Strategies and Insights on Fundraising
Among founders that have prior experience with raising venture capital, a common strategy is to identify and pursue investors that have historically followed their existing investors. As an example, a company that raises capital from YCombinator may pursue investors that most frequently invest in YC companies.
The Venture Ladder
Venture investors typically specialise in one or two very specific stages. Investors that specialise at the Seed stage tend to focus on specific types of deal flow -- they often lean on a given set of accelerators that fund companies at Preseed and that they believe have the right approach toward identifying promising companies. Similarly, investors specialising at Series A tend to focus on specific types of deal flow, targeting a specific set of Seed-stage firms that refer their best investments.
Given the above context, it can be particularly useful for founders to:
- Identify their existing_investors that have a strong brand and/or are generally well-known
- Determine the set of investors that have historically frequently followed their existing_investors
Let's look at a few specific examples.
Techstars
As one of the most active investors, Techstars has developed an incredible brand around being one of the most founder-friendly early-stage investors. With detailed programs to support founders, and with an operating model that has a strong presence in numerous geographies, Techstars has built an ecosystem of investors that love investing in companies backed by Techstars. Using Metal, we set out to identify the set of investors that meet the following criteria:
- Investor type must be "VC" or "Corporate VC"
- Specialise at Seed (I.e. at least "15%+" of total investments at Seed
- Have been reasonably active (I.e. at least "3" investments in the past 12 months)
- Have made 10%+ of their total investments following Techstars
The above search yielded 200+ VC firms that meet the above criteria. In addition, when we adapt the search to "Angels", we identified 250+ angels that love following Techstars.
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First Round Capital
Over the years, First Round has established a terrific brand as one of the top VC firms specialising at the Seed stage. The First Round Review is well known for publishing world-class content on various aspects of building high-growth startups. Using Metal, we set out to identify the set of investors that meet the following criteria:
- Investor type must be "VC" or "Corporate VC"
- Specialise at Series A (I.e. at least "10%+" of total investments at Series A)
- Have been reasonably active (I.e. at least "3" investments in the past 12 months)
- Have made 5%+ of their total investments following First Round
The above search yielded 76 VC firms that meet the above criteria. In addition, when we adapt the search to "Angels", we identified 140+ angels that love following First Round.
By adjusting the parameters, founders can identify specific investors for their subsequent round that love following their existing investors. Pursuing such investors is a terrific strategy for founders to focus their efforts on the "highest" probability financing partners.
At Metal, one of our focus areas has been in-depth research on the investing behaviours of venture investors. Across historical data, one prominent trend is that venture investors love to invest in patterns that they believe will deliver returns. For instance, investors that invest in HR Tech once or twice are significantly more likely to make additional investments in that particular area (relative to investors that haven't done any prior work in the space). This unfolds an important truth about venture investments:
When Investor X makes an investment in a specific vertical, that event serves as evidence that the investor views that space favourably. Put differently, investors that have made multiple investments in HR Tech are more likely than others to make further investments in that space.
Understanding Opportunity Spaces
In order to identify similar companies, one layer of complexity lies in understanding what exactly qualifies as "similar". As an example, a company that builds a hyperlocal marketplace for senior care is actually strikingly similar to one that develops a hyperlocal marketplace for gardeners.
Traditional sectors would categorize the former within healthcare and the latter within home care. In reality, however, both companies have a super similar business model (built around enabling users to earn money by delivering basic services within their neighbourhood).
In the long term, with the right quantum of training data, AI models will get really good at identifying similar companies. Alongside similarity in business models, another important layer of complexity involves the broader investing thesis that a given company falls under.
Collectively, similarity in business models and overlapping investing thesis come together to form what we refer to as an"opportunity space". Investors that have historically invested in the same opportunity space as a given company are ultimately the "most likely" financing partners.
Metal's Investor Ranking Models
At the very core of Metal's technology lies our investor ranking model. With the right quantum of training data, our model has the ability to identify the "most likely" investors for a given Company -- the model uses data points derived from on a unique combination of industry and user generated information. An early version of our ranking model is already live on the platform, enabling users to identify investors that are a particularly strong fit for their company and round.
Ultimately, we believe that the overall venture industry will benefit from AI models that can identify which investors are most likely to lean in on specific types of companies and/or rounds.
Founders that zoom in on the right type of "most likely" investors are often able to close rounds with a higher level of certainty than those adopting a "spray-and-pray" approach. All else being equal, pursuing high-relevance investors reduces the time it takes to close, improves overall odds of a successful close, and eliminates the need to talk to a very large number of investors.
After observing 1,000+ raises across numerous sectors, we see two different approaches toward fundraising, resulting in very different types of experiences for founders.
The first approach is what we refer to as "spray and pray" -- a state in which founders try to access and pursue any investor(s) that they can easily access (with some high-level directional focus on investors that are "early stage" or "late stage"). With this approach, founders don't have a clearly defined qualification criteria, and are generally relying on hearsay.
The second approach is what we refer to as "high precision" -- a state in which founders first form a specific qualification criteria and then use data to identify investors that meet that. With this approach, founders are laser focused on identifying investors that are the “most likely” partners for their Company.
With fundraising, there is no one approach that fits all companies. There are, however, strong reasons for why banking on empirical precision to identify the "most likely" investors enhances the odds of a successful raise. The below post draws on contrasting patterns that we hear about from founders in each category.
Can’t get intros vs. forward motion
In the spray and pray category, founders often experience very low conversion rates with introduction requests. This often gets attributed to the absence of a strong network, which, in turn, prompts founders to move toward cold emails.
