State of Pre-Seed 90 Percent of Founders Raise on SAFEs
State of Pre-Seed 90 Percent of Founders Raise on SAFEs
Author: Peter Walker
Read time: 1 minute
Published date: May 20, 2025
The State of Pre-Seed Report is live—pre-seed activity declined for the third consecutive quarter, SAFEs dominate, and dilution is highly sensitive to the...
90% of founders raise their initial capital on SAFEs. Are you raising at the right valuation cap?
The State of Pre-Seed Report is live! Direct link here, but read on for the highlights: https://lnkd.in/gpJkbfUZ
Continued decline in pre-seed activity: For the third consecutive quarter, pre-seed investment declined, in terms of both total cash raised and count of instruments. Q1 saw a total of $737 million invested, down 20% from Q4’s $923 million.
Rising pre-seed hubs in the South: Out of the top 20 pre-seed metros by total cash raised in the past year, six were in the South: Austin, Dallas, Houston, DC, Atlanta, and Miami. The South took in 18% of all pre-seed cash raised from Q1 2023 to Q1 2025.
SAFEs vs. convertible notes: SAFEs comprised a record high of 90% of all pre-seed rounds on Carta in Q1 2025, while convertible notes made up the other 10%. The share of pre-seed capital raised on SAFEs, though, fell slightly to 82%, suggesting that Q1 had some large convertible note deals.
Increasing valuation caps: For post-money SAFE rounds above $500,000, valuation caps rose slightly in Q1 2025 compared to Q4 2024.
Steady interest rates: The median interest rate on convertible notes held steady at 7% in Q1 2025, down from a high of 8% in Q2 2024.
Industry dynamics: Startups in crypto, biotech/pharma, and hardware had the highest valuation caps in SAFE rounds. Hardware startups also raised the third highest amount of cash in Q1, behind only SaaS and healthtech.
Author Information
Peter Walker runs the Insights team at Carta, focused on discovering key data and narratives across the private capital ecosystem. In a former life, he was a marketing executive for a media analytics startup and led the data visualization team at the Covid Tracking Project.