If 2023 and 2024 were defined by correction and caution, 2025 is shaping up to be the year of concentration. 50% of all the venture capital raised in 2025 went to 1% of the companies… and as you may have guessed, AI startups attracted most of that funding.
Based on the State of Seed Stage 2025 report by Carta, along with insights from a16z’s Speedrun, the early-stage landscape has fundamentally shifted. While cash is flowing again, reaching the highest amount raised since 2022, it is finding its way into fewer hands.
For founders and investors alike, the “standard” rules of the seed game are being rewritten, driven largely by an unprecedented distortion at the top of the market caused by Generative AI companies, across all stages.
I thought it’s worth diving in to some of the findings and also, what this means for Israeli founders…
1. The Death of the “Average” Seed Round
We are currently witnessing a bifurcation of the seed market. On one side, we have the “Mega-Seeds”—nine-figure rounds for pre-revenue AI companies that resemble growth equity checks. For example, Mira Murati’s Thinking Machines Lab recently raised a record-breaking $2 billion seed round.
On the other side is the broader market. For the majority of startups, the median cash raised hovers around $3.6 million. While total cash is up, the number of rounds is down, meaning investors are writing bigger checks but backing fewer teams.
The takeaway: The bar has risen. If you aren’t building foundational AI models with a team of ex-OpenAI researchers, you are competing in a market that prioritizes disciplined execution over blind promise.
2. The “20% Rule” and the Dominance of SAFEs
Despite the volatility in valuations, one metric remains remarkably stubborn: dilution. Across all sectors, founders are consistently selling approximately 20% of their company during the seed round.
At the Pre-Seed stage, the instrument of choice is effectively settled. According to Carta, 92% of pre-seed rounds are now raised on SAFEs, specifically post-money valuation cap SAFEs,. Convertible notes are becoming a relic, largely relegated to specific sectors like Biotech and Energy.
If you are raising pre-seed in 2025:
- Expect to use a Post-Money SAFE.
- Valuation caps are holding steady, though they are ticking up for rounds larger than $2.5M.
- The market is active: Pre-seed activity in 2025 is on track to outpace 2024.
3. Radical Efficiency: Teams are Getting Smaller
The era of hiring a dozen people immediately after a seed round is over. The average seed-stage company in 2025 has just 6.2 equity-holding employees, down from a peak of 10.3 in 2021.
This leanness extends to the founders themselves. 35% of startups founded in 2024 were solo-founded, a significant rise from previous years. However, a word of caution to solo founders: VCs still show a statistical preference for co-founding teams. Solo founders are about half as likely to secure VC funding compared to two-founder teams.
4. The “Graduation” Gap is Widening
Raising a seed round is a milestone, not a guarantee. The road to Series A has lengthened significantly. The median time between Seed and Series A has pushed out to 2.1 years.
While graduation rates from Seed to Series A are showing early signs of improvement for the most recent cohorts, they are still well below the frenzy of 2020-2021. Founders need to budget for a longer runway and focus on genuine product-market fit metrics to bridge this widening gap.
What This Means for Israeli Startup Founders
For Israeli founders, the local data mirrors the US trends but with even sharper edges. According to Startup Nation Central, the Israeli ecosystem is experiencing a “new normal” defined by fewer rounds but bigger bets.
1. The “Safety” of Infrastructure and Cyber While the US market is obsessed with Foundational AI models, Israeli capital is flowing heavily into “defensive” and infrastructure-heavy sectors. Cybersecurity and Business Software accounted for more than half of all private capital raised in H1 2025 ($5.4B combined). If you are building in these strongholds, capital availability remains high for high-quality teams.
2. Longer Cycles to Series A Israeli founders are famous for speed, but the market is forcing patience. The average time from Seed to Series A in Israel has stretched to 35 months—nearly three years. This is significantly longer than the US median of ~2.1 years.
- Advice: Israeli founders must obsess over capital efficiency. You likely need your seed money to last nearly three years, not 18 months.
3. The Mega-Round Effect Israel is participating in the global “Mega-Round” trend. Companies like Safe Superintelligence ($1B) and Cyera ($500M) are skewing the averages. This indicates that late-stage growth capital is available for Israel, but it is highly concentrated in winners that have proven they can scale globally.
4. Global Alignment The data shows Israel is outperforming Europe and Asia in terms of funding growth (up 62% in H1 2025 vs H2 2024). However, US investors (who lead many top-decile rounds) are increasingly concentrated in San Francisco and New York.
- Advice: Israeli founders must double down on their US go-to-market presence early. With 66% of top-decile seed valuations going to SF/NY startups, bridging the Tel Aviv-to-US gap is more critical than ever for valuation maximization.
The Bottom Line and a Shameless Plug
2025 is a year of high standards. The “tourist” capital has evaporated. For Pre-Seed and Seed founders, the money is there, but it demands cleaner cap tables, leaner teams, and a longer view of the runway. Shameless plug: We did 9 pre-seed deals in 2025 at Remagine Ventures and are actively deploying. If you’re an Israeli founder building in stealth – we’d love to talk to you and provide friendly VC feedback about what we’re seeing in the market.
He is a former General Partner at Google Ventures (GV) in Europe, former head of Google for Entrepreneurs in Europe, and founding head of Campus London, Google's first startup hub. Eze writes on Israeli tech, venture capital, artificial intelligence, and founder strategy.
He is also the founder of Techbikers, a nonprofit that brings together the startup ecosystem on cycling challenges in support of Room to Read.
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