In the high precision camp, founders see a clear forward motion -- they are able to access investors (with at least 5-25% of their intro requests converting into actual introductions). These founders are able to get some form of clear feedback from investors and are able to move forward with key decisions on their strategy.
Our perspective is that landing intros with investors is particularly hard when targeting firms that don’t really invest in the type of opportunity that your Company offers.
Low vs high funnel conversion rates
In the spray and pray category, founders report low conversion rates at every step of the fundraising pipeline. From investors that are identified to ones that take first calls, conversion rates remain low. From ones that take first calls to those that move to due diligence, the conversion is again low. This sometimes leads to a misdiagnosis, often around the business not being ready for the next raise.
In the high precision camp, founders report high conversion rates. In any sales process, a super targeted approach yields high(er) conversion. This is particularly true for fundraising as investors that have a track record of investing in the sort of opportunity that your Company brings have a much higher likelihood of wanting to engage.
Stalled process vs high-velocity
For investors, a key part of the job is to learn about different industries and business models to sharpen their thinking on what the future holds. As such, investors are generally open to taking calls, and are not always decisive or upfront about their level of excitement. Founders in the spray and pray category often experience a “stalled” process, which is neither moving forward nor ending in a clear pass.
In contrast, founders in the high precision camp experience a clear velocity in the process. We believe this is often because the investors they engage with are genuinely interested in the business, are familiar with the space, and are therefore able to arrive at a PoV in a reasonable time-frame.
A small subset of all VC firms tend to specialize in sectors. Such firms typically follow a clearly defined thesis on trends that will lead to growth in a given sector. In the early 2010s, one such trend was technology-driven marketplaces – this created many sector-focused VCs that specialized in marketplaces.
1. Sector Specialists as Domain Experts
Founders often report having high-context conversations with sector-focused VCs. These firms are often deeply knowledgeable about a given space and have the ability to bring domain expertise to investment discussions.
In a given fundraising process, founders should add at least a few sector-focused VCs that truly understand their sector. This is best achieved by pulling together a list of VC firms that have made 20%+ of their portfolio investments in your specific sector.
In some sectors (such as biotechnology), specialist investors are more important than in others. In most sectors, founders can have high-context conversations to sharpen their thinking by engaging with investors that truly and deeply understand their sector.
2. Geo Specialists in Developing Countries
Similar to sector VCs, geo specialists tend to bring deep expertise around a given geography. For founders in developing countries, such VCs have already overcome the biggest obstacle of being open to investing in their specific country. In such geographies, geo specialists can be an integral part of the fundraising process.
This is best achieved by pulling together a list of VC firms that have made 5%+ of their portfolio investments in your specific continent (along with at least a few investments in your country). Identifying VCs that have made at least “1” investment in a set of similar countries can be a great way to identify firms that may not have invested in your specific country, but are likely to be “open” to doing so.
The pre-seed fundraising landscape has fundamentally shifted. What worked in 2021's frothy market won't cut it in 2025's more disciplined environment. Today's pre-seed founders need a data-driven approach to identify the "most likely" investors—those who actually specialize in their stage, sector, and geography rather than just claiming to be "early-stage friendly." (Metal)
The numbers tell the story: while pre-seed rounds have become the second most common type of venture financing globally, the total number of investors specializing at pre-seed is about one-third that of Series A. (Metal) This concentration means founders can't afford to spray and pray—they need surgical precision in their targeting.
This guide will walk you through building a systematic, data-backed investor target list that maximizes your conversion rates at every step of the fundraising funnel. We'll cover everything from initial prospect identification to advanced filtering techniques, using real market data and proven CRM workflows.
Understanding the 2025 Pre-Seed Landscape
The Current Market Reality
Pre-seed funding has evolved from a rare occurrence to representing over 20% of all venture rounds globally. (Metal) However, this growth comes with increased competition and higher standards.
According to recent market analysis, accelerators dominate the pre-seed space, accounting for approximately 45% of all pre-seed investments. (Metal) Y Combinator, for instance, typically invests $125K for 7% equity, followed by another $375K in subsequent rounds. (Who Is Investing @ Pre-Seed?)
The shift in funding strategy is notable: funds that previously invested in both pre-seed and seed rounds are now leaning more heavily toward seed-stage investments. (Who Is Investing @ Pre-Seed?) This means the pool of true pre-seed specialists has become more concentrated but also more predictable for founders who know how to identify them.
Traction Expectations in 2025
The bar for pre-seed funding has risen significantly. While accelerators may still invest in companies without revenue, most venture investors now expect some form of market validation or early prototype. (Metal)
For B2B SaaS companies, this typically means:
• A small set of engaged freemium users or paying customers
• Clear evidence of product-market fit signals
• Demonstrable demand validation through customer feedback or pre-orders
The key insight: investors are betting primarily on the team, market opportunity, and evidence of latent demand rather than just the idea. (Metal)
Step 1: Define Your Investor Criteria Framework
The Six Core Principles for Investor Identification
Before diving into databases and spreadsheets, you need a clear framework for what constitutes a "most likely" investor. Based on empirical analysis of successful pre-seed rounds, there are six core principles that should guide your targeting: (Metal)
1. Stage Specialists vs. Stage Tourists
The most critical distinction in pre-seed fundraising is identifying true stage specialists versus stage tourists. Stage specialists are investors who consistently invest at pre-seed, while stage tourists only participate opportunistically in outlier deals. (Metal)
To identify stage specialists, filter for investors who have made at least 25% of their total investments at the pre-seed stage. This data-driven approach eliminates the guesswork and ensures you're targeting investors who understand pre-seed dynamics.
