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Welcome to another Data Driven VC “Insights” episode where we cover the most interesting research & reports about startups and VC from the past week.
State of Funding Round Dilution
In one of his recent posts, Peter Walker analyzes dilution data from recent US venture rounds to challenge the idea that giving up 30% at seed is normal. Using Carta data, he shows how dilution has trended lower across stages, with notable differences between software and deep tech.
3,112 Priced Rounds and Under 10% Above 30%: The analysis covers 3,112 primary priced rounds raised by US startups, excluding bridges and extensions. Fewer than 10% of software seed rounds in 2025 involved founders selling 30% or more of the company.
Seed to Series B Medians: 20% to 14%: Median dilution at seed sits at 20% for software and 21% for deep tech, then drops to 18% and 22% at Series A. By Series B, medians decline further to 14% in software and 16% in deep tech.
Only 3% With Liq Prefs Over 1x: Walker notes that aggressive terms are not replacing headline dilution. Just 3% of Seed and Series A deals in 2025 included liquidation preferences above 1x, suggesting market standards have tightened rather than shifted risk elsewhere.
✈️ KEY TAKEAWAYS
The data suggests heavy dilution is increasingly an outlier rather than the norm, especially in software. While founders may still need to accept tough terms in constrained situations, citing “the market” is less credible when median dilution is trending down and aggressive structures are being priced out.
Why Capital Recycling Quietly Drives Better LP Outcomes
John Rikhtegar explores how capital recycling can significantly improve net returns for LPs without changing a fund’s headline gross multiple. Using historical examples and industry data, the article argues that disciplined fund management deserves more focus in venture performance discussions.
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