You’ve got your deck. You’ve got your pitch. You’ve read every post about warm intros and lead investors and deal terms.

You think you’re fundraising.

You’re wrong. What you’re actually doing is throwing a pool party. And nobody wants to be the first one in the water.

No single investor takes down your whole round. So you’re running around trying to get six, eight, twelve of them to jump in—while every one of them stands at the edge, watching to see who goes first.

That’s what this book is about. What’s actually happening inside the investor’s head while you’re pitching.

They’re not calmly evaluating your business. They’re worried about looking stupid in front of their partners. They’re waiting to see what other investors do before deciding what they think. They’re pattern-matching your company against a decade of deals that had nothing to do with yours.

That is the psychology of fundraising. Once you can see it, you can play it.

The Pool Party is four seasons and 270+ episodes of the VC Minute, plus eight years of telling founders no for a living, in 12 short chapters.

Inside:

• Why investors say no—and which no’s you can actually fix

• How FOMO really works, and how to build it without lying

• A gameplan to run your raise as a sprint instead of a slow bleed

• Why taking care of yourself is part of the job while you’re raising

It’s free. It’s always going to be free. I wrote it because I want founders to succeed.

→ Subscribe below and it’s yours.

Thank you for reading. Please share your feedback.

If you know a founder that would benefit from this, send it to them.

— Rich Maloy
Managing Partner, SpringTime Ventures · Host, the VC Minute

✍️ Carta State of Pre-Seed Q1 2026

Carta’s Q1 2026 State of Pre-Seed report shows the market stabilizing in total volume, with roughly $2.9B deployed quarterly, roughly in line with recent quarters. The more interesting story is that the middle of the market is quietly hollowing out, with rounds between $1M and $2.5M shrinking as a share of total activity while both very small rounds and mega-rounds grow. AI crossed the 50% mark of all Pre-seed dollars for the first time, mirroring the concentration trend seen at later stages. Convertible notes hit a record low of just 7% of instruments, cementing the post-money SAFE as the default early-stage instrument.

STV Take: The barbell-ing is not a trend, it's the market, and if we're being honest, it always has been to a certain degree. Rich discussed this hot-or-not pool party dynamic back in 2022. What's changed isn't the dynamic itself, it's the extremity of it. The $1M–$2.5M round used to be the workhorse of Pre-seed. It was enough to hire, build, and reach something real without overcommitting on valuation. That middle is shrinking because investors are concentrating behind a smaller number of consensus bets and the $1.5M pre-seed doesn’t fit that story. For founders, the practical implication is uncomfortable but important: if you're not clearly in the hot bucket, a leaner raise at a more defensible valuation is probably the smarter path than anchoring to a middle-market number the market is quietly walking away from.

🧭 The Financial Operator

In this episode of The Financial Operator, host Jen Fizer sits down with Andrew Ackerman for a conversation on startups, capital, and founder judgment. Ackerman opens with a firsthand story: his first company had a term sheet on the table when 9/11 erased both the deal and the fund overnight. From there, the conversation covers when and how to raise, how the cost of getting a startup off the ground has collapsed from $5M to near zero, and what traits Ackerman consistently sees in founders who succeed. He closes with a practical framework for testing ideas cheaply before building, including a literal index card prototype method, and the importance of finding the single hook for a customer.

STV Take: Ackerman’s 9/11 story is a useful anecdote for how founders should think about capital at the earliest stages. The lesson isn’t to panic-accept every term sheet. It’s that leverage is fragile and timing is unpredictable, and optimizing for a better deal assumes a stability that early-stage fundraising almost never offers. His framing of “fundraising mode vs. not” is something we’ve discussed before and recommend founders take seriously. Fundraising is a process. Don’t treat it as something you can turn up gradually. A half-committed raise is often worse than not raising at all. It consumes bandwidth without generating momentum, and momentum is the only thing that creates the investor competition you actually need.

🍽️ AI Ate Digital Health (and What That Means for Fundraising)

Halle Tecco, drawing on interviews with 24 healthcare AI founders conducted as part of a Columbia Business School independent study, examines what fundraising actually looks like inside the healthcare AI boom. The headline finding is that concentration has reached an extreme. Twelve mega-deals accounted for 59% of all Q1 2026 digital health funding, while the median time from Seed to Series A has stretched to 616 days. For the AI-native winners, rounds are closing faster than ever; for everyone else, the gap is widening. Founders report that investors have largely stopped asking about technology and are instead asking two questions: is your product defensible against Epic and OpenAI, and can you show live ARR that proves adoption rather than just potential?

STV Take: The healthcare framing here is specific, but the fundraising reality isn't. Across sectors, investors are benchmarking every company against the fastest-moving outliers in the market and expecting everyone else to explain the gap. It’s an unfair comparison, but it's the one founders are walking into. The lesson from these 24 conversations is that AI has raised the floor on what counts as traction, not just in healthcare but everywhere. Saying your product uses AI no longer signals differentiation; it signals that you've cleared the minimum bar to be taken seriously. Regardless of sector, what investors are actually asking is whether customers are using it, paying for it, and coming back. If you can't answer all three cleanly, the technology story won't save you.

🧠 Why Too Much Freedom Is the Enemy of Success

In this episode of Plain English, host Derek Thompson speaks with author David Epstein about his new book, Inside the Box, which argues the opposite case from his prior bestseller, Range. Where Range celebrated breadth and generalism, Inside the Box makes the case for constraints. Drawing on stories ranging from the doomed tech company General Magic (which collapsed not from lack of talent or resources, but from having too much of both) to Keith Jarrett’s best-selling piano album recorded on a broken instrument, Epstein argues that limits force prioritization, sharpen focus, and unlock creativity in ways that total freedom rarely does. The episode also covers the science of self-interruption, the productivity case for deadlines, and why the most satisfied people tend to be those with the most obligations.

STV Take: The General Magic story is one every founder should study. The company had the right vision, the right people, and effectively unlimited resources, yet failed precisely because of that last part. When you can do anything, you do everything, and the product that eventually ships is a bloated mess nobody knows how to use. We have talked a lot about the dangers of raising too much at Seed, and General Magic is one of the most perfect examples of why. This is also why investors bristle when a pitch is too broad on use cases and customers. Constraints signal focus. They’re evidence that you know what you’re building and who it’s for.

📐 You Only Need 12 Slides

Landon Howell, who has helped 60+ startups raise over $270M, built this site as a free template for fundraising pitch decks. He argues that the best decks have exactly 12 slides—Cover, Thesis, Problem, Solution, Market, Why You/Why Now, Business Model, Traction, Competitors, Roadmap, Team, and Ask. Each slide is defined by the specific question it must answer and the minimum elements required to answer it. The site also includes 10 tips on deck construction, covering everything from how investors make decisions emotionally before they make them rationally, to why all financial projections are wrong but still need to be directionally defensible.

STV Take: What makes this framework useful is the discipline it forces. Every slide has a job, and the job is answering a specific question an investor is already asking. Founders who over-build their decks usually do so because they’re not yet confident in their answers, so they compensate with volume. The constraint of 12 slides forces you to know exactly what you’re saying and why it matters. One slide worth particular attention: “Why You? Why Now?” While some founders treat this as a formality, this is really the whole point of the pitch at the earliest stages. If an investor doesn’t believe now is the time to solve the problem and you’re the founder to do it, nothing else matters.

