At SaaStr Workshop Wednesday live, Ethan Kurzwiel, previously partner at Bessemer Venture Partners and now founding partner at Chemistry VC, took us through a deep dive of exactly where Series A funding is right now in 2025.
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About Ethan Kurzweil
Ethan is the founder of Chemistry VC, a focused early-stage venture firm that writes $3-30M checks with an average of $10-12M for Series A investments. Prior to founding Chemistry, Ethan spent 16 years at Bessemer Venture Partners, where he led investments in successful companies like PagerDuty, Intercom, and SendGrid. With 17 years of venture capital experience, Ethan began his career in consumer investing before pivoting to B2B, where he developed particular expertise in developer platforms and B2B software. Along with partners Mark Goldberg (formerly of Index) and Christina Shen (formerly of Bessemer and Andreessen Horowitz), Chemistry VC raised a $350 million fund focused exclusively on Series A investments.
Current State of Early-Stage Venture Market
The early-stage venture landscape has experienced significant shifts since the peaks of 2021. We’re seeing:
- Deal activity decline: From the highs of 2021 (around 3.5B raised in Q4 2021), we’re seeing a return to baseline levels but still below pre-zero interest rate era volumes.
- Longer funding timelines: Seed to Series A timelines have stretched from approximately 12 months to 25 months on average, requiring founders to plan for longer runways.
- More capital into fewer deals: While total capital deployment is returning to pre-2021 levels, it’s being concentrated in fewer companies, making the environment more binary and competitive.
- Graduation rates plummeting: The percentage of seed companies successfully raising Series A has dropped significantly across all industries, creating a “crunch” for many startups.
What’s Getting Funded in 2025
According to Ethan, companies that check multiple of these boxes are securing funding:
- Companies showing sustained momentum that appears likely to continue
- Teams hitting forward-looking themes (particularly AI-related)
- Products demonstrating clear customer demand and willingness to pay
- Startups with raving customer reviews and strong net expansion
- Founders with unique, compelling visions who can articulate them effectively
The “AI premium” remains real in 2025, with valuation premiums escalating through funding stages:
- 20% premium at Seed
- 40% premium at Series A
- 60% premium at Series B
However, Ethan cautions that investors aren’t looking for “AI for AI’s sake” but rather companies applying AI to solve discrete business or consumer problems with demonstrated traction.
Series A Success Strategies for 2025
Ethan shared several critical strategies for founders approaching Series A:
- Understand your “why”: Clearly articulate why you’re raising capital and what you’ll do with it beyond simply “it’s time for the next round.”
- Explain the “why now” moment: Connect your funding timing to market dynamics, technological shifts, or other factors creating urgency.
- Craft a compelling narrative: Structure your story with a clear arc from founding to current traction to future vision.
- Run an intentional process: Be strategic about your fundraising approach rather than scattershot or overly compressed. Allow time to build relationships with potential investors.
- Focus on the right metrics: Be transparent about your key metrics rather than relying on vanity numbers. Critical metrics include:
- Net new ARR growth
- Net dollar retention
- Gross logo retention
- CAC payback period
- Average contract value (ACV)
- Burn multiple (ideally 1-2x for healthy growth)
Insights on the “Triple, Triple, Double, Double” Standard
The classic SaaS growth benchmark of “triple, triple, double, double” (3x growth for two years followed by 2x growth for two years) was once the gold standard, but the landscape has shifted:
- For many competitive AI markets, this benchmark may no longer be sufficient to attract top-tier funding
- In more stable, discrete markets like developer platforms, this growth trajectory may still be attractive
- The key is demonstrating that growth is sustainable and tied to real customer value, not just capital deployment
Moats in the Age of AI
A fascinating exchange touched on how traditional software moats are being disrupted by AI:
- Technical lock-in and switching costs are diminishing in the AI era
- User and developer love remains one of the strongest moats
- Products that create genuine emotional connection and solve real pain points still have defensive advantages
- Free AI tools (like ChatGPT, Claude) are retraining users to expect more value for less cost
- Products need stronger value propositions beyond mere functionality to maintain competitive edges
4 Things Founders Might Not Expect About Series A Funding Today
- Multiple seed rounds are now the norm, not the exception: Most companies will do 2+ seed rounds before Series A, and investors don’t view this negatively. Pre-seed, seed, and seed+ rounds are all being lumped together conceptually. As Ethan notes, “Nobody looks back and docks you for more [seed rounds].”
- The “tight process” advice is potentially harmful: While conventional wisdom suggests running a compressed fundraising process with artificial deadlines, Ethan advocates for an “intentional process” instead. For relationship-based Series A funding, giving investors time to genuinely understand your business leads to better partnerships.
- Capital alone rarely accelerates growth curves: While founders often believe additional funding will unlock faster growth, Ethan observes this rarely happens unless a company is genuinely under-optimized. Most companies that are just below the growth threshold can’t simply spend their way to higher growth rates.
- The bar for exit outcomes keeps rising: With the IPO threshold now effectively requiring 50% growth at $500M+ in revenue, the path to venture returns has become more demanding. This reality is cascading down to earlier stages, requiring founders to build long-term sustainable businesses rather than planning for quick exits or market bubbles.
