# 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](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.