🔗 The Lead Investor Problem

Charles Cormier argues that the most common reason good companies don’t get funded isn’t a bad pitch or weak traction, it’s that nobody will go first. Most investors will stay “interested” indefinitely, but interest and conviction are different things. Leading a round means setting terms, doing real diligence, and writing a check before anyone else has. Cormier’s prescription is to stop treating the lead problem as a social challenge and start treating it as a systems one. His recommendation is to build a conditional commitment pipeline with 20-30 thesis-aligned investors, run a structured process with a defined close date, and time your outreach to coincide with a public momentum signal. The goal is to manufacture the conditions where leads compete.

STV Take: The insight here is a nuance we see founders often miss: “Interested” is not a fundraising outcome. Founders frequently mistake warm conversations for progress, then wonder why the round isn’t closing. Even if he doesn’t frame it this way, what Cormier is really describing is the power of constraint applied to process. A defined list of 30 investors, a hard close date, a structured sequence aren’t just tactical moves, they’re how you stop your raise from sprawling indefinitely into politeness. Open-ended processes produce open-ended results. The founders who close are the ones who made waiting feel like a mistake.

🔬An Investor’s View of the Private Market

In this episode of Health Tech Nerds Radio, host Kevin Stevenson speaks with Conor Green of Truehelm, a healthcare-focused growth equity firm, about the state of the private markets. Conor describes the current environment as the most confusing of his 13-year career, characterized by a wide disconnect between what investors think businesses are worth and what sellers expect. He notes a logjam in the middle market driven by funds that deployed capital at peak valuations in 2021–2023 and are now struggling to generate exits, while LPs are waiting for distributions before committing to new funds. The conversation closes with an encouraging mindset shift: founders are increasingly asking not how much they can raise or at what price, but what raising capital actually means for their timeline to exit and who that exit will come from.

STV Take: While this conversation focuses on healthcare, the dynamics Conor describes apply broadly. The logjam he references—funds stuck with overpriced companies, LPs waiting on distributions, & exit markets largely closed—creates a trickle-down effect that constrains capital availability at every stage.

For founders, the mindset shift Conor observes is one investors across the board are increasingly rewarding. The question shouldn’t be how much you can raise or at what valuation, but whether the capital you’re taking gives you a realistic path to an outcome. In an environment where exits are uncertain and the bar for follow-on rounds remains high (see article below), raising at a price you can grow into is far more valuable than a headline number that creates impossible expectations down the road.

🌱 The State of Seed

Lucas Vaz penned a thread on the structural changes reshaping the Seed market. He anchors on two data points, the 95th percentile Seed valuation tripling to $173M since 2022 and OpenAI’s earliest angel investors realizing only ~140x returns despite backing the most consequential company of the decade. His central argument is that the market has fully bifurcated into a small group of highly legible, institutional-quality companies raising at premium valuations and a vast ocean of companies raising at seemingly cheap prices that are, in practice, value traps with no credible path to a venture-scale exit. He argues that the era of diversified, low-price Seed investing as a viable strategy is structurally over.

STV Take: This piece is written for fund managers, but understanding how the changing Seed market impacts fund managers’ thinking is important for founders too. As capital concentrates into fewer companies, fund managers are making fewer bets. When you’re making fewer bets, the pressure to be right on each one intensifies dramatically. That dynamic has a direct consequence for founders: fewer companies are getting funded overall, and the bar for what reads as a credible, institutional-quality opportunity has meaningfully risen.

I’d push back on his “value trap” framing, though. A company raising at $10M post-money isn’t automatically a trap. The math of getting to a meaningful return is often more forgiving at that entry point than at $50M. The real issue isn’t price; it’s whether the business has a credible path to an outcome that justifies the ownership stakes, dilution, and investor return expectations that come with the capital it has taken on.

For founders, the most actionable response to this environment isn’t to obsess over valuation; it’s to obsess over how clearly your story, traction, and team add up to an obvious bet. Investors are making faster, more concentrated bets, which means narrative clarity and the quality of your early signal matter more than ever.

📄 The Most Important Document You’ll Ever Sign

CRV, one of the oldest early-stage venture firms in the country, published a guide walking founders through how to read, understand, and negotiate a term sheet. The piece opens with an important reminder: a term sheet isn’t a finish line. It’s a system that governs economics, control, and behavior for years to come. CRV organizes the key provisions into three categories—economic terms (valuation, liquidation preferences, anti-dilution), control terms (board composition, protective provisions, voting rights), and process terms (exclusivity periods and confidentiality). The guide closes with a practical red flag checklist and specific questions founders should ask investors before signing, including asking investors to model actual dollar outcomes at different exit scenarios.

STV Take: Given everything we’ve covered in this issue, getting to a term sheet is harder than ever. That makes the moment one actually arrives even more emotionally charged. After months of pitching, rejection, and uncertainty, the relief of hearing “yes” can make it tempting to just sign and move on. That’s exactly when founders are most vulnerable to glossing over the provisions that will quietly shape their outcomes for years.

CRV’s framework—economics, control, behavior—won’t eliminate that emotional intensity, but it gives you a logical structure to return to when the excitement of the moment makes clear thinking hard. The red flags section is worth bookmarking before you ever receive a term sheet, not after. Participating liquidation preferences, full ratchet anti-dilution, and investor board majority at Series A are the provisions most likely to erode founder outcomes in the scenarios that matter most and they’re easiest to miss when you’re just happy someone said yes. Asking investors to model actual dollar outcomes at different exit scenarios before signing (or doing this yourself) is one of the most underutilized tools founders have. It turns abstract terms into concrete reality fast, and shifts the conversation from relief back to logic, right where it needs to be.

📊 VC Fund Performance: Q4 2025

Carta released its Q4 2025 VC Fund Performance report. There is some good news: the median net IRRs for both the 2021 and 2022 fund vintages have finally climbed out of negative territory, and more than half of all 2020-vintage funds have begun generating at least some DPI. The bigger story, though, is the widening gap between the best and the rest: in the 2019 vintage, the 90th percentile TVPI sits at 3.01x compared to a median of just 1.33x — a spread that dwarfs the distance between every other performance tier. The same right-tailed distribution holds across every vintage tracked.

STV Take: Power law returns have always defined venture. A small number of funds generating the vast majority of returns is a feature of the asset class, not a new phenomenon. For founders, this has a practical implication that goes beyond just picking a well-known firm. A fund sitting at or below median is under mounting pressure to generate returns from new investments, which can influence everything from the terms they offer to the decisions they make as a board member. When you’re doing investor diligence, understanding where a firm sits in its fund lifecycle and how prior funds are performing is time well spent.

💀 Nobody’s Getting Paid

In this post, Charlotte Ketelaar unpacks why the record-breaking Q1 2026 venture funding headline obscures a more uncomfortable reality for most founders. Global venture funding hit $297B in a single quarter—more than every full-year total before 2018—but four mega-rounds captured 65% of it. The concentration is happening on both sides of the table simultaneously: the same mega-funds swallowing LP capital are writing the mega-checks, leaving the rest of the ecosystem to compete for what’s left. Meanwhile, the Carta data above helps explain why. With the majority of 2021 and 2022 vintage funds barely back in positive territory and LPs ranking DPI as their top re-up criterion, capital is flowing to the perceived safest bets. Seed dollars are actually up 31%, but the middle of the market continues to get squeezed.

