Series A in Decline, Seed on the Rise in 2025

Why Series A is harder than ever

We’ve seen a pick-up in seed activity this year, and at first glance, it looks like early-stage venture is warming back up. It isn’t. What’s happening is a restructuring of what “early-stage” even means.

Seed rounds today often resemble bridge rounds, masquerading as forward momentum. More insider-led extensions, more notes stacked on top of each other, and fewer true first institutional checks. There are still real seed rounds happening, but they’re largely reserved for companies with traction that would’ve qualified for Series A two years ago.

That’s the shift. The real bottleneck is at the Series A stage.

According to PitchBook, only 343 Series A rounds were completed in Q1 2025; a 60% drop from the peak in 2021. Valuations are creeping back up, but don’t let that distract you. The uptick is artificial. It reflects concentration, not confidence. The capital that’s still moving is flowing toward the same narrow profile: high-growth, efficient, AI-adjacent, and already de-risked.

At Thunder, we’re seeing the same pattern. More founders are seeking seed over Series A, even though the ARR numbers have remained about the same.

Series A used to be the “prove you can build” round. Now, it’s a late-growth checkpoint wearing an early-stage label. Investors aren’t just looking for a product and some early traction. They want retention curves, clear CAC-to-LTV dynamics, channel scalability, usage depth, defensibility, all before writing a $5M–$10M check. If you haven’t hit those marks, you’re not in the pipeline.

We talk to hundreds of founders at Thunder. The overwhelming feedback from those raising is consistent: seed is still doable, but it comes with caveats. You either raise from existing backers, string together angels, or negotiate with small funds for undersized checks that stretch out the close for months. And when you ask about Series A, you get nods and vague timelines.

Nobody wants to lead it. Nobody wants to price it. Nobody wants to be first in.

This is what a collapsed middle looks like.

The same pattern applies to emerging fund managers.

In 2021, 441 first-time funds raised $24B. In Q1 this year, only 15 have raised, and they’ve pulled in just $1B in aggregate. That’s not a lull. That’s a structural dislocation.

Emerging managers haven’t disappeared. Many are still writing checks, but they’re doing so with smaller reserves, longer fundraising timelines, and less visibility on their next close.

LPs are consolidating into larger platforms, either for perceived safety or in search of AI exposure. Meanwhile, the managers who backed iconic companies at pre-seed and seed just a few years ago are being told they’re too small, too early, or too risky.

What this leaves us with is a two-speed venture market:

• On one end: party rounds, pre-seed SAFEs, and angels writing $25K checks.

• On the other: multi-billion dollar raises from AI platforms backed by strategics, megafunds, and sovereign wealth.

Everyone else is stuck in the no-man’s-land between $2M and $15M.

The advice for founders is clear.

Don’t raise with the assumption that Series A will come on schedule. Most founders won’t get there on a clean, linear path. Build enough runway in your seed round to get to real, verifiable traction. That means customers paying real dollars, usage metrics that compound over time, and proof that you’re not just a nice-to-have.

Also, know which investors are active. Warm intros don’t matter if the fund has quietly stopped leading. Update your stack.

If you’re building something worthwhile but haven’t hit the “AI multiplier” or hockey stick revenue yet, you’ll need to be strategic, because the market’s not going to carry you.

For emerging managers, this moment requires edge and patience. Most won’t close new funds this year. Those who do will either have institutional LPs from previous cycles, or a tight, differentiated thesis LPs can’t find elsewhere. Everyone else is playing defense, deploying slowly, and hoping their vintage ages well enough to reopen the conversation in 2026.

At Thunder, we’re watching this play out across thousands of companies and funds.

This is not a normal slowdown. It’s a structural reset.

Those who adapt will survive it. Those who wait it out are probably done; they just don’t know it yet.

If you're generating more than $1M in revenue and growing, but aren't sure of your capital options, reach out and tell me more about your situation and I'll see if I can help.