Carta has released its Winter 2025 State of Seed report, a comprehensive analysis packed with critical data for founders and investors navigating the dynamic startup landscape. Drawing insights from over 50,000 startups, the report paints a picture of a healthy yet increasingly bifurcated seed market, heavily influenced by the rise of AI. Here are the most important takeaways, particularly for B2B founders:

Key Insights from Carta's State of Seed 2025 Report

1. Solo Founders on the Rise, But VCs Still Prefer Teams

A notable trend shows solo founders are becoming more common, accounting for 35% of startups incorporated in 2024, a significant jump from 17% in 2015. However, venture capitalists continue to favor teams, with solo-founded companies representing only 17% of VC-backed startups. The two-founder model remains the most attractive, making up 34% of funded deals. This suggests that while building solo is increasingly feasible, securing venture capital may prove more challenging.

2. SAFEs Have Achieved Dominance

The debate between SAFEs (Simple Agreement for Future Equity) and convertible notes is definitively over. SAFEs now constitute a staggering 92% of pre-seed rounds, up from 54% in 2019, while convertible notes have dwindled to just 9%. The standard structure has become post-money SAFEs with a valuation cap only (no discount), used in 61% of cases. When discounts are applied, they are almost universally 20%. First-time founders should question any legal advice pushing convertible notes.

3. The Pre-Seed Market Remains Robust

Despite broader economic concerns, the pre-seed market for sub-$5 million SAFE/Note rounds is thriving. Q2 2025 alone saw $815 million deployed into these early-stage rounds, continuing a strong trend observed since 2023. This indicates that the early-stage market is not broken, but rather more selective in its investments.

4. Seed Valuations Are Sharply Bifurcated

Seed valuations are experiencing a significant split. While the median post-money seed valuation stands at $20 million, the top end is stretching dramatically. The 95th percentile reached $80.5 million in 2025, nearly triple the $28.5 million seen in 2019. Conversely, the 25th percentile is a modest $13.8 million. This "barbell market" means high-demand deals, especially in AI, command premium valuations, while other startups compete for more conservative terms.

5. Founder Attrition is More Common Than Expected

Co-founder breakups are a significant reality in the startup world. Approximately one in four VC-backed, two-founder teams incorporated between 2015-2024 experienced a co-founder departure by their fourth year. This attrition accelerates, reaching around 30% by year five and nearly 40% by year eight. This trend underscores the importance of co-founder vesting and why investors meticulously scrutinize founding team dynamics.

6. Time to Series A is Lengthening

The journey from Seed to Series A is taking longer. The median time has stretched to 2.1 years, up from 1.5 years in 2019. Even for AI startups, which generally move faster, the timeline is extending to 1.9 years. The 75th percentile now reaches 1,251 days (3.4 years). Founders should plan for at least 24 months of runway at the seed stage, as the era of rapid Series A progression is largely over.

7. Graduation Rates Stabilize Around 50%

For seed companies from the 2019-2020 cohorts, roughly half successfully graduate to Series A by their fourth year (Q16 post-seed). The 2019 Q1 cohort, for instance, achieved a 49.1% graduation rate. Encouragingly, recent cohorts show slightly better early tracking, with Q2 2024 seed companies at 8.9% graduation by Q4 of their first year, outperforming the challenging 2022 cohorts.

8. Founders Are Building Leaner Teams

Startups are increasingly adopting a leaner operational model. The average seed-stage team size has decreased to 6.2 employees in 2025, down from 10.3 in 2021. The median time to make the first hire has also increased from 214 days in 2019 to 284 days in 2024. This trend extends across all stages, with Series A teams averaging 16.8 employees (down from 25.9 in 2021) and Series B teams at 48.2 (down from 72.3 in 2022), reflecting the real-time impact of AI efficiency.

9. SF and NYC Dominate Top-Tier Valuations

Geographic concentration remains a significant factor for top-tier valuations. San Francisco (44%) and New York (22%) collectively account for 66% of top-decile seed valuations. While lower valuation tiers show more geographic dispersion (only 6% of bottom-quartile valuations are in the Bay Area), startups outside these traditional hubs face a statistically harder path to achieving premium valuations.

10. Founder Ownership Drops Faster Than Ever

Founder ownership is experiencing rapid dilution. The median founding team holds 56.2% equity post-seed, which drops to 36.1% after Series A, and further to 23.0% post-Series B. By Series D, founders retain just 11.4%. Investors typically cross the 50% ownership threshold between Series A and Series B, indicating founders are giving up approximately 20 percentage points per round in the early stages.

Additional Quick Hits from the Data:

  • AI Engineering Compensation Soars: Equity packages for senior AI/ML engineers have surged by 15-40% since January 2024, with Senior Directors seeing a 40% increase. Cash compensation is also up, but equity drives the most significant gains.
  • Seed-to-Series A Step-Ups Recovering: Median valuation jumps from Seed to Series A are recovering to 2.6x in 2025 (up from 2.4x in 2024) but remain below the 2021 peak of 4.2x.
  • First Hire Equity: The median equity grant for a first hire is 1.5%. This drops quickly, with the second hire receiving 0.85%, and the fifth hire 0.33%, illustrating a steep equity curve.
  • Advisor Equity is Modest: Median advisor grants at pre-seed are only 0.24%, with just 10% of pre-seed advisors receiving more than 1%. At seed, this drops to a median of 0.12%. Founders should be judicious about allocating equity to advisors.
  • AI's Growing Market Share: AI companies now capture 42% of seed capital (up from 23% pre-ChatGPT), 35.5% of Series A, 40% of Series B, and a remarkable 70% of Series E+ rounds, indicating accelerating concentration.
  • Widening Seed Round Gap: While the median seed raise is $4 million, the 95th percentile seed round is now $16.6 million—over four times the median. This highlights a growing disparity where top-tier companies raise "mega-seeds" while others cluster around the $2-4 million range.

The Seed VC Market: Healthy but Highly Bifurcated

The 2025 seed market, as revealed by Carta, is robust overall but characterized by significant bifurcation. AI companies operate in a distinct universe, benefiting from higher valuations, faster timelines, and greater capital access. Other startups face increased competition for attention, necessitating leaner teams and longer runways.

SAFEs have become the undisputed standard for early-stage funding. While solo founding is becoming operationally more viable, it remains a hurdle for fundraising. For startups aiming for top-tier valuations, a presence in San Francisco or New York continues to offer a statistical advantage.

The fundamental principles for success endure: build a product people desire, achieve meaningful metrics, and raise capital strategically when you have leverage. However, the benchmarks for "good" are constantly shifting, and this report provides crucial data to help founders and investors understand their position in the evolving seed ecosystem.

The full report is available here.