Series A valuations in 2025: what founders need to know

Understanding startup valuations is invaluable when you’re scaling your operation. Not only is it necessary for informed financial planning, but it also helps you negotiate intelligently with potential investors.

If your startup is preparing for a Series A round, here's what you should know about Series A valuations to position yourself for success in 2025, including how they’re calculated, what constitutes a good amount, and what Series A investors look for.

What is a good Series A valuation amount?

According to the most recent Carta data, the median pre-money Series A valuation was $45M for primary rounds and $43.6M for bridge rounds in Q3 2024. Over the past two quarters, primary rounds were up by 13%, while bridge rounds were down 20%.

These figures may seem like useful reference points, but they only tell you so much. In practice, what constitutes a good Series A valuation amount can vary significantly depending on several factors.

Perhaps most notably, valuations often fluctuate over time due to changes in market trends, investor outlooks, and broader economic conditions, as evidenced below:

‍

Industry dynamics also play a major role, so universal metrics can be misleading. As recently as Q2 2023, the median Series A pre-money valuation reached $46.7M for consumer startups while dropping to $31.5M for fintech firms.

Ultimately, Series A valuations fall within a broad range. They often land between $25M and $50M, but there are exceptions, so don’t let benchmarks limit your thinking.

How to calculate Series A valuations

Series A companies should already have a strong level of traction, including several million dollars in annual recurring revenue (ARR). As a result, Series A valuations tend to rely more heavily on concrete metrics than earlier stages, like pre-seed valuations.

For example, some common Series A startup valuation methods include:

• Revenue multiples: Prospective investors often value Series A companies using a multiple of their ARR. Multiples are often between 3x and 10x, but it also depends on factors like your industry, market conditions, and growth rate.
• Discounted cash flow (DCF): DCF analysis involves forecasting your startup’s cash flows and discounting them to a present value using an expected rate or return. Though popular, its accuracy is questionable due to the inherent uncertainty in both variables.
• Comparable company analysis: You may be able to arrive at a reasonable valuation by looking at recent valuations of similar Series A startups and adjusting for differences in key metrics. However, access to comparable data can be challenging to secure.

In practice, investors often combine multiple valuation methods to arrive at a more accurate estimate of your company’s worth.

How does Series A funding work?

Series A funding is the first priced round and represents a significant milestone in your startup’s development. 

It marks the moment you shift your focus from gaining traction to scaling aggressively, which can continue with Series B, Series C, Series D, and even Series E funding.

As a result, startups generally use their Series A investment for things like:

• Hiring top talent in critical departments
• Doubling down on marketing and sales
• Enhancing product or service development
• Establishing operational infrastructure

Series A financing traditionally comes from venture capital (VC) and private equity (PE) firms, though these institutional investors often specialize in working with startups at specific stages of development.

You can expect Series A rounds to generate between $2M and $20M, which is a broad range. Like with Series A valuations, the cash raised depends on factors like industry dynamics, market trends, VC investor outlooks, and your performance metrics.

As a result, the average funding amount raised in a Series A round also fluctuates over time. For example, it was roughly $12M in Q3 2024, but below you can see evidence of how much it’s differed over the last four years:

‍

What investors are looking for in a Series A company

By the time your startup reaches its Series A round, high growth potential is no longer enough to secure financing. 

That might have been sufficient at the pre-seed and seed stages, but institutional investors bet millions of dollars, and expectations have risen since the funding boom in 2021.

You can expect a Series A investor to look for traction, scalability, and a clear path to growth before they consider working with you. For example, here are some ways they may assess this:

• Proven traction: Most Series A companies have achieved significant revenue milestones. Typically, that means at least $2M to $5M ARR.
• Revenue growth rate: Investors want to see that Series A companies are expanding rapidly and may look for at least 25% month-over-month growth.
• Market opportunity: Your addressable market should support a venture-scale outcome. There’s no universally accepted gauge, but some look for the potential to reach $100M ARR or a $1B or higher valuation within ten years. 

In addition to these metric-based considerations, you should be able to demonstrate that your leadership team is well established, with key positions filled in the most critical areas of your business.

Typical Series A funding round structure

While pre-seed and seed rounds are primarily raised using Simple Agreement for Future Equity (SAFE) and convertible notes, Series A rounds are generally the first round of traditional equity funding.

In other words, Series A investors generally buy shares of stock in your business at a clear price, which is why Series A is considered the first “priced round.” Subsequently, the investors become part owners in your company.

As a result, raising a Series A round typically involves negotiating:

• Valuation amount and share price
• Liquidation preference
• Board seats
• Pro-rata rights for future rounds
• Anti-dilution protections

While expectations vary, Series A investors generally require at least 15% of your company, with some taking as much as 30%. In addition, they typically demand preferred shares, granting them preference over common stock owners in liquidation.

Series A deal structuring may be complicated by any convertible notes you issued to raise money in your earlier stages since they typically convert into shares of preferred stock at your first priced round.

Consulting a financial expert is always a good idea when fundraising, but it’s especially beneficial during the pivotal Series A round.

Pre-seed vs Series A funding

Pre-seed funding occurs at the earliest stage of a startup’s development, while Series A funding is the first priced round. Here are the most significant differences between them:

• Cash raised: Pre-seed rounds typically raise under $1M, with a significant percentage coming in under $250K. Meanwhile, the average Series A round often fluctuates between $10M and $20M.
• Structure: The majority of pre-seed rounds use SAFEs, which eventually convert to preferred shares based on a valuation cap or discount rate. Meanwhile, Series A rounds involve the direct sale of preferred stock.
• Purpose: Founders typically use pre-seed funds to begin establishing product market fit, but Series A funds generally go toward scaling a business model that’s already gained traction.
• Investors: Pre-seed investors are often angel investors or early-stage funds making quick decisions. In contrast, Series A investors are generally institutional firms with thorough due diligence processes.

You can learn more about the differences between fundraising rounds in our other articles, Pre-Seed vs. Seed Funding and Series B Valuations.

How to prepare your financials for fundraising

Financial preparation is essential for successful fundraising, no matter your stage of development. The level of due diligence investors conduct varies between fundraising rounds, but here are some steps you should always consider:

• Outline a strategic business plan: Investors expect you to have a plan for utilizing their capital. Consider allocating it into different categories, like product development, hiring initiatives, and marketing campaigns.
• Build financial management systems: You should have efficient bookkeeping, GAAP-friendly accounting, and effective tax compliance systems in place as soon as possible, but especially before you raise your Series A round.
• Financial reports and projections: Make sure you have appropriate financial documents prepared for investors, such as financial statements, capitalization tables, budgets, key performance metrics, and financial projections.
• Support for your startup valuation: Research and apply suitable valuation methods to your business. Having your own estimates helps promote productive discussions about company value during term sheet negotiations.

Remember, pitching is about displaying your business acumen and leadership capabilities as much as your financial performance. Investors want to know you understand your company’s economics and can think strategically about growth.

Use Zeni to prepare for your next fundraising

Fundraising can be one of the most demanding aspects of scaling your startup, especially when you’re trying to complete your first priced round. Fortunately, Zeni’s comprehensive financial management platform can help lighten the load.

In addition to our AI-enhanced bookkeeping and startup tax accounting, we offer fractional CFO advisory services that can help you navigate any challenge you face while fundraising, whether that’s cash flow forecasting or negotiating with a VC firm.

Schedule a demo today to see how Zeni makes scaling easier.