STV Take: Ketelaar’s “dual concentration doom loop” framing is useful in describing what’s happening in the market right now. The headlines and the lived experience of most founders aren’t in conflict; they’re just describing two completely different markets. The practical implication hasn’t changed but is worth repeating: don’t anchor your fundraising expectations to the headline numbers. If your metrics don’t clearly place you in the consensus top tier, plan your process and your runway as though capital is scarce. For most companies, it still is. This bifurcation also reshapes what Series A actually looks like today, which is exactly what the next piece addresses.

🎙️ Rethinking Series A in the Age of Mega-Funds

On this episode of StrictlyVC Download, host Connie Loizos speaks with Stacy Brown-Philpot, Founder and Managing Partner of Cherryrock Capital, about what she calls the “Missing Middle” at Series A. As mega-funds have grown and increasingly behaved like PE vehicles, Brown-Philpot argues they’ve vacated the traditional Series A, creating a genuine gap for founders with strong businesses that don’t fit a $100M+ check size. Her firm looks specifically for “product-market fit at scale,” which she defines not by ARR alone, but by the quality underneath it—long-term contracts, deep account penetration, and strong retention. She educates founders on the quality of their ARR, which is a distinction that matters increasingly as portfolio companies approach Series B and C, where actual revenue generation gets scrutinized far more than annualized projections.

STV Take: Brown-Philpot’s conviction is encouraging, but the word doing the most work in that quote is “great.” The bifurcation described by Carta and Ketelaar above hasn’t made Series A impossible, but it has made it more challenging. Mega-funds are writing larger checks into fewer, later-stage companies with near-certain outcomes. The “Missing Middle” is where firms like Cherryrock are stepping in, but they’re doing so with a high bar for revenue quality, not just revenue quantity. For founders, this means the path to a Series A runs through demonstrable retention, expanding customer relationships, and a credible story about why the revenue you have will compound versus just a headline ARR number. Pilots and short-term contracts may get you to a number, but they won’t survive the diligence of an investor who knows what durable businesses actually look like.

❓ Starting with the Right Question

Jainaba Njie shared a LinkedIn post featuring an Eric Partaker graphic that breaks down different types of capital. Her argument is one we’ve returned to often: not every business should raise venture capital. Because VC gets so much of the attention, founders often start by asking who will fund them instead of what they actually need to fund. That distinction matters, because the answer shapes the type of capital they pursue.

STV Take: This post pushes founders to get more specific about the purpose of the capital they are raising. Venture capital can be a great fit when a business needs fuel for rapid growth and there is early evidence of where that capital can be put to work, but it is often a poor match for companies that primarily need inventory financing, equipment, working capital, or simply more time to compound steadily. Founders can save themselves a lot of wasted meetings by first getting clear on why they are raising money and what kind of business they want to build.

✂️ Measure Twice, Cut Once

In “Measure Twice, Cut Once”, Mark Suster argues that fundraising should be run like a process, which will not be a new idea to long-time readers of this newsletter. He encourages founders to identify the right investors before they begin pitching, qualify them based on fund and stage fit, and use trusted introductions wherever possible. He also discusses how founders should think about targeting individual partners based on career stage and firm tenure.

STV Take: The strongest point in this piece is the reminder that founders need to qualify investors just as much as investors qualify companies. Not every firm that takes a meeting is truly a fit on stage, sector, check size, ownership expectations, or appetite to lead. When founders skip that work, the process can look busy without actually moving closer to a term sheet. A tighter, better-qualified target list usually does more for fundraising momentum than simply taking more meetings.

👨‍💻 Cap Tables, Compensation, and Culture

TechCrunch’s Build Mode podcast features General Catalyst’s Yuri Sagalov on the early decisions that shape a startup long before scale, like who is on the cap table, how equity is split, and how founders frame compensation with early hires. Sagalov’s point is that investors are not interchangeable, and that the wrong kind of involvement can be more damaging than unhelpful. He also offers practical guidance on seed dilution, co-founder equity splits, and the importance of being candid with early employees about startup risk. Ultimately, the episode is about treating ownership and incentives as foundational parts of team design, not just legal or financing details.

STV Take: This episode rightfully identifies that the earliest structural decisions in a startup reverberate for a long time. Founders understandably focus on getting the round done, but who ends up on the cap table and how ownership is allocated can shape culture, incentives, and decision-making for years. As we have discussed before, these choices also carry downstream fundraising implications; e.g., giving up too much equity too early (note: the above quote is a good benchmark). A messy cap table can create concerns about founder incentive alignment and room for future ownership, while a difficult investor can introduce governance friction that makes later rounds harder to complete.

🎓 Intro to Venture Capital 101

In the introduction to a new series of articles called “Venture 101”, Stanford GSB professor Ilya Strebulaev sets out to explain venture capital mechanics in plain English. He previews future topics including preferred stock, SAFEs, convertible notes, governance, control rights, and follow-on rounds, but starts with a walk-through of how venture financings work. The post is designed to help founders better understand the mechanics behind selling equity before they are negotiating terms in real time.

STV Take: We think this is the kind of content founders should review before the term sheet shows up. You do not need to become an expert in venture finance, but you do need to understand enough to know where the economic and governance tradeoffs actually sit. The reality is that some of the most important decisions in a financing are easy to gloss over when you are focused on simply getting the round done. Founders who do a little homework ahead of time can save themselves a lot of time and headache once the pressure of a live raise sets in.

🧰 2026 Startup Fundraising Playbook

OpenVC published a practical playbook designed to help founders run a more structured fundraising process. The guide walks through how venture capital works, fundraising strategy, investor targeting, materials preparation, valuation, and process management. It is broad, but intentionally tactical, with the goal of helping founders more efficiently manage their raise. For founders who have not raised before, it is a useful starting point.

STV Take: The above image is a good primer for our next article, but this whole playbook is great because it treats fundraising like a process to be managed rather than a mystery to be solved. Too often, founders start taking meetings before they have built a target list, pressure-tested their narrative, or thought through how to create momentum. When fundraising is unstructured, every conversation can feel more promising than it really is. A thoughtful process helps founders better separate real traction from false starts.

📊 A Framework for Benchmarking Private Investments

This (oldie but goodie) Cambridge Associates piece explains how institutional investors evaluate private investment performance and why no single metric tells the full story. It covers IRR, time-weighted returns, cash-on-cash multiples, and public market equivalent analysis, while also noting that private funds often take years to settle into their ultimate performance quartile. The article is written for an LP audience, but it offers a useful view into how venture funds themselves are judged.

STV Take: Founders often spend a lot of time trying to understand how a VC evaluates their company, but less time thinking about how that VC is being evaluated by their investors (limited partners, LPs). This piece is a good reminder that VC fund managers operate in a system where performance is noisy, slow to reveal itself, and constantly benchmarked against peers and public markets. Understanding the venture capital chain is critical and can make VC behavior look a lot less arbitrary. After all, unless they are investing only their own money, venture capital fund managers are answering to someone too.

📊 State of Pre-seed 2025

Carta released their full report featuring data and trends at the Pre-seed funding stage, which Carta defines as “any fundraising activity that occurs on convertible instruments prior to a company’s first priced equity round.” Much like every other stage of financing, capital is consolidating into fewer deals. While just 1% less capital flowed into Pre-seed deals in 2025 compared to 2024, it went into 13% fewer companies.

STV Take: This report drives home just how bifurcated the Pre-seed market is. Roughly half of companies are raising <$500K at their first round, while 8% are raising $5M+. What is most interesting to me is the hollowing out of the $250K to $2.4M range. That has dropped by at least a couple of percentage points since 2023; e.g., 10% more rounds are for less than $250K. What this really emphasizes is that founders need to be more intentional than ever about how much they raise and what they can prove with it. A smaller check isn’t disqualifying, but it does compress the margin for error, making focus and milestone clarity critical from day one.

