The median Seed stage startup is raising at $20 million pre-money. That’s too high for investors to make a decent return.

High Prices at the Startup Store

AngelList just came out with its wonderful The State of Venture Report H1 2025. It shows that the median Seed valuation is at an eye-watering $20 million pre-money.

Add in a raise of perhaps $4 million, and we’re looking at $24 million post-money. Wow.

One bright spot: at least the valuations didn’t go up. Last year saw the same Seed valuations, although Series A and B did increase this year.

Why Investors Will Struggle to Make Money In This Environment

A portfolio with a median post-money valuation of $24 million will have a very hard time making money. Here’s why…

To make investing in early stage venture worth the risk and illiquidity, you need to hit some serious returns. With the NASDAQ returning 10% a year historically, early stage venture needs to return around 15% in order to be worthwhile.

Over a 10 year fund life, that’s a 4x fund.

In any early stage portfolio, all or nearly all your gains tend to come from a single startup. Let’s say your fund has 35 names in it. To get a 4x fund from one of those 35 startups, you need that one winning startup’s valuation to increase by 140x.

It Gets Worse

But wait…even 140x isn’t enough.

You’ll probably be diluted by 50-60% as the company grows and raises more money. So in reality, you need a 280x return on that top startup in order to get a 4x fund.

So, you’re $24 million post-money Seed stage startup has to hit a valuation of $6.7 billion. And it only has 10 years to do so.

That is incredibly difficult. If the startup is valued at 10x ARR, it would need to hit $670 million ARR. Even if investors give it a rich, 20x revenue multiple, you still need $335 million ARR to hit the target valuation.

No wonder that there are only 295 public tech companies valued at $6.7 billion or higher, according to Companiesmarketcap. In the entire world.

That $6.7 billion is a very rare outcome. We can’t underwrite to that.

What I’m Paying in 2025

My median pre-money valuation so far this year is much lower than the AngelList data. Counting the deal I’m wiring for today, my median pre-money valuation is $13 million. My median post-money is $15 million.

That’s 35% lower than the AngelList median.

Of the 6 deals I’m including, 1 is pre-seed, which slightly throws my numbers off. But suffice it to say, my entry price is significantly lower than most people’s. Another Seed deal I’m planning to do this fall should drive those figures even lower.

At my entry price, I just need a single startup to hit a $4.2 billion valuation. If I can get that, I have a 4x fund even if everything else goes to zero.

And even a $4.2 billion outcome isn’t easy to find! But I like my odds a lot better than if I needed a nearly $7 billion exit.

I’m In a New York State of Mind 🍎

One way I’ve kept prices down: invest at home!

Of my 5 deals so far in 2025, 3 are in the NYC area. The other two are in SF. This is despite SF being a much larger market for startups.

I’m not just investing in New York out of hometown pride. The NYC area is producing incredibly good startups and charging very little to invest in them.

“Please don’t forget us!” I can almost hear NYC founders saying. “We’re making good stuff too.”

And they really are! What’s more, the valuations are roughly half what you’d see in SF.

The market is telling investors to spend less time in SF and more in New York. I’m happy to oblige.

Wrap-Up

We angels aren’t value investors. But we can’t afford to ignore entry price either.

Every now and then, I grab a pricey SF startup or two.

But those expensive deals are exceptions. And if I fill my portfolio with high priced startups with minimal traction, they’re no longer exceptions. They’re the rule.

That’s a game we just can’t win.

Have a great weekend everyone!

More on tech:

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