2. Sector Concentration vs. Sector Familiarity
At pre-seed, most investors tend to be sector agnostic due to the experimental nature of early-stage investing. (Metal) However, you should still distinguish between:
• Sector Familiar: Investors who have made a minimum number of investments in your sector
• Sector Concentrated: Investors who have made a minimum percentage of investments in your sector
For example, if you're building in healthcare, look for investors like Khosla Ventures, which has concentrated 27% of all investments in healthcare, with specific focus areas in drug discovery (24%) and therapeutics (29%). (Metal)
3. Geographic Relevance
Avoid being either overly restrictive (only local investors) or too liberal (global spray-and-pray). Instead, identify investors who are "geographically relevant" based on their investment patterns. (Metal)
For US founders, target investors who have made a healthy percentage of investments in North America, including European and Asian investors who actively invest in US companies. For founders in developing markets, look for investors with at least 3 investments in similar geographies.
4. Fund Size Alignment
Most investors maintain check sizes of roughly 1-2% of their total fund size. (Metal) If you're raising $1-2M (typical pre-seed range), target investors with fund sizes of $50-200M who can write meaningful $100-300K checks.
5. Active Deployment Status
Only about 10% of all venture funds are actively deploying capital at any given time. (Metal) Filter for investors who have made at least one investment in the past 3-6 months to ensure they're actively writing checks.
6. Lead Capability
Early in your fundraising process, focus on investors with a history of leading rounds. Look for investors where at least 30-40% of their investments involve leading the round rather than following. (Metal)
Step 2: Source Your Initial Prospect Universe
Public Database Starting Points
Begin with these reliable data sources to build your initial prospect list:
Primary Sources:
• Crunchbase Pro: Comprehensive investor database with filtering capabilities
• PitchBook: Professional-grade venture data (if accessible)
• AngelList: Strong coverage of early-stage investors and syndicates
• Carta's investor directory: Focus on active US investors
Secondary Sources:
• VC firm websites and portfolio pages
• Accelerator alumni networks
• Industry-specific investor lists
• LinkedIn Sales Navigator for investor discovery
Initial Filtering Criteria
Start broad, then narrow down. Your initial filters should capture:
Filter CategoryCriteriaStage FocusPre-seed specialist (>25% of investments)Investment ActivityActive in last 6 monthsFund Size$50M - $200M for $1-2M roundsGeographic FocusRelevant to your locationSector ExposureSome familiarity with your space
This should yield 200-500 initial prospects depending on your sector and geography.
Step 3: Enrich and Filter Using Advanced Data
Leveraging Metal's 20+ Filter System
Once you have your initial prospect universe, it's time to apply sophisticated filtering to identify the highest-probability targets. Metal's platform provides over 20 granular filters that can significantly improve your targeting precision. (Metal)
Key Enrichment Data Points
Investment Pattern Analysis:
• Average check size and range
• Typical round participation (lead vs. follow)
• Investment frequency and timing
• Portfolio company stage progression
Metal's network expansion capabilities help identify warm introduction paths through your existing connections. (
Use Metal's advanced search to identify portfolio founders who meet two key criteria: they recently raised from your target investor (within 2-3 years) and are building products you could see yourself using. (
Propensity Scoring Framework
Develop a simple scoring system to rank your prospects:
Propensity Score = (Stage Fit × 3) + (Sector Fit × 2) + (Geography Fit × 2) + (Network Overlap × 3) + (Recent Activity × 2)
Where each factor is scored 1-5:
- Stage Fit: % of pre-seed investments
- Sector Fit: Familiarity with your sector
- Geography Fit: Investment pattern alignment
- Network Overlap: Strength of mutual connections
- Recent Activity: Investment frequency
This weighted scoring prioritizes the most important factors while ensuring you don't miss high-potential prospects.
Step 4: Organize Your Target List for Maximum Efficiency
CRM Setup and Pipeline Management
Metal's built-in CRM functionality allows you to manage your entire fundraising pipeline from prospect identification through close. (Metal) Here's how to structure your investor pipeline:
Pipeline Stages:
1. Research - Initial prospect identification
2. Qualified - Passed all filtering criteria
3. Warm Intro Pending - Seeking introduction
4. Outreach - Direct contact initiated
5. Meeting Scheduled - First meeting confirmed
6. Due Diligence - Active evaluation process
7. Term Sheet - Negotiating terms
8. Closed - Investment completed
Advanced Data Columns for Tracking
Metal's high-resolution search capabilities enable founders to add advanced data columns to view key trends for qualified investors. (Metal) Essential columns include:
ColumnPurposeLast Investment DateGauge current activity levelAverage Check SizeEnsure round fitLead PercentageIdentify potential round leadersPortfolio OverlapFind sector familiarityMutual ConnectionsPrioritize warm intro pathsResponse RateTrack outreach effectivenessMeeting ConversionMeasure pitch success
Segmentation Strategy
Divide your target list into three tiers:
Tier 1 (25-30 investors): Perfect fit across all criteria
• High propensity scores (12-15)
• Strong warm introduction paths
• Recent investment activity
• Clear sector thesis alignment
Tier 2 (50-75 investors): Good fit with minor gaps
• Medium propensity scores (8-11)
• Some network overlap or direct outreach potential
• Active but less frequent investors
Tier 3 (100+ investors): Broader net for market coverage
• Lower propensity scores (5-7)
• Cold outreach candidates
• Backup options if Tier 1/2 don't convert
Step 5: Execute Your Outreach Strategy
Warm Introduction Prioritization
The venture industry runs on warm introductions, making network leverage critical for pre-seed success. (Metal) Metal's network analysis helps identify the strongest introduction paths by analyzing your LinkedIn and Gmail connections.
