Peering into the 'Series A chasm' with Everywhere Ventures' Jenny Fielding

Equity

TechCrunch

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4.2 • 365 Ratings

🗓️ 29 May 2024

⏱️ 25 minutes

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Summary

It’s no secret that the bar for startups to land a Series A has risen, but has it risen too high? According to Jenny Fielding, a co-founder and Managing Partner at Everywhere Ventures, startups are facing what she calls “The Series A Chasm.” In a post on X this month, Fielding said, “there’s a huge backlog of seed stage companies with nice traction – just not $3m ARR + 30% MOM growth kinda traction.” The post sparked a conversation online, and Fielding joined Haje Kamps on Equity to talk through it all. Looking beyond Fielding’s portfolio, we can see that the early stage storm has been brewing for quite some time. According to data from Crunchbase, seed companies have raised about $7 billion so far this year, which is down $1 billion year over year and down significantly in the later stages. Crunchbase has even taken to calling this a moment of “extended adolescence” for startups, with an increase in companies raising $5 million+ seed rounds instead of a Series A. Of course, this meant we had to address the AI elephant in the room, and the $135 million seed round Musk’s xAI raised last December. Note that after 6 months, the company behind Grok has already announced a $6 billion Series B round. It was an interesting chat, so press play and join the conversation!

Transcript

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0:16.0	Hello and welcome back to Equity, Ranches flagship podcast about the business of startups. I'm Haya and today is our Wednesday episode.
0:18.0	We're bringing deep-dive conversations back to the podcast on Wednesdays and today we're taking a look at what some are calling the Series A cliff.
0:25.0	To give us some context we'll be talking to Jenny Fielding, co-founder and managing partner at Everywhere Ventures.
0:31.0	Jenny, welcome back to the show.
0:32.6	Thanks so much for having me, excited to be here.
0:34.6	Jenny's been on Equity Before, talking about how startups have to double down on quality
0:38.7	and how smaller firms can compete with their more established peers and much more.
0:43.0	That's not what we're talking about today, however.
0:45.0	It's rough out there for startups, and Jenny, you put out a tweet
0:49.0	which sparked a whole bunch of debate.
0:51.0	What exactly is the Series A cliff?
0:52.8	Yeah, I'm actually calling it the chasm.
0:55.0	That's my new report.
0:57.0	So essentially, it's much harder to raise a Series A right now.
1:01.0	The bar has just moved, right so I think what founders are feeling is that
1:06.8	while back in 2020, 2021 you could get to something like a million dollars in ARR and be able to raise a proper
1:15.0	Series A from a great Series A fund. There was a lot of variables on that, what
1:19.7	area you're building in, your team background, all those things things but let's just call that general and
1:24.6	fast forward to today where you know the goalposts have really moved and so the tweet was really
1:30.0	what I'm kind of seeing which is the million has now gone up to sometimes three
1:35.0	million and let's not just talk about absolute numbers there's also a growth
1:39.5	rate that these investors are looking at so it's really a tough moment for founders
	...

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