Seasonal Trends in Seed and Series A Rounds

In the venture capital world, timing matters. Seed and Series A funding follow clear seasonal patterns, and knowing when to fundraise can significantly impact outcomes. Here's what you need to know:

• Q1 is quieter but offers higher valuations for standout startups. In 2025, seed rounds had a median pre-money valuation of $16M, up 18% from 2024, despite fewer deals. Series A rounds saw lower dilution (17.9%) but more down rounds (19%).
• Q4 is busier, with 20% more deals than Q1, as investors rush to allocate budgets. However, competition increases, and holiday delays can push deals into the following year.
• Sectors like AI and healthcare perform well year-round. In Q1 2025, 70% of AI investments were early-stage, while healthcare startups raised larger seed rounds (median $4.6M vs. $3.1M overall).

Timing your fundraising efforts to align with these trends can improve your chances of success. But strong fundamentals and preparation remain essential.

1. Seed Funding Rounds

Seasonal Funding Volume

Seed funding tends to follow a predictable seasonal rhythm, which can greatly influence a startup's fundraising efforts. Historically, Q4 experiences 20% more deal activity than Q1, creating distinct opportunities for founders depending on the time of year.

Take early 2025 as an example of how volatile these patterns can be. During Q1 2025, only 401 new seed rounds were completed - a sharp 28% drop compared to the previous year. The total capital raised also plummeted, falling 37% to $1.2 billion, marking one of the lowest points for seed funding in recent years.

That said, the seed funding landscape remains relatively stable in some respects. Across the U.S., the median seed round size stands at $3.1 million. Healthcare startups, known for their lengthy development timelines and regulatory hurdles, continue to secure larger rounds, with a median of $4.6 million. Meanwhile, the median pre-money valuation for new seed rounds has climbed to $16 million in Q1 2025 - an 18% increase from the previous year, even as deal volumes have declined.

These trends highlight how funding activity ebbs and flows with the seasons, directly impacting a startup's chances of closing a successful round.

Success Rates by Season

Seasonal patterns also shape success rates. Q1 typically sees lower success rates, as many investors take a cautious approach following the year-end, while Q4 benefits from a surge in deal-making as investors aim to allocate remaining capital before closing their books. This dynamic stems from the annual budgeting cycles and portfolio strategies of venture capital firms.

The competitive environment is growing tougher, with capital increasingly concentrated in fewer but larger deals. For seed-stage startups, this makes timing even more critical.

Investor Behavior

Investor behavior reinforces the importance of timing, as their strategies have become more data-driven, prioritizing clear traction and differentiation.

One area drawing significant investor enthusiasm is AI-focused startups. In fact, over 50% of Y Combinator's Spring 2025 batch is working on AI and agentic solutions, signaling strong demand for transformative technologies. Early-stage deals made up 70% of all AI-related investments in Q1 2025, further underscoring this trend.

Healthcare AI startups like Helpcare AI illustrate how aligning sector focus with investor preferences can lead to larger seed rounds. By showcasing their unique advantages and targeting periods of heightened investor interest, these companies have successfully captured attention and premium valuations.

For founders, understanding these patterns and aligning fundraising efforts with market dynamics can make all the difference. Partnering with experienced advisors, like Phoenix Strategy Group, can help craft compelling financial narratives and optimize fundraising strategies to meet the expectations of today’s investors.

2. Series A Funding Rounds

Seasonal Funding Volume

Series A funding often follows a predictable seasonal rhythm, with deal activity in Q4 typically outpacing Q1 by about 20% over the past five years. This pattern highlights the importance of timing when founders map out their fundraising strategies.

In Q1 2025, there were 1,122 new Series A rounds - the lowest figure since 2018. While the median pre-money valuation climbed 9% to $48 million, the number of closed rounds dropped by 10%. Total capital raised across all funding stages fell to $21 billion in Q1 2025, reflecting the usual first-quarter slowdown. These numbers offer valuable insight into how seasonal fluctuations can influence Series A outcomes.