Introduction Quality Hierarchy:
1. Portfolio founder introductions - Highest conversion rate
2. Mutual investor connections - Strong credibility signal
3. Industry peer referrals - Good context and relevance
4. Professional network - Moderate effectiveness
5. Cold outreach - Lowest conversion but necessary for coverage
Portfolio Founder Outreach Strategy
Metal enables you to identify portfolio founders who have also raised from your existing investors, creating natural conversation bridges. (Metal) This dual connection significantly increases introduction success rates.
Outreach Template Framework:
Subject: Introduction request - [Mutual Investor] portfolio founder
Hi [Founder Name],
I noticed we're both [Mutual Investor] portfolio companies - they invested in [Your Company] last [timeframe] and I see they backed [Their Company] in [year].
I'm currently raising our pre-seed round and would love a brief introduction to [Target Investor] given your positive experience working with them. Happy to share our deck and keep it brief.
Would you be open to a quick 15-minute call to discuss?
Best,
[Your Name]
Direct Outreach for Pre-Seed
Many pre-seed funds welcome warm emails or have open application processes. (Metal) This makes direct outreach more viable at pre-seed than later stages.
Cold Email Best Practices:
• Lead with traction metrics and social proof
• Reference specific portfolio companies or investment thesis
• Keep initial email under 150 words
• Include clear ask and next steps
• Attach deck as PDF, not link
Step 6: Track and Optimize Your Funnel
Key Metrics to Monitor
Track these conversion metrics to optimize your approach:
MetricBenchmarkOptimization FocusEmail Open Rate40-60%Subject line testingResponse Rate15-25%Message personalizationMeeting Conversion30-50%Pitch deck refinementSecond Meeting Rate40-60%Due diligence preparationTerm Sheet Conversion10-20%Investor fit accuracy
Iterative Refinement Process
Use Metal's CRM tracking to identify patterns in your most successful investor interactions: (Metal)
1. Weekly pipeline reviews - Assess progress and bottlenecks
2. Monthly cohort analysis - Compare Tier 1 vs Tier 2 performance
3. Quarterly strategy adjustment - Refine targeting criteria based on results
A/B Testing Framework
Test different approaches systematically:
• Subject lines - Traction vs. team vs. market angle
• Email length - Brief vs. detailed initial outreach
• Deck versions - Metrics-heavy vs. vision-focused
• Meeting formats - Video call vs. in-person vs. phone
Real-World Success Examples
Case Study: Sub-$500K ARR Pre-Seed Success
Recent successful pre-seed rounds demonstrate that strong targeting can overcome modest traction metrics. Companies have successfully raised $1-2M rounds with annual recurring revenue below $500K by focusing on growth velocity rather than absolute numbers. (List of SaaS Investors & VC Firms for Startups (2025))
Success Factors:
• 100-150% year-over-year growth rates
• Clear path to $1M+ ARR within 12 months
• Strong unit economics and customer retention
• Experienced team with relevant domain expertise
Metal Customer Success Stories
Metal's platform has enabled numerous successful fundraising outcomes through precise investor targeting. Customer stories from companies like Creator Land and Kidsy demonstrate how data-driven investor identification significantly improves fundraising efficiency. (Metal) (Metal)
These success stories highlight common patterns:
• Focused targeting of 50-100 highly qualified investors
• Systematic warm introduction strategies
• Rigorous pipeline management and follow-up
• Continuous refinement based on feedback and results
Your Downloadable Workflow Template
Airtable/CSV Template Structure
Here's a comprehensive template structure for organizing your investor target list:
Core Fields:
• Investor Name
• Fund Name
• Contact Email
• LinkedIn Profile
• Fund Size
• Typical Check Size
• Stage Focus (%)
• Sector Focus
• Geographic Focus
• Last Investment Date
• Lead Percentage
• Portfolio Companies (relevant)
• Mutual Connections
• Introduction Path
• Propensity Score
• Outreach Status
• Response Date
• Meeting Status
• Notes
Calculated Fields:
• Days Since Last Investment
• Network Strength Score
• Sector Fit Score
• Overall Priority Ranking
Integration with Metal's Pipeline View
Metal's CRM integrates seamlessly with external data sources, allowing you to import your target list and leverage the platform's advanced tracking capabilities. (Metal) The integration process involves:
1. Data Import - Upload your CSV/Airtable export
2. Field Mapping - Align your columns with Metal's data structure
3. Enrichment - Leverage Metal's database for additional data points
4. Pipeline Setup - Configure stages and tracking workflows
5. Automation - Set up follow-up reminders and progress tracking
Advanced Strategies for 2025
Leveraging AI-Powered Insights
The fundraising landscape is increasingly data-driven, with platforms like Metal incorporating AI to surface the most relevant investor matches. (Y Combinator) This technology enables founders to identify patterns and opportunities that might not be obvious through manual analysis.