💔 A Startup Postmortem

Rachel Draelos, MD, PhD spent seven years building Cydoc, a bootstrapped health AI startup focused on automating patient intake and clinical documentation, before shutting it down in August 2025. Despite achieving what she thought were real validation milestones (e.g., paying customers, patents, and demonstrated clinical time savings), the company ultimately couldn’t overcome a broken business model. In this article, Rachel reflects candidly on the nine key mistakes she believes she made trying to build Cydoc into a successful business. A few from the list include inadequate sales and marketing, not having the right cofounders, and minimal customer discovery.

STV Take: This is a rare gem because of how candid it is. We’ve touched on many of the issues Rachel raises, but it cuts differently when it comes from someone who recently had to shut their company down because of them. Her piece brings to life why VCs fixate on certain risks. These are not abstract criteria to investors, because they’ve seen these exact patterns play out. When you’re raising, a lot of advice gets thrown your way, and not all of it deserves equal weight; however, if a particular concern keeps coming up across multiple investors, it’s worth pausing. Chances are investors are pattern matching against a mistake they’ve seen before. Rachel’s article is a good lens for figuring out which feedback falls into that category.

💰 U.S. VC Valuations and Returns Report

Pitchbook released a report on valuations in the U.S. venture market. Unsurprisingly, it shows venture concentrating into a handful of perceived winners, generally in AI. A few interesting data points from the report:

• 20.9% of rounds in 2025 were at valuations that were flat or less than the prior round.

• Top-decile valuations at the Series B have increased by 64% in 2025 relative to 2024.

• The media pre-money valuation for a Seed-stage AI company is $16M, while the median pre-money valuation for a Seed-stage non-AI company is $15.3M. This disparity only grows in subsequent rounds (see chart below).

STV Take: One of the more interesting facts Pitchbook calls out is the current status of U.S. unicorns. According to the report, there are 857 unicorns; however, on average, these companies have not raised a fresh round of capital in 2.5 years ago. Because of the length of time since the last round and change in market dynamics, Pitchbook estimates that about a quarter have actually had their valuations dip below $1B since their last round.

This matters to founders fundraising at Seed because the slowdown at the unicorn stage doesn’t stay contained there. With many late-stage companies sitting on stale valuations and limited liquidity, distributions back to LPs have slowed. That has made it harder for VC firms to raise new funds, particularly emerging managers who disproportionately invest at pre-seed and seed. The result is a tighter early-stage funding environment: fewer new funds coming online, smaller fund sizes, longer decision cycles, and a higher bar for conviction. For seed founders, this means investors are writing fewer checks, reserving more for existing portfolio companies, and underwriting more conservatively than they did in 2020–2021.

📖 SVB State of the Markets H1 2026

SVB’s latest report reinforces what we’ve seen in other data sources: The venture landscape is bifurcated, and while 2025 saw nearly $340B in VC investment, it was concentrated in fewer deals. The top 1% of companies captured 33% of all capital, while the bottom 50% received just 7%. AI drove the surge, with five AI companies achieving valuations three times higher than all dot-com era IPOs combined. However, traditional early-stage deals face headwinds: median seed-to-Series A revenue requirements increased 35% year-over-year, while graduation rates remain at decade lows.

STV Take: The key takeaway is sobering: If you’re building AI infrastructure or have repeat-founder credibility, mega-rounds might be accessible. For everyone else, the bar has never been higher to raise a round of funding. Founders need to demonstrate significantly more traction to raise funding than they did a few years ago, and the unfortunate part is that revenue growth is also slower than it was in 2021 (not surprising, honestly). Gone are the days when founders could plan for 12-18 months between rounds. According to this report, just 3% of Seed-stage companies raise a Series A within 12 months. Companies should be planning to have at least 18-24 months of runway before needing to raise more money and to >11x revenue before the Series A. Wow.

🤯 Insane ARR Number ≠ (Always) Reality

In a recent TechCrunch article, Andreessen Horowitz general partner Jennifer Li cautions founders against fixating on viral ARR announcements claiming to reach $100M in months. She notes that many founders often conflate true annual recurring revenue (contracted, recurring subscriptions) with revenue run rate (annualized snapshots of temporary growth). Li argues that many founder tweets lack context around retention, business quality, and sustainability. While acknowledging some a16z portfolio companies like Cursor and ElevenLabs achieved rapid growth, she emphasizes that sustainable, year-over-year expansion with strong customer retention will still attract investors.

STV Take: This topic gets at the heart of many investors’ pet peeves: Using ARR when it’s actually run rate. While investors usually give founders the benefit of the doubt on this, it can send a subtle signal, especially if there are other things not quite lining up. Be precise with your metrics terminology from day one. If you’re showing run rate, call it run rate. If retention is shaky, acknowledge it and explain your plan to improve it. Sloppy metrics suggest sloppy thinking, and investors would rather fund a founder who’s honest about the gaps than one who’s overselling the wins.

💡AI is Changing Due Diligence

A PitchWorx analysis reveals that VC firms are now using AI tools like ChatGPT, Perplexity, and Claude to vet founders during due diligence. Beyond pitch decks, investors scrutinize seven critical areas: financial hygiene (burn multiples over growth), visual brand consistency, founder-market fit through social media history, AI visibility (whether startups appear in LLM-generated answers), uncurated customer validation via backchanneling, technical scalability, and cap table cleanliness. Founders who optimize these “off-deck” signals are reportedly 3x more likely to secure term sheets.

STV Take: We’ve talked a lot about the importance of a clean cap table, so I’ll spare you that rant; however, we really haven’t spent much time talking about AI’s impact on how investors are doing their job, which is why I thought this article was a good one to highlight. While there are points in this article I don’t 100% agree with, the overarching idea is true: The use of various LLMs at different stages of diligence is common place. Investors are using it to get smart on markets before they even take an intro call with founders, and to accelerate background research on founders and customers.

Assume investors are querying AI about your category before your first meeting. The time they save doesn’t disappear; it gets reallocated to deeper reference checks, customer backchanneling, and product scrutiny. Focus on what you can control: be ruthlessly consistent, ensure your best customers would give glowing references if called, and make sure your LinkedIn presence reflects genuine domain expertise. The bar for diligence has gone up, not down.

Pitchbook-NVCA Venture Monitor: Q4 2025

Pitchbook and NVCA released the Q4 2025 Venture Monitor. It outlines a polarized market where a robust, AI-fueled recovery in dealmaking contrasts sharply with a decade-low in new fund commitments. While capital deployment has surged to near-record levels, limited partners remain cautious, creating a challenging landscape for new funds. Key stats below.

• AI Dominance: Artificial Intelligence and Machine Learning captured 65.4% of total deal value and 39.4% of deal count in 2025.

• Fundraising Lows: Fundraising activity hit its lowest point in over a decade, with only 537 funds closing and total capital raised dropping to $66.1 billion.

• Exit Market Value: Despite a low volume of public listings, the exit market generated $297.6 billion in value, the fourth-highest year on record.

STV Take: The $339.4B headline can look like proof that venture has fully recovered, but the distribution tells a different story. Nearly half of that capital went to a small group of AI infrastructure companies raising $100M+ rounds. Those rounds are the exception, not the norm, which makes it more important than ever for founders to clearly articulate who the customer is, what problem is being solved, and why now is the moment their business works in a way it couldn’t before.

