May 21, 2025
Kaley Ubellacker
Market Stirrings 🚩
Here's what the week looked like in pre-seed:
$14.9M
12
Data aggregated from proprietary research and Crunchbase; valuation estimate based on 10-20% ownership stake.
TOTAL NUMBER OF ROUNDS IS LOOKING ~DAINTY~
Valuations are growing amid a decrease in deal volume. At the seed stage, median pre-money valuations increased 13% in Q1 2025 compared to the same time last year, while the total number of rounds dropped 36%. Similar trends emerged for Series A through Series C. The pattern suggests investors are continuing to fund a smaller pool of startups, prioritizing quality over quantity.
Good Reads 📖
For the rushed reader …
According to data from Carta, nearly half of all seed deals in Q1 2025 were bridge rounds, which is the highest rate on record.
Once the belle of the ball, climate tech experienced a 55% drop in investments from its 2021 peak, with Q1 2025 marking its weakest deal quarter since 2019.
Redpoint Ventures secured $650 million for its 10th early-stage fund, matching its previous fund size.
For the less rushed reader …
Seedy findings
Seed-stage startups are stuck at the starting line. According to data from Carta, nearly half of all seed deals in Q1 2025 were bridge rounds, which is the highest rate on record. Dubbed the “Series A crunch,” the phenomenon has less to do with a lack of capital and more to do with VCs hitting the brakes in a post-ZIRP world, growing increasingly selective about where they deploy funds. Series A deal volume plummeted 79% since Q1 2022, and the stagnation is reshaping venture math: LPs in later-stage funds face dimmer ROI prospects as fewer startups move up the funding ladder on expected timelines. Meanwhile, startups are giving up less equity, taking longer to raise, and offering investors more downside protection. The once-smooth venture conveyor belt is now a bumpy path, with many startups finding themselves stuck in “Seed-ageddon.”
Solar or soldier?
Startups are trading carbon footprints for combat boots. Once the belle of the ball, climate tech experienced a 55% drop in investments from its 2021 peak, with Q1 2025 marking its weakest deal quarter since 2019. Facing high burn rates, policy headwinds, and investor fatigue after overhyped valuations and high-profile flops, some climate-tech startups are repositioning as defense plays. A couple examples are South8 Technologies, which develops lithium-ion batteries for both EVs and military-grade tech, and Saildrone, whose ocean-mapping drones support climate research and naval intelligence. It’s more than a survival strategy: defense VC investments were up 400% last quarter, and military budgets offer deep pockets. So does this mean founders are heading off to boot camp?
Raise and shine
Redpoint is on point with its latest fundraise. Redpoint Ventures secured $650 million for its 10th early-stage fund, matching its previous fund size. The hefty raise signals solid LP confidence amid a downmarket fundraising environment. The firm, which has been investing for over 25 years, will continue to back early-stage startups, particularly in sectors like AI, enterprise software, infrastructure, and developer tools. Led by managing partners Alex Bard, Satish Dharmaraj, Annie Kadavy, and Erica Brescia, Redpoint has recently backed buzzy startups like AI coding platform Poolside, distributed database builder Cockroach Labs, and procurement tool Levelpath. In a VC landscape where many firms are trimming fund sizes or pausing raises altogether, Redpoint’s consistency offers an optimistic vote of confidence for early-stage founders. With momentum like that, it’ll be hard for other funds to cash up.
Fire Up the Pre-Seeds🔥
Highlights from this week’s pre-seed raises:
SaaS
Upscale AI - Not as easy as it streams.
Upscale AI raised $5.5 million in a joint pre-seed and seed round, including participation from nvp capital, M12 (Microsoft’s Venture Fund), Eniac Ventures, SuperAngel.Fund, and Breakpoint Capital. Upscale AI is creating an AI-powered advertising platform that enables brands to create, launch, and optimize performance-driven video ads.
Set Your Sites - Trail-blazing tech.
Set Your Sites raised $500k led by Invest Nebraska. Set Your Sites Set Your Sites is developing a comprehensive platform for campgrounds, streamlining operations with mobile payments, real-time site tracking, and Wi-Fi solutions.
AI
ThriveAI - No PM, no problem.
ThriveAI raised $1.2 million led by 500 Global. ThriveAI is building an AI teammate for product managers, using a multi-agent platform to handle everything from data analysis to feedback interpretation. Picture a junior PM that’s actually eager for a sprint.
Outro🚪
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