where we want to be, way above historical average. And that really declined from Q one to Q two. So from…”

“So if you look at like, just take SAS versus AI SAS. So like non, non AI versus AI, but in the single SAS enterprise category, you know, on that same valuation cap basis for a pre-seed round, the AI might be, you know, a million on 12, one million on 13. As th…”