Pitch Teardown

Haley Bryant, Partner at Hustle Fund, does a live pitch review with Ali Summer, CEO & Founder of Sumer Space. The video starts with Ali providing his background and then the pitch for his business. Haley jumps in with questions and then provides the following suggestions to make the deck stronger:

• Be specific about the problem being solved.

• Reduce jargon. Most investors are generalists and need context, especially if what you’re building is highly technical.

• Answer why now is the time to solve this problem.

STV Take: We see hundreds of decks that argue “this is a massive problem,” but fail to answer the critical follow-up: “Why hasn’t it been solved yet?” A big market without a specific catalyst is often a trap—a problem everyone sees but no one can fix profitably. Founders often treat the “Why Now” slide as a throwaway, but it’s actually the single most important validation of your strategy. We know the market is big; what we don’t know is why this is the moment it unlocks. Don’t tell us about general trends (e.g., “mobile adoption”). Tell us about the structural break in the market that renders the old way of doing things obsolete and makes your approach the only logical path forward.

2026 VC Predictions

Investors surveyed by Business Insider provided their perspective on 2026’s defining trends. The general consensus was that customers of AI companies will shift from “AI experimentation” to demonstrable “ROI reality”. Other predictions included the following:

• Small groups will leverage AI to achieve disproportionately large revenue.

• AI tools will evolve from passive software to autonomous “employees” with their own budgets and spending limits.

• While some anticipate a broader IPO window, VCs also caution that a correction is imminent for overpriced AI startups that fail to show clear, tangible returns for enterprise clients.

STV Take: It isn’t the start of a new year without some reflection on what the next 12 months holds! The shift towards ROI shouldn’t be surprising. The hype is fading, but buyers are still willing to spend on solutions that clearly deliver measurable value. After a couple of years of experimentation driven by fears of being left behind, the AI conversation is moving from pilots to proof. Companies have already tested plenty of tools. Now, they’re asking which ones are worth committing real budget to.

Quick programming note: As we move into what should be a (hopefully) very active year, we’re going to dial back the frequency of these newsletters from weekly to biweekly.

✍️ State of Startups 2025

Carta released its State of Startups 2025 report containing different data points on the startup ecosystem. A couple of interesting ones:

• The amount of capital invested in the first three quarters of 2025 outpaced 2023 and 2024. Q4 25 is lower than prior years, but that data is still trickling in.

• The have-and-have-nots trend continues. While total capital raised rose in 2025, deal count did not, meaning more money went into fewer companies.

• The number of down rounds continued to decrease but is still historically high.

  

STV Take: There are many slides in this report worthy of a screenshot, but this one is particularly astounding because it quantifies the tale of two markets we’ve been discussing for years. We often talk about bifurcation at Seed, but seeing the premium for top-tier deals expand so aggressively suggests that investors are not just being selective, they are paying historically unprecedented prices to win allocation in the consensus outliers. For founders, the danger lies in anchoring expectations to headlines rather than the median; doing so is the fastest way to stall a fundraise. Unless your metrics place you undeniably in that top bracket, optimize for a valuation that allows you to grow into your next round, rather than one that sets you up for a future down round.

📝 State of Venture

Another take! CB Insights released its annual 2025 report, State of Venture 2025. This one is a bit more robust and includes funding across angels, venture capital, private equity, and corporate venture capital. CB Insights data shows global venture funding came roaring back in 2025, jumping 47% YoY to reach $469B. While cash is flowing, overall deal volume actually dropped by 17%, confirming a market that is deploying massive capital into fewer, safer bets. The primary driver is essentially a single sector: AI companies captured a record 48% of all global venture dollars, while mega-rounds (deals over $100M) accounted for nearly 65% of total funding.

STV Take: If the Carta data showed us the valuation gap, this report reveals the volume gap. The headline that ‘venture is back’ is true but a little misleading for the average founder. Capital is consolidating. Despite the top-line growth, capital availability at the Series A and B rounds for companies building outside of AI remains constrained. Plan your runway assuming 2023-style scarcity rather than 2021-style abundance.

🧑‍🏫 Techstars Tips for Fundraising

Techstars released the first part of a fundraising series to prepare founders for their first raise. This first part of this series starts with three questions that founders should answer before starting a fundraising process: 1) Is your business venture scale? 2) Are you personally ready? 3) Is VC funding the best way to get capital? The article then goes on to describe why fundraising efforts fail and how to prepare for investor meetings.

STV Take: We started this newsletter with some intimidating charts about the haves and have-nots of 2025. This article is the tactical antidote. It reminds us that no matter what the current hype cycle is and how your company fits into it, the mechanics of a successful raise remain unchanged. The guide’s emphasis on treating fundraising as a sales funnel—specifically qualifying investors and building relationships before you need the check—is exactly how you bridge the gap between good metrics and a closed round. In a market that is skeptical of everything outside the top 5%, process beats hype every time.

How VCs communicate with their LPs is indicative of how they approach the startup market. SpringTime is no different.

Below is part of a message that we sent to our LPs after doing the first close of our third fund (woohoo! 🎉) and right before Thanksgiving. Enjoy!

Market Perspective

With Fund III live—and investing—we find we’re asking the same question that we ask ourselves every venture cycle: Where will the next multi-billion-dollar fund returners come from?

Today’s technology market presents an interesting paradox. We have, at the same time, the Age of Incumbents and the Sea of Sameness.

The Age of Incumbents

Historically, technological shifts topple giants. But in the AI era, it is the opposite: companies like Microsoft, Google, and Oracle—businesses that are decades old—are not just surviving this wave; they are driving it.

Along with this comes the megafication of a new wave of AI winners: OpenAI, Anthropic, and specialists like Lovable and Harvey, to name just a few. Those startups scaled faster than anything ever seen before, and established themselves as the new incumbents.

The Sea of Sameness

Ironically, while the incumbents (old and new) made themselves indispensable, they also reduced defensibility for startups building today. It’s never been easier or cheaper to start a company. Anyone can incorporate on Stripe Atlas, build an MVP on Lovable (or any of their dozens of competitors), and utilize AI to: run ad campaigns, build knowledge bases, answer customer questions, and schedule meetings. All for a few thousand dollars a month.

This has accelerated a fascinating phenomenon in the startup market: founders across the country land on the exact same ideas, seemingly at the same time. But in the AI age, instead of two or three at the same time (Uber & Lyft) we see a dozen nearly identical ideas at once. We’ve seen multiple iterations of AI-to-patient chat startups, and more foreign exchange stablecoin plays than we can count, just to name two common pitches.

This is the Sea of Sameness.

Prepared Mind

But because we specialize, our business model pattern recognition is highly tuned. When we see fifty variations on the same pitch, we know exactly what “average” looks like. When a founder walks in with something truly new—something novel and differentiated—it pops like a fireworks show.

There is no dearth of new ideas, but in a world of low moats, the question is no longer just “Is this possible?” It is: “Is this differentiated, and how will it survive the inevitable competition?”

The answer to that always comes back to the person sitting in Zoom with us. The prepared mind is not as much about us as it is about the founder. How did they come to this insight? How did they build their initial customer base? How quickly can they move?

The old adage that “venture investing is a people business” has never been more true. The deeper we get into technology, the more that the person at the helm matters.

In the sea of sameness, a strong founder building a truly differentiated business will bring the fireworks. We’ll get you a ticket to the show.

