What Carta's 2025 Pre-Seed Data Actually Means for Your Round

Every year, Carta publishes data from thousands of real startup fundraises on their platform. Their State of Pre-Seed: 2025 in Review is one of the best snapshots of what's actually happening at the earliest stages of venture funding — not what Twitter thinks is happening, but what the cap tables say.

We dug through the report (and the full version with 28 additional charts) so you don't have to. Here's what matters if you're raising right now.

---

SAFEs Won. The Debate Is Over.

92% of pre-seed rounds in Q3 2025 used SAFEs. Convertible notes are functionally dead at this stage.

If your lawyer is still defaulting to convertible notes for a pre-seed raise, that's a yellow flag. SAFEs are simpler, faster, and what investors expect. The most common structure: a post-money SAFE with a valuation cap only (no discount). If you're not familiar with the differences, our breakdown of SAFEs vs. convertible notes covers the mechanics in detail — including when a note still makes sense.

What this means for you: Don't overcomplicate your first round. A clean post-money SAFE with a cap is the market standard. If someone is pushing you toward a convertible note with interest rates and maturity dates, ask why — and whether they've actually done a pre-seed deal recently.

The "Standard" Discount Is 20%

When SAFEs do include a discount, it's 20% in 63% of cases. This is so standardized it's barely worth negotiating. Investors expect it, founders accept it, everyone moves on.

If you're offering MFN SAFEs without caps to early believers, the 20% discount on conversion is the norm when you add a cap later. And if an investor asks for a 30%+ discount, they're reaching — you now have data to push back.

Fewer Big Pre-Seed Rounds, Not Fewer Rounds

Here's the nuance most people miss: pre-seed deal count isn't collapsing — large pre-seed rounds are. Q1 2025 had 3,400 rounds under $1M (down only slightly from 3,800 a year earlier), but rounds over $1M dropped from 2,900 to just 1,700.

Investors are still writing checks at pre-seed, but they're being more disciplined about size. The $2–3M "pre-seed" rounds common in 2021–2022 are fading.

What this means for you: Calibrate your raise. If you're targeting $500K–$1M, the market is there. If you're trying to raise $2M+ and calling it "pre-seed," you're swimming upstream. Either tighten the raise or be prepared to call it a seed and price it accordingly.

Valuation Caps Are Rising for Small Rounds

For SAFE rounds under $250K, the median valuation cap hit $7.5M in Q2 2025, up from $6.5M the prior quarter. Larger rounds carry higher caps, naturally, but even at the smallest check sizes, founders are getting better terms than a year ago.

Don't anchor too low. If you're raising a small friends-and-family round, a $6–8M cap is defensible with the data behind you. And if you're raising $1M+, median caps scale up accordingly — know the benchmarks before you set your terms.

Dilution Varies More Than You Think

For founders raising $1M–$1.9M via SAFEs, the median expected dilution is 15.6%. At $5M+, it jumps to 23.7%. That's a massive range, and most founders don't think about it until they're staring at a pro forma cap table wondering where their ownership went.

If you're stacking multiple SAFEs at different caps, the dilution math gets even more complex — and the hit falls entirely on the founders. Our deep dive on stacking post-money SAFEs walks through exactly how this works.

What this means for you: Model your dilution before you set your cap and raise target. Every dollar you raise at pre-seed has a cost in ownership. A good startup lawyer will walk you through a dilution waterfall so you understand exactly what you're giving up — not just at this round, but through Series A and beyond.

AI Is Eating Pre-Seed Capital Too

The Carta data shows AI capturing an increasing share of capital across all stages — 41.7% of all seed capital in 2025 went to AI-focused companies, with AI software startups commanding median valuations of ~$19M vs. $15M for the broader market.

Whether you're building an AI company or not, this affects your raise. If you're in AI, you're competing for attention in the most crowded category. If you're not, you need to clearly articulate why your market is compelling without the AI tailwind. Don't slap "AI" on your deck if it's not core — investors see through it.

The Bottom Line

The pre-seed market in 2025 isn't broken — it's more disciplined. SAFEs are standard. Caps are reasonable. Dilution is manageable if you plan for it. The founders who struggle are the ones who either don't know the benchmarks or don't have advisors who do.

If you're raising a pre-seed round and want to make sure your terms are market-standard and your docs don't slow you down, we can help.

---

Data sourced from Carta's State of Pre-Seed: 2025 in Review and the full report.