Why Europe’s Seed Stage Now Looks Like Yesterday’s Series A

Research

31 Oct

Written by Philip Clements

As a CEO of an early-stage start-up, I know all too well the pain, persistence, and patience involved in raising capital. So, fresh from Dublin’s legendary SaaStock conference[1], the meeting ground of “SaaS and AI”, I wanted to share a few reflections from my time among the hordes of early-stage capital allocators.

From “spray and pray” to “prove and scale”

It’s becoming increasingly clear to eager-eyed entrepreneurs across Europe that many early-stage capital allocators are rebalancing their portfolios, moving away from “true” pre-seed and seed rounds toward Series A and beyond. I saw this firsthand at SaaStock, where several self-proclaimed “early-stage” investors were asking for £500k+ in Annual Recurring Revenue (“ARR”) for what they still labelled a pre-seed or seed funding round, blurring the line between genuine early-stage risk capital and growth-stage funding.

The macro picture explains part of it, elevated nominal rates and a slowing IPO market in 2022–2023 pushed early-stage risk takers to prioritise follow-on reserves and back companies with a more visible path to profitability. By mid-2024 and through 2025, later-stage resilience (and some mega-rounds) returned faster than broad early-stage activity, with Dealroom noting that late-stage and “breakout” rounds ticked up in Q2 2024 to multi-quarter highs, while pre-seed/seed remained subdued.[2] Additionally, KPMG’s Q3 2025 readout calls out country-level shifts. In Germany, for example, “investors concentrated on mid- to late-stage deals,” creating headwinds for companies that raised seed 2–3 years ago and are now struggling for follow-ons.[3] Perhaps many pre-AI SaaS start-ups are now realising that without a meaningful pivot, the rise of large language models (“LLM’s”) has effectively rendered their original value proposition obsolete.

Zooming out, Crunchbase reported European seed investments in Q3 2025 was still active ($1.7bn across 745 rounds), but the mix of global capital has clearly favoured deeper pockets since 2024. Axios called an “all-time high” share of seed bridge rounds (46% in Q1 2024), a strong tell that many founders are delaying/pricing out of Series A.[4]

The bar has moved towards higher ARR

Reflecting on my time in Dublin, the UNESCO City of Literature, I couldn’t help but feel a disconnect between everything I’ve read and learned about pre-seed investing, and the story being told by those currently writing the rules.

With more capital at Series A+ and a scarcer appetite for seed risk, the hurdle rates appear to have moved up. Several benchmarks, admittedly more US-skewed but increasingly mirrored in European partner conversations, triangulate the new bar:

Series A ARR: SaaS investors now look for $1–1.5m ARR for a “standard” Series A, and $2–3m ARR for an “exceptional” one.[5]
Median ARR at Series A: Silicon Valley Bank’s H1 2025 synthesis pegs the median Series A at ~$2.5m ARR, up ~75% since 2021.[6]
Round sizes/valuations: TechCrunch’s late-2023 view had Series A at $7–15m rounds on $35–75m post-money, smaller and more disciplined than 2021, but with tougher traction thresholds.[7]

The bottom line is that even genuine “early” rounds increasingly look like yesterday’s “early growth.” To break through, founders need revenue quality, not just topline ARR.[8]

What does this shift mean for founders?

There are at least four key insights that seem to come from these changes that founders may now need to think on.

First, they need to treat pre-seed/seed like a design partner programme, not a capital event. Second, there needs to be a focus on making capital efficiency the story – whether for better or worse it seems that bootstrapping for longer may be the new norm. Third, founders may need to sequence their narrative to match the capital stack - conserve runway to hit the handful of metrics that can help unlock capital. And, finally, curating an investor list seems more important than ever, targeting those with a “true” appetite for risk.

The final point highlights a fundamental challenge in Europe - founder-led venture funds remain in the minority compared with the United States. For early-stage founders, this means being deliberate in targeting operator-led funds and sector specialists at pre-seed/seed. In parallel, it’s worth keeping an eye on US crossover funds. While some have pulled back, a select few continue to lead European rounds, particularly where efficiency, traction, and momentum are clear.[9]

Finally, recognise the meta-trend - Europe’s ecosystem has matured, median round sizes are up across stages versus a decade ago, but partner composition and capital mix still push the market to “prove more, earlier.” Seed isn’t dead; it’s just more selective and milestone driven. If you show undeniable customer love and efficient revenue, the capital is there

If not, expect bridges and inside rounds until you do…or head to Dublin to hear it all first hand over a pint of Guinness[10].

[1] https://www.saastock.com/

[2] https://dealroom.co/uploaded/2024/07/Dealroom-Europe-Q2-2024-VC-Report.pdf

[3] https://kpmg.com/xx/en/what-we-do/industries/private-enterprise/venture-pulse/europe.html

[4] https://news.crunchbase.com/venture/europe-vc-funding-early-stage-ai-q3-2025/

[5] https://www.work-bench.com/post/fundraising-milestones-to-cross-the-seed-to-series-a-chasm-in-application-software

[6] https://developmentcorporate.com/product-management/svb-seed-stage-startup-advice-2025/

[7] https://techcrunch.com/2023/12/21/seed-to-series-a-strategic-insights-for-tech-founders-in-the-2024-venture-landscape/

[8] https://www.stateofeuropeantech.com/chapters/investment-levels

[9] https://kpmg.com/xx/en/what-we-do/industries/private-enterprise/venture-pulse/europe.html

[10] https://www.stateofeuropeantech.com/chapters/investment-levels