We sincerely appreciate you and the time you take every week to read this! Happy (early) Holidays!

🤯 ARR, CARR Soup

Carlotta Siniscalco posted a plea to founders to stop confusing annualized recurring revenue (ARR), contracted ARR (CARR), pilots and pipe (or pipeline opportunities). In her explanation, she draws a comparison between each of these and dating. ARR is the business relationship equivalent of being married, meaning it’s a done deal and the revenue is live. CARR is more like an engagement where things are locked down and unless one party does something egregious, that revenue will become live. Pilots do not count as recurring revenue, nor do one-off projects. Hopefully this is obvious, but pipeline opportunities with no signed contract do not get counted as ARR.

STV Take: This isn’t a new problem, but I agree with Carlotta that it’s cropping up more with the current AI hype. I’ll just be blunt: Confusion around ARR and CARR usually signals one of two things. Either the founder doesn’t fully understand how to measure and report their revenue (which can have material cash flow implications) or they’re being misleading. Neither of these inspires confidence with investors and can have potentially long-term reputational consequences.

🏃 The Term Sheet Sprint

Hypepotamus shared insights from investors and start-up lawyers on what really happens in Q4 and how to make the most of the end of the year. Investors warn that founders pushing for a quick close will face skepticism and will likely be asked tough questions around runway, participation, and urgency. If you do need cash before the end of the year, angels might be an option. Some take advantage of the year-end slowness to get into deals at a discount.

STV Take: It wouldn’t be a pre-Thanksgiving VC read without a reminder that landing a term sheet between now and year-end is exceptionally tough. If you’re not already deep in conversations with investors, it’s usually better to wait until after the new year. The scheduling gymnastics make it hard to build real momentum. Instead of kicking off a full process now, share a light update and plan to reconnect with investors in Q1.

❓Four Questions

Christine Lu Hong penned an article on the four questions she believes separate side projects from ideas that can raise venture capital. She gives some fantastic context around each of the questions, along with examples of good and bad answers. The four questions are the following:

• Is the founder targeting someone who can actually pay?

• Why now? What has changed?

• Is your market big enough?

• Are there 2-3 competitors already doing this?

STV Take: Too often founders trip over these simple but powerful questions. They may sound obvious, but getting them right forces you to show why your idea matters, how you’ll win, and what sets you apart. Struggle here and investors will quickly write the idea off as a side project before you’ve had a chance to prove yourself. Nail this and you start the conversation from a position of strength.

🔧 Fix Your Pitch Deck

Donna Harris at Builders + Backers discusses how VCs assess pitch decks and the mistakes founders make by not understanding this process. The article starts off with an explanation of how an investor typically scans a deck before agreeing to a meeting. The first scan is really quick to understand the business, market size, and general fit with the firm’s investment focus areas. During this, investors aren’t digging in; they’re literally scanning headlines and images. If the deck passes this stage, then an investor moves on to a more thoughtful (but still short!) analysis to answer slightly deeper questions. Only if that assessment is passed does an investor take a meeting. Some avoidable mistakes Donna points out that prevent founders from getting a meeting include no hook in the intro and making investors do the work of inferring from too much text.

STV Take: The double scan of a deck is real! Investors see countless company decks—many of which aren’t even a fit for their firm—so the first pass is a quick test to determine if it’s in scope before investing real attention. Every investor has had that moment where a deck looks promising, only to reach the end and realize the company is raising too much or too little for where the firm invests. This is why the quick scan exists; however, while investors are flipping through, they’re also forming first impressions. Once those impressions (opinions?) are made, it’s hard to change them, which is why clarity and focus from slide one matter so much.

👩‍💻 AI Won’t Make You Rich

In AI Will Not Make You Rich, Jerry Neumann argues that while AI is a transformative technology, it’s unlikely to make most investors or founders wealthy. Drawing on the history of innovation, he suggests AI’s impact will be widely distributed—more like container shipping than the microprocessor era—benefiting consumers more than startups. He closes by noting that the winners in the foundation model space have already been crowned, and even niche AI companies will likely be acquired, though high-touch service areas stand to become significantly more efficient and accessible.

STV Take: On the surface, this article can feel a little bleak, but I actually think the key takeaway—service intense businesses becoming more accessible—provides a reason for hope. That said, this article is worth reading for any founder thinking about building a business in AI, especially right now where it really does feel like everyone is chasing a gold rush. Investors are asking themselves the same questions Jerry raises, and it’s critical for founders to think through where real, defensible value will accrue before jumping in.

👻 Venture Ghost-lit

Brian Sugar penned an article on the big downstream funding risk founders assume when they raise a Seed round at a nosebleed valuation. The higher the valuation is at Seed, the harder it is for founders to raise at the Series A and the more traction/revenue they need to get the round done. A high-priced Seed round leaves little room for error.

STV Take: If you’ve been even a brief reader of this newsletter, you know that valuation at Seed is a true Goldlilocks scenario: It needs to be priced high enough to not overly dilute founders but low enough that it doesn’t create an impossible path to raising future capital. Especially right now with headlines of staggering Seed round amounts (let alone valuations) dominating tech media, this article is a good reminder that taking the most amount of money at the highest price is not usually a good strategy. Your Seed valuation shapes your future fundraising path, and it’s smarter to pick a raise that keeps you flexible and able to execute, rather than one that locks you into pressure and unrealistic expectations.

🏅AI Market Leaders

TechCrunch published a summary of a TechCrunch Disrupt interview with Elad Gil, a prolific angel investor who has been investing in generative AI companies since 2021. The gist of the synopsis centers around how much uncertainty there is around AI but also how there are markets where winners are starting to emerge. These areas are usually marked by well-funded companies with a clear leading edge with users, like foundational models (OpenAI), AI-assisted coding (Cursor), customer support (Decagon), legal (Harvey), and medical transcription (Abridge). In addition to identifying categories where the white space might be more limited, he discusses the false signal AI companies are generating because so many enterprise customers feel like they will be left behind if they don’t experiment with AI. While companies are spending on AI, it’s unclear whether that revenue sticks.

STV Take: Elad Gil’s categorization of AI markets into “decided” versus “wide open” matters because VCs are increasingly hesitant to fund companies competing against perceived category leaders, even exceptional execution gets dismissed as “too late” when investors believe winners have emerged. For founders, this means either dominating a greenfield category or having an ironclad wedge strategy if you’re entering contested territory, because “we’ll execute better” is no longer a fundable thesis against established players with momentum and mindshare.

👎 Is VC Worse than 2021?

In a recent VC20 podcast episode, host Harry Stebbings discusses with Jason Lemkin and Rory O’Driscoll the state of VC in the wake of the AI hype. They analyze Revolut’s $3 billion fundraise at a $75 billion valuation, debating TAM (total addressable market) exhaustion concerns and whether the rapid adoption of AI tools represents sustainable growth or a temporary “everyone’s in market” phenomenon similar to COVID-era buying patterns. The discussion then segues into a debate on whether current AI vertical market investments are overvalued given the compressed timeline for customer adoption and uncertain long-term market sizes. The conversation concludes with reflections on venture capital cycles, the challenge of temporal diversification when fund cycles have compressed to 18 months, and differing views on whether this is the easiest or hardest time to be a venture investor.