Success Rates by Season

Seasonal trends play a big role in determining success rates for Series A fundraising. Q1 typically sees lower conversion rates, as companies face stiff competition for limited investor attention and tighter capital allocation during this period.

However, there’s a silver lining for founders: median dilution in Series A rounds dropped to 17.9% in Q1 2025, down from 20.9% the previous year. This means founders were able to retain more equity. On the flip side, over 19% of Q1 2025 rounds were down rounds, where companies received lower valuations compared to earlier funding stages. This percentage has stayed steady since 2023 but is notably higher than the levels seen between 2019 and 2022.

These trends suggest that while fewer companies are closing Series A rounds, those with strong fundamentals and measurable progress have an opportunity to secure better terms - especially when they align their fundraising with periods of increased investor activity.

Investor Behavior

Investor activity in Q1 reflects a period of reassessment. Venture capital firms often use this time to review their portfolios and finalize budgets, leading to a more cautious approach to new investments.

In the AI sector, early-stage deals made up 70% of investments in Q1 2025, slightly down from 75% in 2024. This shift points to a gradual maturation of the AI investment landscape, with some funds pivoting toward later-stage opportunities.

Healthcare startups, on the other hand, continue to attract steady investment. Their longer development timelines and regulatory hurdles contribute to a more stable funding pattern, emphasizing the importance of understanding sector-specific dynamics.

These evolving investor behaviors mirror trends seen in seed rounds, underscoring the critical role timing plays in early-stage funding. For growth-stage companies navigating these challenges, working with experienced advisors can make a significant difference. For instance, Phoenix Strategy Group provides fractional CFO services and FP&A expertise, helping companies create solid financial plans and manage investor expectations in today’s selective Series A market.

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Advantages and Disadvantages

Let’s dive into the upsides and downsides of fundraising across different seasons, building on the detailed patterns we've already explored.

Q1 fundraising has its own set of perks and challenges. On the plus side, this quieter period means less competition, giving startups a chance to grab investors' undivided attention. In fact, seed rounds in Q1 2025 saw a median pre-money valuation of $16 million - an 18% increase compared to the previous year. This suggests that high-quality startups can secure better valuations when fewer deals are competing for investor dollars. However, there’s a flip side: overall funding volumes drop, and decision-making slows down as investors focus on reviewing their portfolios and setting budgets for the year.

Q4 fundraising, on the other hand, operates under a completely different rhythm. This period sees a surge in deal activity as venture capital firms rush to allocate their remaining budgets. Decisions often come faster, which can be a blessing for startups ready to close deals. But with more startups entering the fray, competition stiffens. This can lead to lower valuations or less favorable terms for founders. Add to that the holiday season, which can create delays and push deals into the next year.

Sector-specific trends also play a big role, no matter the timing. Healthcare startups, for instance, consistently shine with larger median funding rounds. AI companies, driven by ongoing investor enthusiasm, often manage to sidestep seasonal fluctuations altogether.

Here’s a quick breakdown of the seasonal pros and cons:

For Series A fundraising, the stakes are even higher, but the seasonal trends remain similar. In Q1, founders who can navigate the selective environment often retain more equity, though the heightened scrutiny can result in more down rounds.

For growth-stage startups, preparing for these seasonal shifts is crucial. Working with experts, like Phoenix Strategy Group, can make a big difference. Their fractional CFO services and FP&A expertise help startups build detailed financial projections and align with investor expectations, no matter the season. Their data-driven strategies can be a game-changer when it comes to timing your fundraising efforts to maximize benefits and minimize pitfalls.

At the end of the day, timing is just one piece of the puzzle. The real key to success lies in having strong fundamentals - clear traction, a stellar team, and a sustainable growth plan. While strategic timing can certainly improve your odds and terms, it’s your business’s foundation that will ultimately carry you through.

