The Series A Crunch
Everyone in VC is talking about the “Series A crunch,” but what does that actually mean? Picture this. You are a founder. You raise your seed round, pull together a small team, build your MVP, maybe land a few customers. You figure Series A is the next step. Instead, it feels like Series A keeps moving further away, the check is bigger, the expectations are higher, and your cash is running out faster. At that point, you either grab a bridge round, take on some venture debt, or risk running out of oxygen.
The numbers show how tough it has gotten. Only about 15% of startups that raised seed in 2022 made it to Series A within two years, compared to more than 30% of the 2018 group.1 That is basically cutting the graduation rate in half in just a few years. And the average Series A today? Around $16.6 million.1 So it is not just harder to get, it is also way more expensive. Because of that, the in-between stage has blown up. In Q1 of 2024, 46% of all seed deals were bridge rounds.2 That is the highest ever. Founders are stacking bridges, doing extensions, even pulling in venture debt just to keep the lights on long enough to hit the milestones Series A investors demand. And those milestones are not light. VCs want real traction, not just a shiny demo. They want revenue, strong retention, and unit economics that make sense. The days of raising a Series A on pure vision are fading fast.
Companies getting to Series A in 2024 had smaller teams than 5 years ago, closer to 15 or 16 people, but were expected to show way more results.1 The ripple effects are obvious. Founders end up giving away more equity earlier since bridge after bridge adds dilution. Term sheets also come with heavier protections for investors like liquidation preferences, milestone based funding, and tighter pro rata rights. It is almost like investors are putting more airbags in the deal just in case things go sideways.
The reason for all this is not a mystery. Too many startups got funded at seed during the boom, but the amount of Series A capital did not scale up the same way. Add in higher interest rates and LPs being more cautious, and investors are simply pickier. The result is a traffic jam. Money is still flowing, but it is piling up at the top and clogging the middle. And it’s worth saying, this isn’t the first crunch founders have faced. After the dot-com bust and again after 2008, there was a wave of startups stuck between seed and A. The difference this time is the scale: way more companies got funded during the 2020–21 boom, and then interest rates spiked almost overnight. That combo has made the squeeze feel sharper and faster than in past cycles.
So what does this mean in practice? For founders, it means seed is not a victory lap anymore, it is survival training. You need to stretch your cash, get your metrics in shape, and be ready for a long wait before Series A. If you cannot show real growth, then profitability or at least a clear path to it is a must. For VCs, the crunch means no more spraying checks around and hoping something sticks. You need to double down on the companies that prove themselves and accept that plenty of others will quietly fade away on bridge rounds.
At the end of the day, bridge or bust is not just a phrase people toss around. It is the reality of early-stage venture right now. And whether it ends up filtering out weak companies or unfairly killing good ones that just got stuck in the jam is the question everyone in the ecosystem is asking. Still, founders aren’t totally out of moves. Some are cutting burn to stretch their seed, others are turning to revenue-based financing or even striking partnerships to buy time. None of these are silver bullets, but they can keep the lights on long enough to prove traction. In a crunch like this, survival is its own strategy.
1. LinkedIn Pulse — The Series A Crunch Is Back: Why 85% of Seed Stage Startups Now Fail (2024) (https://www.linkedin.com/pulse/series-crunch-back-why-85-seed-stage-startups-now-fail-ffbae/)
2. (https://www.axios.com/newsletters/axios-pro-rata-a68c1560-d690-4439-b7d7-8e1e4d8e8c2b)
* Written by Rodrigo Pinillos Vega, Guest Contributor
Rodrigo is a Sophomore at the University of Chicago with a passion for healthcare tech and venture capital. Rodrigo has lived in 9 countries, and studies Economics and Philosophy.