STV Take: The podcast’s TAM exhaustion debate directly validates Gil’s warning about entering “decided” categories. What looks like massive market expansion is often just compressed buying cycles where every company purchases AI tools simultaneously, then stops buying. Lemkin’s point that legal AI went from unfundable to overfunded illustrates why VCs backing late entrants face impossible math: they’re paying 2025 euphoria valuations for markets that could very likely revert to normal adoption within a year or two. For founders, this means you either dominate during the current “everyone’s buying” moment or risk building solid products that miss their market timing entirely.

👼 Active Angels

Ksenia Moskalenko has been posting lists on her LinkedIn of active early-stage investors. Her most recent one included ten angel groups actively investing in the SE and a breakdown of what each is interested in.

STV Take: We frequently get asked for recommendations for angels and angel groups, and while we have a few faves, they are usually very specific to our core investment areas, which is why we will often refer founders to find lists, like Ksenia’s, to broaden their search. Just remember, like every VC firm, every angel group has their own unique preferences and processes. Make sure you take the time to talk to other founders who have gone through an angel’s process and can help you decipher if it’s right for you.

➗VC Fund Math

Mayur Aras had a great LinkedIn post walking through the math that VCs must do to justify an investment. For every check, a VC has to understand how it has the potential to return their fund. This is why VCs care so much about the addressable market. If a market is too small, then a company can’t hit the revenue threshold it needs to get an exit value that generates a >100x return, which is what is needed in the example he gives.

STV Take: This math is critical for any founder raising venture capital to truly understand. As Mayur points out, VCs are generally expecting a company to achieve that level of growth within the 10-year lifespan of their fund, which is no small feat. This is why not every business is a fit for venture capital. Most simply can’t scale fast enough or big enough to hit the types of exits VCs need to make their portfolio math work.

A common reaction is: “Why don’t VCs just back more businesses that can reliably triple?” The truth is, venture returns don’t work linearly. Many companies, even the ones that look like a safe bet, fail outright, so investors rely on a few outliers—the fund returners—to make up for the losses. That’s why when VCs press on market size or your path to $100M+ in revenue, it’s not nitpicking, it’s survival.

🧐Two Metrics that Matter to Investors

Andre Retterath at Data Driven VC penned an article on the two metrics that investors are watching closely these days, burn multiple and revenue per dollar raised. Essentially, each of these metrics helps investors understand the capital efficiency of a business, which, as the author points out, is critical as capital has become more expensive and harder to get. Some of the data the authors highlight:

• By Series A, good companies usually have a 1.2x burn multiple, meaning that for every $1 of revenue, a company is burning $1.20.

• $2M in ARR is now seen as the minimum revenue needed to raise a Series A.

• AI startups are reaching $5M in ARR in a median time frame of two years.

STV Take: I’ll start by saying there are always exceptions in venture financing, but this article serves as a stark reminder of how difficult it is to navigate from Seed to Series A. The metrics it highlights—burn multiple and revenue per dollar—help explain why there’s no “magic number” of revenue you need to raise a Series A. It’s more complex than hitting a revenue threshold, and founders should be ready for more intense scrutiny of capital efficiency than ever before. Ultimately, raising smarter, not just faster, is what separates the startups that scale from those that stall.

🕵️Seed Round Intel

Adam Shuaib, General Partner at Episode 1 Ventures, highlighted five of the best stats he has come across on Seed fundraising dynamics. See below!

STV Take: This data confirms what many first-time founders miss: Speed signals momentum and the $2.25M sweet spot exists for a reason (less leaves you undercapitalized, more creates valuation traps and masks weak product-market fit). The most actionable insight: front-load investor qualification to build a tight list of 20-25 thesis-aligned funds before you start, because 46 meetings is the average but quality beats quantity every time. Plan for 15 weeks but optimize for six to eight by creating genuine urgency through progress, not artificial deadlines.

While speed to raising a Seed round does appear to increase the odds of raising a Series A, it’s important that founders validate VC is the right path for them. As the first post in this article highlights, the type of growth VCs want to see is steep. Take the time to do the work to validate that the business can grow like investors want to see. It will save so much time and headache later on.

😱 Down rounds, Recaps, Oh my!

On a recent episode of Consumer VC, host Mike Gileb interviews Steven Finn, Partner at Siddhi Capital, about the challenges VC-backed founders face when things don’t go as planned, especially after raising large sums of money. Steven shares his perspective on the right time for founders to pursue venture capital and the risks of overcapitalization. He explains how overfunded companies often need to “rightsize” their cap tables by cleaning up dead equity and removing early investors. He also notes that the excess capital raised in 2021 and early 2022 has made today’s investors far more cautious and attuned to financing risk, or in laymen’s terms, the company’s ability to raise additional capital down the line.

STV Take: Even though this podcast focuses on consumer companies, it offers important lessons for any founder on when and how much to raise. We often talk about the dangers of raising too much too early and becoming just an “option” for larger funds, but Steven’s examples make these risks concrete. Sure, it feels great to close a big round with a name-brand investor, but doing so can set the bar for an exit at unrealistically high levels, making it much harder to achieve long-term success.

🔥 The 7 Deadly Sins of Raising Venture Capital

Startup Grind’s article on the seven mistakes first-time founders make when trying to raise venture capital is a great primer for first-time founders embarking on their VC fundraising journey. A few of the “deadly sins” fall into the following:

• Sending pitches through email without trying to network your way into a warm intro.

• Underestimating how long it will take to get a financing deal done, expect 6-9 months.

• Thinking that closing a fundraising round is the end of the journey.

STV Take: This quote is a perfect follow-up to the podcast. Obsessing over valuation in the earliest stages is the wrong focus and can actually do more harm than good. Raising at a high valuation without the fundamentals in place creates downstream funding risk, as future investors may not see a path to an exit that justifies their investment. High valuations can also come with onerous terms—like steep liquidation preferences—that can significantly impact founders at exit.

💭 Fundraising Advice from a Founder

Ankur Nagpal’s article offers candid fundraising advice from a founder’s perspective. He points out that venture capitalists are often chasing very large exits, which may not always align with a founder’s personal goals. Ankur encourages founders to raise the right amount of capital for their business while still pitching the boldest vision of their company to attract investors. He also highlights the importance of planning for the “medium success case,” so that even if things don’t go perfectly, the outcome is still meaningful and life-changing for the team.

STV Take: Raising venture capital isn’t just about the money—it’s about aligning the raise with the kind of company you actually want to build. Nagpal’s advice reminds founders to balance ambition with pragmatism: aim high to capture investor interest, but make sure the capital and terms you take support a path that’s achievable and meaningful for your team. Thinking through the “medium success case” forces you to be realistic about execution while still keeping the vision compelling, which ultimately sets you up to raise effectively and avoid the downstreaming funding risk talked about above.

🌡️ Dealmaking Indicator

PitchBook released their latest Dealmaking Indicator, which measures how friendly the fundraising environment is for startups versus investors. It combines data on deal terms, market momentum, and ownership trends to show who currently has the upper hand in negotiations. A higher score means investors hold more leverage, while a lower score signals that conditions are more favorable for founders raising capital. Across all stages, the environment remains investor-friendly; however, companies do have a bit more leverage than they did in 2024.

STV Take: I found the above chart fascinating. The capital demand-supply ratio shows just how tough fundraising was across all stages in 2023 and 2024—and why. The demand for capital outpaced supply more than at any other point in recent history. While the market is beginning to rebalance, it’s still a challenging environment. Investors have options, and founders need to focus on telling a clear story on positioning, market opportunity, and why they’re the best ones to go after it.

