Record Number Of Startups Raise First Venture Round
A record 8,625 US startups raised their first venture round this year, with smaller VCs struggling to compete. This surge in new companies may lead to changes in the venture capital landscape.
Original reporting · saastr.com
Original: “A Record 8,625 Startups Raised Their First Venture Round This Year. Smaller VCs Now Have to Find Founders Before They Found Anything.”
Read “A Record 8,625 Startups Raised Their First Venture Round This Year. Smaller VCs Now Have…” at SaaStr →
How this was written. Awesome B2B Growth wrote this article with a language model from SaaStr’s reporting (model: @cf/meta/llama-3.3-70b-instruct-fp8-fast); it describes that reporting rather than adding to it. The original, linked above, is the full story.
Key points from SaaStr’s report
- A record 8,625 US startups raised their first venture round this year, beating the 2021 full-year record.
- Smaller VC firms are struggling to compete, with many investing in people who haven’t started a company yet.
- The median US pre-seed pre-money has tripled since 2020, to $12 million, while the median seed check has fallen to $3.0 million.
- Larger funds are dominating the market, with funds of $500 million or more taking 78.1% of capital.
- The consolidation of capital may lead to fewer small funds and more megafunds writing seed checks as options.
A record number of US startups have raised their first venture round this year, according to SaaStr. Through Q3 2026, an estimated 8,625 startups closed their first-ever venture financing, already beating the 2021 full-year record of 8,507. This surge in new companies is expected to continue, with an estimated 11,500 first-time financings by the end of the year.
The increase in new startups has led to a highly competitive market, with many smaller VC firms struggling to get in the door. As a result, smaller funds are moving to invest in people who haven’t started a company yet, in an effort to get ahead of the competition. This shift in strategy may become more common as the market continues to evolve.
The median US pre-seed pre-money has tripled since 2020, from $4 million to $12 million. The median seed pre-money has also increased, to $18.3 million, up from $16.0 million last year. However, the median seed check has fallen, from $3.4 million to $3.0 million, resulting in smaller checks and less ownership for investors.
The venture capital landscape is also changing, with larger funds dominating the market. Funds of $500 million or more took 78.1% of capital, while making up only 6% of funds closed. Established firms, such as Andreessen Horowitz, are raising large amounts of capital, with Andreessen Horowitz alone closing $23.8 billion in 2026.
Meanwhile, smaller funds are struggling to raise capital, with first-time funds on pace for the fewest in a decade. Emerging managers closing a fund have also decreased, from 927 in 2022 to 211 through Q3 2026. This consolidation of capital may lead to fewer small funds and more megafunds writing seed checks as options.
The cause of this consolidation is distributions, with net cash flow to LPs having been negative by $202 billion since 2022. As a result, LPs are recommitting their capital to multistage funds, rather than smaller funds. This trend is expected to continue until LPs see real distributions, leading to a shift in the venture capital landscape.
The impact of AI on the startup landscape is also a factor, making it cheaper to start a company and leading to an increase in new startups. However, the capital behind those first rounds is consolidating into fewer firms, resulting in smaller checks and higher prices. As the market continues to evolve, smaller VCs may need to adapt their strategies to remain competitive.
Questions and answers
What is the current pace of first-time financings in the US?
The current pace is estimated to be around 11,500 first-time financings by the end of the year, according to SaaStr.
Why are smaller VC firms struggling to compete?
Smaller VC firms are struggling to compete due to the highly competitive market, with many larger funds dominating the market and investing in startups at an early stage.
How has the median US pre-seed pre-money changed since 2020?
The median US pre-seed pre-money has tripled since 2020, from $4 million to $12 million, according to SaaStr.