Conclusion

Seasonal timing plays a critical role in fundraising success. In Q1 2025, while fewer seed rounds are expected, those that secure funding enjoy higher valuations. This trend highlights a crucial takeaway: fewer startups may get funded, but those that do often negotiate better terms.

Founders targeting Q1 and Q2 benefit from reduced competition and premium valuations, whereas Q4 offers 20% more deals but comes with increased competition and potential delays due to the holiday season. Series A rounds show similar trends, with Q1 2025 allowing founders to retain more equity, thanks to lower dilution rates. These patterns reflect how timing influences fundraising outcomes across sectors.

Sector alignment can help overcome seasonal challenges. Healthcare startups consistently perform well, and AI companies continue to attract investor attention throughout the year. By aligning with high-demand sectors, founders can mitigate the impact of seasonal fluctuations.

The current fundraising environment is more selective than ever. With an increase in down rounds compared to pre-2023 levels, investors are prioritizing startups with strong financial forecasts, clear traction, and strategic preparation. This shift underscores the importance of data-driven planning and execution.

For founders navigating these complexities, expert financial guidance can make all the difference. Phoenix Strategy Group offers fractional CFO services and FP&A expertise to help startups build the financial foundation needed to seize seasonal opportunities. Their proven track record shows how strategic planning can optimize fundraising outcomes, no matter the timing.

Ultimately, the goal isn’t just about choosing the right quarter - it’s about building a resilient business that thrives year-round. Strong financial fundamentals, clear differentiation, and expert support are the pillars of long-term success. While timing can provide a tactical edge, sustainable growth and solid preparation remain the key drivers for achieving fundraising success.

Founders should use seasonal insights as a tool, but never at the expense of building a strong foundation for their business.

FAQs

How do seasonal trends impact seed and Series A funding strategies for startups?

Seasonal trends play a crucial role in shaping the timing and strategy for startups aiming to secure seed or Series A funding. Investor activity tends to ebb and flow throughout the year, with certain times being more active than others. For instance, early in the year and late summer often experience slower deal-making due to holidays and vacation schedules. On the other hand, spring and fall are generally busier periods for funding rounds.

For startups, timing fundraising efforts to align with these patterns can boost their chances of success. Start preparing early, focus on building relationships with investors well ahead of these peak periods, and ensure your pitch stands out during competitive times. By understanding these seasonal shifts, founders can approach investors with a thoughtful and well-timed strategy.

What are the pros and cons of raising funds in Q1 versus Q4 for startups in AI and healthcare?

The timing of fundraising plays a crucial role in a startup's trajectory, particularly in industries like AI and healthcare. Q1 often brings fresh budgets and renewed interest from investors, making it a prime opportunity to present groundbreaking ideas. That said, the competition can be intense, as many startups race to secure funding early in the year.

On the other hand, Q4 might see fewer startups vying for attention, offering a less crowded field. However, investors may be more reserved during this time, as they deal with budget limitations or focus on wrapping up their fiscal year. To maximize your chances, it’s important to sync your fundraising efforts with your company’s milestones and the specific focus areas of investors in your industry.

How can startups time their fundraising efforts to align with seasonal investor trends and secure better terms?

Seasonal trends can have a noticeable impact on the success of fundraising efforts, especially for seed and Series A rounds. Historically, certain times of the year have shown higher investor activity. For instance, the first quarter often sees a surge in interest as budgets are freshly allocated, and the period following the summer months tends to bring renewed momentum to deal-making. On the flip side, activity can slow down during the holiday season or late summer.

Understanding these patterns allows startups to time their outreach and pitches strategically, aligning with periods when investors are more engaged. This timing can increase the likelihood of securing favorable terms and closing deals more efficiently. Partnering with expert advisory services, like those offered by Phoenix Strategy Group, can further help startups fine-tune their fundraising approach and effectively navigate these seasonal shifts.

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