🏃‍♀️ Speed as a Lever

Hadley Harris penned a LinkedIn post describing how the biggest predictor of success of raising a Series A is how quickly a founder can iterate. With roughly two years of runway from a Seed round, founders need to find product-market fit within the first year to have enough time to show traction before fundraising again. The best founders treat speed as their advantage—running rapid experiments, learning from customers, and killing ideas quickly—because iteration velocity, not perfection, is what ultimately drives progress from Seed to Series A.

STV Take: This is a reminder that raising a Seed round is not the end of the journey but the beginning of it. Post-seed round, speed is the greatest asset with founders optimizing for fast learning. The founders that are successful in finding product-market fit and crossing the Seed to Series A chasm are ones that are quick to test ideas, talk to customers, and adapt.

❓Questions Every Founder Should Ask Themselves

A recent YC AI Startup School podcast featured a recorded version of a live talk given by Jordan Fisher, Co-founder & CEO at Standard AI, on the questions founders today should be asking themselves if/when artificial general intelligence (AGI) comes to be, which Jordan believes is two to three years away. He believes AGI will have meaningful implications for anyone building today. While he outlines a lot of great questions, some of the most existential ones he identifies are the following: 1) What is defensible? 2) How do you build consumer/user trust? 3) How does customer buying behavior and expectations change?

STV Take: Whether or not you believe AGI is coming in three years, the questions Jason brings up are worth thinking through as a lot of investors are asking themselves the same. Specifically, investors are thinking a lot about defensibility and the types of companies that are best positioned to build moats over time. If you’re fundraising, it’s imperative this be a very clear part of the story.

😇 Finding Angel Investors

Lighter Capital’s article outlines a practical framework for early-stage founders seeking angel investment, starting with how to identify the right angels. The piece details what founders should expect when approaching angel groups, including a multi-stage process: prescreening (where a small committee evaluates your pitch), formal presentation to the full group (typically 10-40 investors over lunch), voting, and follow-up due diligence that can take over a month. The article cautions that early-stage equity is the most expensive form of capital and urges founders to carefully weigh whether they’ve exhausted alternatives like bootstrapping or friends and family funding before accepting significant dilution at their company’s riskiest stage.

STV Take: There is often a perception that raising angel money is easier than raising VC, but I think that really depends on the founder and their personal network. This article does a good job discussing the granular mechanics of how angel groups actually operate, which I think makes it clear that it isn’t always as easy as just finding an angel to write a check. Founders have to contend with the prescreening gatekeepers, the show-of-hands voting dynamics, and the surprisingly formal presentation (and sometimes associated fees!). Every angel and angel group is different, so before going through any process, founders should talk to other founders these individuals or groups have worked with to get a sense of the process and people.

Lastly, this article mentions some angels require 20-50% of a company when investing. Please don’t give up that much! 20-25% is high but within market norms. Anything more than that will significantly ruin the chances of raising additional capital.

💡 Startups vs. New Businesses

Paul O’Brien argues that startups and new businesses are fundamentally different entities that our ecosystem dangerously conflates. Startups are temporary organizations searching for new, scalable business models through experimentation (where failure is necessary), while new businesses execute proven models where failure typically stems from preventable incompetence. Blurring these lines causes catastrophic outcomes: startups get pressured for revenue before product-market fit, new businesses are pushed to innovate before stabilizing, and founders receive advice from people who misunderstand what they’re building.

STV Take: This topic is really important because founders can waste their time pitching to the wrong capital sources—treating startups like businesses needing loans, or presenting straightforward businesses as venture-backable. Understanding this distinction helps you identify whether you need patient capital that expects experimentation (angels, VCs) versus capital expecting disciplined execution (banks, revenue-based financing). O’Brien’s filter question cuts through the confusion: “Are you building something new, or just doing something again?”—because your answer fundamentally shapes which investors you approach and what terms you accept.

⛓️‍💥 The Physics of Startups

In an attempt to satiate his own curiosity, Rob Snyder created this Miro that attempts to answer the question of why startups work. In this complex but fascinating layout, Rob argues that demand is why people buy things. Early in the life of a startup, founders are trying to isolate the demand for their product by running experiments to validate a “pull hypothesis”. Once a pull hypothesis has been validated, successful startups begin to build a “case study factory”, where they focus on running the case study with a growing volume of target customers.

STV Take: This framework cuts through startup theory to focus on what actually matters: why customers buy. The demand graphic in the top right is especially critical for founders pitching investors—a pain point alone doesn’t generate demand, since people complain about countless things without ever taking action to solve them. This is why articulating a clear “pull hypothesis” (as Rob frames it) is essential in any investor pitch. You need to demonstrate not just that a problem exists, but that customers are actively pulled toward solving it enough to open their wallets. Investors have seen too many solutions to problems nobody will actually pay to fix.

🐅 Formidable Founders

Paul Graham emphasizes the important trait in founders that investors prize: formidability, which, as Paul describes, is the combination of competence, determination, and the ability to execute. While traction and market opportunity matter, what truly convinces VCs is a founder who projects confidence and demonstrates they can overcome obstacles to build the company. Graham argues that before founders begin fundraising, a founder should assess whether their idea is investable. Going through this exercise builds confidence and determination in a founder that can’t be faked.

STV Take: Paul gets at the painful, but often unspoken truth: early-stage VCs often pass because they don’t believe in the founding team’s capabilities. Founders often think they need to perform some “wild feat of salesmanship” to convince investors their startup will be huge. But in reality, investors are looking for something much less speculative—they want to see that the company has all the elements of a good bet: a strong team with clear market understanding and the ability to execute. Taking the time to deeply understand the business shows that a founder has the competence and resolve to navigate challenges that tends to inspire investor confidence far more than any fancy pitch deck.

🚩Team Warning Signs

Irina Kukuyeva discusses the yellow flags that show up in diligence that are potential indicators that a team may not be equipped to scale a business. These can take many forms—workflows that don’t reflect industry standards (signals lack of domain expertise), co-founders misaligned on priorities, algorithmic outputs that change based on input order (signals a lack of technical understanding), or products that don’t match the pitch. Such gaps erode trust with investors and customers alike, and often point to missing expertise or poor internal communication, both of which make it harder to build a company capable of delivering venture-scale returns.

STV Take: It’s easy to obsess over your pitch or product demo, but investors are also looking for signs that a team can actually execute. Small inconsistencies—like differing answers on priorities, workflows that don’t match customer reality, or gaps between what’s promised and what exists—can create doubt about whether the team can scale together. For founders, running a successful fundraising process is predicated on a solid business foundation. The team needs to be aligned, the product needs to deliver, and the workflows need to make sense.

⏭️ 50 Reasons to Pass

Joakim Achren outlined the 50 reasons why VCs pass on a company. He segmented these 50 reasons into five broad categories–strategic & communication, product & execution, financial & fundraising, team, and market & opportunity. Many of the issues discussed are areas we’ve talked about before, including messy cap tables, no clear path to $100M in annual revenue, and no relevant industry experience.

STV Take: The first concern under team—missing critical members—is real, but it’s rare for an investor to cite that alone as a reason to pass. These team gaps usually show up as a lack of industry or technical expertise. As Irina (author of the first article) points out, not understanding the industry increases the risk of building a solution that doesn’t meet the user’s practical needs, while missing technical expertise can slow essential product iterations needed to respond to user feedback. Ultimately, these gaps aren’t just abstract risks—they’re the kinds of misalignments that can prevent a startup from scaling effectively.