AI-Enhanced Targeting:
• Predictive scoring based on historical success patterns
• Automated identification of emerging investor trends
• Dynamic re-ranking based on market conditions
• Personalized outreach recommendations
Market Timing Considerations
The 2025 pre-seed market reflects a "return to normal" after the ZIRP era excess. (Pre-Seed and Seed Trends: 2024 Breakdown and 2025 Outlook) This normalization creates both challenges and opportunities:
Challenges:
• Higher traction expectations
• More selective investor behavior
• Increased competition for quality deals
Opportunities:
• More predictable investor behavior
• Clearer market signals and feedback
• Better alignment between investor expectations and founder preparation
Sector-Specific Considerations
While pre-seed investors tend to be sector agnostic, certain sectors show stronger investor concentration. SaaS companies benefit from the sector's attractive unit economics and scalability, with investors particularly focused on recurring revenue models and strong retention metrics. (List of SaaS Investors & VC Firms for Startups (2025))
SaaS-Specific Metrics:
• Annual Recurring Revenue (ARR) growth rate
• Net Revenue Retention (NRR)
• Customer Acquisition Cost (CAC) and Lifetime Value (LTV)
• Clear path to profitability
Implementation Timeline and Next Steps
Week 1-2: Foundation Building
• Define your investor criteria framework
• Set up Metal account and complete onboarding
• Integrate LinkedIn and Gmail data sources (Metal)
• Build initial prospect universe from public databases
Week 3-4: Advanced Filtering and Enrichment
• Apply Metal's 20+ filter system to refine targets
• Calculate propensity scores for all prospects
• Identify warm introduction paths through network analysis
• Segment prospects into Tier 1, 2, and 3 categories
Week 5-6: Outreach Preparation
• Craft personalized outreach templates
• Prepare pitch deck and supporting materials
• Set up CRM pipeline and tracking systems
• Begin warm introduction requests
Week 7+: Execution and Optimization
• Launch systematic outreach campaign
• Track conversion metrics and optimize approach
• Conduct investor meetings and follow-up
• Iterate based on feedback and results
Conclusion: The Precision Advantage
Building a laser-focused investor target list isn't just about efficiency—it's about dramatically improving your odds of success in an increasingly competitive pre-seed market. The data is clear: founders who take a systematic, data-driven approach to investor identification see higher conversion rates at every stage of the fundraising funnel. (Metal)
The key insight for 2025 is that precision beats volume. Rather than reaching out to hundreds of investors with a generic pitch, successful founders are identifying 50-100 highly qualified prospects and crafting targeted approaches that demonstrate clear fit and mutual benefit.
Metal's platform provides the data infrastructure and CRM capabilities to execute this strategy effectively, from initial prospect identification through successful close. (Metal) By leveraging the company's 20+ filtering capabilities, network analysis tools, and pipeline management features, founders can build and execute a fundraising strategy that maximizes their chances of securing the right pre-seed partners.
The 2025 pre-seed landscape rewards preparation, precision, and persistence. Founders who invest time in building a systematic investor targeting process will find themselves better positioned to navigate the market's challenges and capitalize on its opportunities. With the right data, tools, and strategy, raising a successful pre-seed round becomes not just possible, but predictable.
Frequently Asked Questions
What makes the 2025 pre-seed fundraising landscape different from previous years?
The 2025 pre-seed market is significantly more disciplined compared to the frothy 2021 environment. Investors now have higher standards for deals closing, and there's been a strategic shift where funds that previously invested in both pre-seed and seed rounds are now leaning more heavily toward seed-stage investments. This means founders need a more targeted, data-driven approach to identify investors who actually specialize in their specific stage, sector, and geography.
How can Metal's platform help founders build better investor target lists?
Metal's AI-powered platform accelerates the research and diligence process by unifying internal and external data to uncover valuable insights. The platform supports advanced filtering techniques including stage and sector filters, helping founders identify the highest-probability investors rather than just those claiming to be "early-stage friendly." Metal's technology reduces the effort needed to collect and parse investor data, making the targeting process more efficient and data-driven.
What key metrics do pre-seed investors focus on in 2025?
Pre-seed investors in 2025 prioritize strong fundamentals and clear growth trajectories. For SaaS companies specifically, they look for robust Annual Recurring Revenue (ARR) growth rates, strong Net Revenue Retention (NRR), healthy Customer Acquisition Cost (CAC) to Lifetime Value (LTV) ratios, and a clear path to profitability. The focus has shifted from growth-at-all-costs to sustainable, metrics-driven businesses with proven market demand.
Which accelerators and investors dominate the pre-seed space currently?
Accelerators like Y Combinator, HF0, NEO, and Sequoia Arc currently dominate the pre-seed funding landscape. Y Combinator typically invests $125K for 7% equity, followed by an additional $375K for the first $375K in subsequent funding rounds. These accelerators have become increasingly selective, focusing on startups with strong execution potential and clear market validation.
What are the biggest risks investors consider in pre-seed rounds?
Pre-seed funding carries significant risks that investors carefully evaluate, including execution risk (can the team actually build and scale the product), demand risk (is there real market need), customer acquisition challenges (can they efficiently acquire and retain customers), and market timing risk (is this the right time for this solution). Successful founders address these concerns proactively in their investor targeting and pitch strategy.
How should founders structure their CRM workflows for investor outreach?
Effective CRM workflows for investor outreach should include systematic data collection, automated follow-up sequences, and performance tracking from first contact to closed deals. Founders should segment investors by stage preference, sector focus, and geographic location, then create personalized outreach campaigns. The key is maintaining consistent communication while tracking engagement metrics to optimize conversion rates throughout the fundraising process.
