What I’m Seeing as a Founder in 2025: Early Stage Rounds, the Changing VC Climate, and the Road Ahead

In early 2025, ZillyPlanet began raising our angel round. We started, as many founders do, with people we knew personally. Friends. Former colleagues. Mentors. Supporters of our mission to make STEM learning more personal, inclusive, and story-driven. These early conversations felt energizing. They were built on trust, shared vision, and enthusiasm for what we’re building.

But as we reached the tail end of the round, we found ourselves needing to expand our circle. We started talking to people we hadn't met before. Cold intros. Warm intros from one person removed. It’s a totally different game. Building trust from scratch while selling the future of a company in just a few short meetings? That’s tough, especially in a market where every check is harder to win.

That said, the world is opening up again.

After a cold 2022 and cautious 2023, funding in 2025 began to rebound. Crunchbase reports that global venture investment is set to hit $490B this year, a 25% increase from 2024, and nearly 70% of that is flowing into the U.S. . It sounds bullish, and in some ways, it is. But the story is more complex than it seems.

Mega-deals in AI are distorting the picture. The top deals in 2025 (like OpenAI's $40B and Anthropic's $13B) soak up a massive chunk of VC dollars . If you’re not an AI infrastructure company, you’re not playing on the same field, and even if you are, there’s a high bar for differentiation and defensibility.

For most early-stage founders, especially those outside the AI bubble, the path looks very different. Angel and seed funding are still happening, but they come with new expectations. Investors are being selective. The "spray and pray" days are gone. Rounds are smaller, diligence is tighter, and angels are behaving more like institutional investors.

We’re seeing a flight to quality. Strong teams, mission-driven narratives, and early signs of product-market fit are getting attention. But you have to show up with substance. Not just vision, but validation.

There are exceptions, of course. There are always going to be outliers, startups raising $100M seed rounds or pre-product companies riding massive trends. But those are rare. They're news because they're not the norm.

So what’s working for founders?

1. Personal introductions still matter. The best early checks came from people who already believed in us. Even now, warm intros perform 10x better than cold ones. That means founders need to start building their networks before they need them.

2. Clarity and proof. Investors are asking sharper questions, earlier. They want to see traction, but more than that, they want to see clarity of thinking. What makes your approach unique? What signals product-market fit? What proof do you have that your users are sticking around?

3. Narrative strength. Especially for pre-revenue or pre-launch companies, your story is your product. Why now? Why you? Why this market? At ZillyPlanet, our ability to connect AI, storytelling, and adaptive learning into a compelling narrative has opened a lot of doors, especially when tied to big trends like the personalization of education, the rise of AI tutors, and parents seeking better visibility into their kids' progress.

We're nearing the end of our angel round now. We’re proud of what we’ve raised, but we know the hard part is just beginning. In 2026, we’ll be preparing for our seed round. And from what I’m seeing in the market, seed is no longer the "idea stage." It’s the "show us real traction" stage. Median pre-money valuations for Series A hit $48M this year, but to get there, companies need $5M+ ARR or an undeniable grip on a surging trend like AI .

We also can't ignore the broader economic backdrop. While interest rates may ease in 2026, they remain a factor. LPs have been cautious, and capital deployment is still disciplined. There's optimism, yes, but it's a measured optimism. Founders should prepare for a market that rewards resilience, clear outcomes, and capital efficiency.

Stage	Typical Round Size (2025)	What Investors Seek	Funding Trends (2025)
Angel	$50K – $1M	Team strength, mission alignment, warm intros, early belief	Angels are more selective; rounds take longer; diligence resembles early VC rigor
Seed	$1M – $10M+	Problem-solution fit, compelling narrative, early user metrics	Active space but distorted by mega-deals; AI startups dominate; harder for non-AI to cut through
Series A	$4M – $20M	Clear product-market fit, ARR growth, crisp differentiation	Fewer deals; higher valuations; VCs expect ~$5–10M ARR or major traction
Series B	$10M – $50M	Scalable model, efficient growth, strategic partnerships	Many startups raise bridge rounds instead; “missing middle” funding gap noted
Late Stage	$100M+	Dominance in market, exceptional scale, AI or hard tech alignment	Highly concentrated capital; 1/3 of all VC went to top 16 AI deals; non-AI struggle

That’s our challenge for 2026: to shine.

To not just be a strong idea, or even a strong product, but a strong business with traction, retention, and defensibility.

We’re building toward that every day, with game-based adaptive learning, character-driven missions, and AI tools that meet kids where they are, across STEM subjects.

The road ahead won’t be easy. But it is full of opportunity. For founders who can blend heart, data, and storytelling, and who aren’t afraid to reach out, even when it’s hard, 2026 could be a great year to raise.

VC Climate Q&A

Q. How do I stand out to investors when I don’t have massive traction yet?

A: Show clarity of thinking and obsession with your users. Investors want to see that you deeply understand the problem, can articulate your unique angle, and have early signs of product-market fit—even if small. Testimonials, engagement metrics, or creative growth loops can go further than vanity numbers.

Q: Is it still worth going after angel checks in 2025, or should I wait for seed funds?

A: Yes, angel capital is still very much alive—but the bar is higher. Many angels are thinking like early-stage VCs now. Start with people close to you who understand your story. Use angel checks to build real momentum, not just extend your timeline.

Q: How do I balance narrative with metrics when I’m still pre-revenue?

A: Treat your story like a product. Make it structured, visual, and anchored in why your team is right to solve this now. But add hard signals—conversion rates, user behaviors, testimonials. The best fundraising decks today blend vision and real-world validation.

Q: What’s a mistake you see founders make when pitching in this climate?

A: Over-indexing on future plans and under-explaining what’s working now. Investors want to believe your future, but they need proof you can execute today. Be specific about user feedback, iteration cycles, and how you're learning from what the data is telling you.

Q: With AI dominating funding, should every startup be pitching an “AI angle”?

A: Only if it’s core to your differentiation. AI as a buzzword won’t help. If AI meaningfully improves your product, user experience, or scalability—show that clearly. If not, focus on what makes your approach effective and sticky. You don't have to chase hype to raise well.

Sources

• Crunchbase News – Marlize van Romburgh, “The State Of Startups In Mid-2025 In 8 Charts” (July 22, 2025)

• Crunchbase News – Joanna Glasner, “Seed Funding In 2025 Broke Records Around Big Rounds And AI, With US Far In The Lead” (Dec 12, 2025)

• Carta Data – Kevin Dowd, “‘Quantity is down, and quality is up’: The new state of Series A fundraising” (Sept 19, 2025)

• S&P Global Market Intelligence – “AI agents, stablecoins shine in Q3 2025 fintech funding” (Oct 2025)

• Crunchbase News – Mary Ann Azevedo, “Funding To HR Software Startups Rises As M&A Activity Heats Up” (Sept 19, 2025)

• Inc. Magazine – Chris Morris, “These 5 AI Startups Raised the Most Money in 2025” (Nov 17, 2025)

• Healthcare Dive – Emily Olsen, “Digital health funding outpacing last year as huge rounds increase: report” (Oct 8, 2025)

• HolonIQ – “EdTech funding drops again in early 2025. Fewer deals, but bigger bets” (Apr 29, 2025)

• Reach Capital (Tony Wan) – “Is US Edtech Set for a Rebound in 2025?” (Jan 20, 2025)r

• WIPO Blog – Oriol et al., “AI Megadeals Fuel Venture Capital Rebound, but Hide Deepening Divides” (Nov 30, 2025)

• Wellington (Insight) – Michael Carmen et al., “Venture capital outlook for 2026: 5 key trends” (late 2025)