💥Time to First Hire, CEO Refresh Grants, Picking the Right Seed Investor, Collapsing Valuation Multiples & More...
Digesting Insights From the Data
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Decoding Value-Add in Venture Capital
Dealroom’s latest report on investor value add delves into the tangible metrics that define value-add among VC investors, focusing on their role in nurturing startups from seed to success. The right investor choice can have an astounding effect, with outcomes following a long-tailed distribution—where a select few investors dramatically outperform the rest in driving startup success.
Seed to Series A Conversion Rates: Top 5% of investors achieve a 63% conversion rate from seed to Series A, with some exceeding 75%. Startups backed by these investors are 4.5 times more likely to progress compared to those supported by bottom-quartile investors.
Quality of Follow-On Capital: Leading investors facilitate follow-on funding from top-tier Series A+ investors, enhancing startups’ growth trajectories.
Quantity of Follow-On Capital: The report also measures the total follow-on capital raised per company, reflecting investors’ ability to secure substantial funding in subsequent rounds.
✈️ KEY TAKEAWAYS
The report underscores significant disparities among VC investors in guiding startups from seed to Series A, highlighting the impact of investor quality on startup success. Much like with the startups they invest in, it is the few top percent of investors who generate most of the value.
Startup Founders Are Hiring Later Than Ever
Startups are delaying their first hires longer than at any point in the last five years, according to new data from Carta. The median time from incorporation to hiring a first employee has stretched significantly, with founders relying more on lean operations before expanding their teams.
Time to First Hire: In 2019, startups took a median of 214 days to make their first hire. By 2024, that number had jumped 32% to 284 days.
Trends in Early Team Growth: The pattern holds for the second and third hires, with companies waiting significantly longer to expand beyond the founding team. Hiring surged in 2021 and 2022 but has since slowed.
Reasons for the Shift: Tighter funding, increased AI-powered efficiency, and a growing preference for ultra-lean teams are all contributing to the trend. Some founders may also be struggling to find the perfect first hire.
✈️ KEY TAKEAWAYS
Hiring timelines are lengthening as founders prioritize capital efficiency and leverage new tools and AI advances to delay early team expansion.