Sources
1. https://docs.metal.so/content/high-resolution-identification/stage-and-sector-filters
2. https://docs.metal.so/content/network/network-expansion
3. https://docs.metal.so/quickstart
4. https://jamesin.substack.com/p/who-is-investing-pre-seed
5. https://www.highwayventures.com/insights/pre-seed-and-seed-trends-a-2024-breakdown-and-2025-outlook
7. https://www.metal.so/blog/finding-investors
8. https://www.metal.so/blog/overview-of-pre-seed-funding
9. https://www.metal.so/blog/pursuing-investors-in-similar-companies
10. https://www.metal.so/customer-stories/creator-land
11. https://www.metal.so/customer-stories/kidsy
The venture capital landscape has fundamentally shifted in 2025, creating a new reality for early-stage startups seeking funding. With 46% of seed rounds now functioning as bridge rounds and the average time between Series A and Series B extending to 31 months, founders must recalibrate their understanding of venture capital's traditional "rocket-ship" narrative. (Startups Take Longer To Close Rounds, As Funding Cliff Looms) This extended timeline represents a significant departure from historical norms, where the average gap between funding rounds was considerably shorter.
The current funding environment presents both opportunities and challenges that require a more nuanced approach to venture capital strategy. While some venture capital firms have dramatically reduced their investment pace, with firms like Tiger, Index, and Insight among those that have most significantly slowed their investing, others like Y Combinator and Sequoia continue to maintain resilient investment activities. (Here Are The Venture Capital Firms That Are Investing Much Less) Understanding these dynamics is crucial for founders navigating today's funding landscape.
The New Funding Reality: Extended Timelines and Bridge Rounds
Understanding the 2.8-Year Gap Between Series A and B
The most striking change in today's funding environment is the extended timeline between major funding rounds. The time lapse between funding rounds for early-stage startups in 2024 reached 28 months, marking the longest span since 2012. (Startups Take Longer To Close Rounds, As Funding Cliff Looms) This extension has profound implications for startup strategy and cash management.
Historically, the average time lapse between Series A and Series B rounds for U.S. startups was approximately 27 months, rarely extending beyond 38 months. (Many Boom-Era Startups Will Face A Fundraising Cliff In 2025) The current environment has pushed these timelines to their historical limits, creating new challenges for startups that must now plan for longer runway requirements.
This extended timeline affects multiple aspects of startup operations. Companies must now demonstrate sustained growth over longer periods before accessing their next funding round, requiring more disciplined cash management and potentially different growth strategies. The implications extend beyond mere timing - they fundamentally alter how startups should think about their venture capital strategy.
The Rise of Bridge Rounds
The prevalence of bridge rounds has become a defining characteristic of the current funding environment. These interim funding rounds serve as lifelines for companies that need additional capital while working toward their next major milestone. The increase in bridge rounds reflects the reality that many startups are taking longer to achieve the metrics required for their next institutional round.
Bridge rounds often come with different terms and expectations compared to traditional priced rounds. They typically involve existing investors and may include convertible instruments that defer valuation discussions until a future priced round. For founders, understanding when and how to structure bridge rounds has become an essential skill in the current environment.
The Series A Crunch: A Persistent Challenge
Historical Context and Current Reality
The Series A Crunch, also known as the Seedpocalypse, first occurred in 2012 when a surge in seed investments met a relatively stable Series A market, creating a funding squeeze. (The Series A Crunch or the Seedpocalypse of 2024) This phenomenon has returned in 2024, making it challenging for software companies that have achieved the previous era's milestone of $1 million or more in ARR to raise Series A funding.
The current Series A environment is characterized by increased selectivity from investors and higher bars for company performance. The total amount of money available in Series A rounds has dropped by 15% compared to the previous year, down to $5.4 billion. (The 2024 VC Scene: AI Startups Boom While Series A Faces a Crunch) This contraction has created a more competitive environment for startups seeking Series A funding.
Metal's research shows that of all companies that raised Seed rounds in the five-year period from 2015 to 2020, only 45% successfully raised Series A. (Decoding the Dropoff at Series A) This statistic underscores the inherent challenge of progressing from seed to Series A, a challenge that has only intensified in the current environment.
Implications for Startup Strategy
The Series A crunch has several implications for how startups should approach their funding strategy. First, companies need to be more strategic about their seed round sizing and use of capital, ensuring they have sufficient runway to achieve Series A-worthy metrics. Second, the extended timeline between rounds means that startups must plan for longer development cycles and potentially different growth trajectories.
For companies that hit exciting performance milestones, a sizeable drop-off stems from an inability to work capital markets effectively. (Decoding the Dropoff at Series A) This highlights the importance of not just achieving strong metrics, but also developing the sophistication required to navigate the Series A fundraising process.
Advantages of Raising in the Current Environment
Lower Median Dilution
One of the unexpected benefits of the current funding environment is the potential for lower dilution in certain scenarios. With fewer companies successfully raising at inflated valuations, founders who can demonstrate strong metrics may find themselves in a position to negotiate more favorable terms. The reduced competition for quality deals can work in favor of well-performing startups.
The key is understanding how to position your company effectively in this environment. Startups that can demonstrate clear progress toward profitability or strong unit economics may find investors more willing to invest at reasonable valuations, particularly compared to the inflated valuations of the 2021-2022 period.
More Selective Investor Base
The current environment has created a more selective investor base, which can actually benefit high-quality startups. Investors are being more thoughtful about their investments, leading to potentially better partnerships for companies that do secure funding. This selectivity means that investors who do invest are more likely to be committed partners who can provide meaningful support beyond capital.
At any given point in time, 80%+ of all venture investors are in a state of hibernation. (Metal Manifesto) Understanding which investors are actively deploying capital becomes even more critical in the current environment, where the percentage of active investors may be even lower than historical norms.
Opportunity for Strategic Positioning
The current funding slowdown creates opportunities for strategic positioning that weren't available during the frothy markets of 2021-2022. Startups that can demonstrate resilience and adaptability in challenging market conditions may be viewed more favorably by investors who are looking for companies that can weather economic uncertainty.
This environment rewards companies with strong fundamentals over those with just growth metrics. Investors are increasingly focused on path to profitability, unit economics, and sustainable business models - factors that create long-term value for both founders and investors.
Disadvantages and Challenges
Extended Time Under Investor Pressure
The extended timelines between funding rounds mean that startups will spend longer periods under investor scrutiny and pressure to perform. With Series A and Series B rounds taking longer to materialize, companies must maintain investor confidence over extended periods while demonstrating consistent progress toward key milestones.
This extended timeline can create additional stress on founding teams and may require different approaches to investor communication and expectation management. Regular updates and transparent communication become even more critical when investors are committed for longer periods between major funding events.
Reduced Overall Capital Availability
The overall reduction in venture capital deployment means that fewer companies will successfully raise funding at each stage. This creates a more competitive environment where only the strongest performers are likely to secure funding. For many startups, this means either achieving higher performance standards or considering alternative funding sources.
The startup slowdown has been ongoing for two years, leading to a decrease in investments from many venture capital firms. (Here Are The Venture Capital Firms That Are Investing Much Less) This sustained reduction in capital availability means that the current environment is not a temporary blip but a new normal that startups must adapt to.
Higher Performance Bars
Investors have raised their performance expectations across all stages of funding. What might have been sufficient metrics for a Series A in 2021 may no longer meet investor standards in 2025. This means that startups need to achieve higher levels of performance before they can successfully raise their next round.
The most common cause of drop-off between funding rounds is simply company performance, as most companies are unable to achieve the growth metrics that are typically required for the next stage. (Decoding the Dropoff at Series A) In the current environment, these performance bars have only gotten higher.
Smart Timing Tactics for the Current Environment
Identifying Still-Active Funds
One of the most critical skills for founders in the current environment is identifying which funds are still actively deploying capital. Metal's platform enables founders to identify investors that are concentrating investments in a specific stage and have historically been active in their sector. (Metal Search) This data-driven approach becomes even more valuable when the percentage of active investors is lower than historical norms.
Founders should focus on investors that have made at least one investment in the past 3-6 months to ensure they're targeting active funds. It's extremely common for founders to learn after several calls that a fund is "barely active," making only one or two investments each year. (Finding Investors) This discovery often comes too late in the process, wasting valuable time and momentum.
Leveraging Data-Driven Investor Targeting
The current environment makes data-driven investor targeting more important than ever. Metal allows founders to identify investors that lead based on actual historical data, rather than relying on assumptions or outdated information. (Finding Investors) This capability is particularly valuable when the pool of active investors is smaller and competition for their attention is higher.
Founders should focus on investors that have demonstrated consistent activity in their specific stage, sector, and geography. Metal's platform provides multiple ways to sort through historical data on venture investments to identify firms that are most likely to invest in your region and sector. (Metal Intelligence) This targeted approach can significantly improve conversion rates in a challenging funding environment.
Strategic Round Planning
In the current environment, strategic round planning becomes even more critical. Founders need to plan for longer timelines between rounds and ensure they have sufficient runway to achieve the metrics required for their next funding milestone. This may mean raising larger rounds or being more conservative with burn rates.
The extended timelines also mean that founders should start their fundraising process earlier than they might have in previous years. What used to be a 3-6 month fundraising process may now take 6-12 months, requiring earlier preparation and longer lead times.
Sector-Specific Considerations
AI Startups: The Exception to the Rule
While most sectors are experiencing funding challenges, AI startups have seen continued strong investor interest. In the first half of 2024, AI startups received about $9.8 billion from venture capitalists, marking a 25% increase from the previous year. (The 2024 VC Scene: AI Startups Boom While Series A Faces a Crunch) This represents a significant exception to the broader funding slowdown.
Nearly 40% of the funding for AI startups is being invested in projects that aim to make the world more sustainable or revolutionize healthcare. (The 2024 VC Scene: AI Startups Boom While Series A Faces a Crunch) This focus on impactful applications of AI technology suggests that investors are looking for AI companies that can demonstrate clear value propositions and market applications.
Traditional Software and B2B Companies
For traditional software and B2B companies, the funding environment remains challenging. These companies face higher performance bars and longer timelines between funding rounds. However, companies that can demonstrate strong unit economics and clear paths to profitability may still find receptive investors.
Metal's analysis of Series A rounds shows that companies need to demonstrate more sophisticated metrics and business models to successfully raise institutional funding. (An Empirical Overview of Series A) This sophistication requirement has only increased in the current environment.
Practical Recommendations for Founders
Building Resilient Fundraising Strategies
Founders should develop more resilient fundraising strategies that account for the current environment's challenges. This includes building longer runways, developing multiple funding scenarios, and maintaining relationships with potential investors even when not actively fundraising.
The approach to fundraising should be similar to selling an apartment - it requires preparation, market knowledge, and patience. (Metal Manifesto) In the current environment, this patience and preparation become even more critical.
Leveraging Technology and Data
The data revolution in venture capital means that more than 75% of VC deal reviews will be informed using AI and data analytics by 2025. (The data revolution in venture capital) Founders should leverage this trend by using data-driven platforms like Metal to identify the most likely investors for their specific situation.
Metal's platform brings efficiency and intelligence to the fundraising process, enabling founders to avoid some of the biggest pitfalls in fundraising. (Metal Manifesto) This efficiency becomes even more valuable when the margin for error is smaller in a challenging funding environment.
Managing Investor Relationships
In an environment where funding rounds take longer and investors are more selective, managing investor relationships becomes crucial. Founders should maintain regular communication with potential investors, provide consistent updates on progress, and build relationships before they need funding.
The typical fundraising funnel still applies: targeting around 200 investors, expecting one-third to not respond, one-third to pass without taking a call, and one-third to agree to a first meeting. (Metal Manifesto) However, in the current environment, these conversion rates may be lower, requiring founders to cast a wider net or be more targeted in their approach.
Looking Ahead: Preparing for the Future
The Funding Cliff Risk
Many boom-era startups will face a fundraising cliff in 2025, particularly those that raised large rounds in 2021-2022 and are now approaching the end of their runway. (Many Boom-Era Startups Will Face A Fundraising Cliff In 2025) If a startup goes four or more years without raising a new round, the likelihood of it ever raising subsequent venture funding decreases significantly.
Founders should assess their runway carefully and begin fundraising processes earlier than they might have in previous years. The extended timelines mean that what used to be adequate runway may no longer be sufficient.
Building for Sustainability
The current environment rewards companies that can demonstrate sustainability and resilience. This means focusing on unit economics, path to profitability, and business model strength rather than just growth metrics. Investors are increasingly looking for companies that can weather economic uncertainty and build lasting value.
Companies that can demonstrate these characteristics will be better positioned to succeed in the current environment and will likely find more receptive investors when they do fundraise.
Conclusion
The 2025 funding slowdown has fundamentally altered the venture capital landscape for early-stage startups. While the challenges are real - including extended timelines, reduced capital availability, and higher performance bars - opportunities exist for well-prepared founders who understand the new dynamics.
The key to success in this environment is taking a data-driven approach to fundraising, focusing on the most likely investors, and building resilient business models that can weather extended funding cycles. Metal provides the tools that founders need to put the odds in their favor in this challenging environment. (Metal Manifesto)
Founders who adapt their strategies to account for the new realities - longer timelines, more selective investors, and higher performance requirements - will be better positioned to successfully raise venture capital and build lasting companies. The venture capital model remains viable, but it requires a more sophisticated and strategic approach than in previous years.
In this environment, every "No" should be viewed as a stepping stone toward landing that term sheet. (Metal Manifesto) Success requires persistence, preparation, and the right tools to navigate an increasingly complex funding landscape.
Frequently Asked Questions
How has the 2025 funding slowdown changed the timeline between funding rounds?
The funding slowdown has significantly extended the time between rounds, with the average gap between Series A and Series B reaching 31 months in 2024, tied with 2023 as the longest span. This represents a substantial increase from the historical average of 27 months, creating what experts call a "funding cliff" for many startups that raised during the boom era.
What percentage of seed rounds are now functioning as bridge rounds in 2025?
According to current market data, 46% of seed rounds are now functioning as bridge rounds, indicating that nearly half of early-stage companies are raising capital to extend their runway rather than fuel aggressive growth. This shift reflects the challenging fundraising environment where startups need additional time to reach the metrics required for their next funding milestone.
What is the Series A Crunch and how does it affect early-stage startups?
The Series A Crunch, also known as the "Seedpocalypse," occurs when a surge in seed investments meets a relatively stable or declining Series A market, creating a funding squeeze. In 2024, this phenomenon returned with Series A funding dropping 15% to $5.4 billion, making it challenging even for software companies with $1M+ ARR to secure Series A funding, forcing many to seek bridge rounds instead.
How are AI startups performing differently in the current funding environment?
AI startups are bucking the overall funding trend, receiving approximately $9.8 billion in the first half of 2024, marking a 25% increase from the previous year. Nearly 40% of AI startup funding is directed toward projects focused on sustainability or healthcare innovation, demonstrating that investors remain enthusiastic about AI despite the broader market slowdown.
What does the Series A dropoff data reveal about startup funding success rates?
According to Metal's analysis of Series A funding patterns, there's a significant dropoff between seed and Series A rounds, with many startups struggling to meet the elevated metrics required for institutional funding. The data shows that startups going four or more years without raising a new round see their likelihood of securing subsequent venture funding decrease significantly, highlighting the importance of strategic planning during extended funding cycles.
Which venture capital firms have remained resilient during the funding slowdown?
While firms like Tiger Global, Index Ventures, and Insight Partners have dramatically slowed their investing pace, Y Combinator and Sequoia Capital top the list of resilient venture capital firms that have maintained their investment activity. This disparity shows how the funding slowdown has affected different types of investors differently, with some traditional VCs maintaining discipline while others have pulled back significantly.
Sources
1. https://news.crunchbase.com/venture/boom-era-startups-funding-cliff-2025/
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4. https://www.linkedin.com/pulse/series-crunch-seedpocalypse-2024-tomasz-tunguz-e6fmc
5. https://www.metal.so/blog/an-empirical-overview-of-series-a
6. https://www.metal.so/blog/decoding-the-dropoff-at-series-a
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8. https://www.metal.so/intelligence
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11. https://www.newcomer.co/p/here-are-the-venture-capital-firms
12. https://www.signatureblock.co/articles/the-data-revolution-in-venture-capital
