The Hollowing Out of Series A and B

Closing a Series A or B has become increasingly difficult. Part of that story is the surge in AI investment, which captured 83% of VC dollars in 2026.

But the Q3 2026 PitchBook data shows that's not the whole story.

• Nearly 55% of all capital raised by VC firms went to the top 7 firms: A16z, Founders Fund, Thrive, Bessemer, Kleiner Perkins, Battery Ventures, and Lux.
• $500M+ mega-funds captured 78% of all capital raised from LPs.

This capital concentration changes the math for you and your investors. For a classic $150M fund, a $1B exit returns the whole fund. For a mega-fund, $1B doesn't move the needle. They need $10B+ outcomes.

So mega-funds treat seed checks like cheap call options, driving first-time financings to a record 8,625 deals this year. Since 2021, median seed deal size is up 36% to $3M, and median pre-money valuation doubled to $18.3M.

After seed, they only write massive checks into high-growth outliers, locking 89% of Series A and B dollars into $25M+ rounds. If you can't clear that bar, it's cheaper to write you off than to invest more time and money.

The mid-sized funds ($100M–$500M) that used to lead normal Series A and B rounds have collapsed, falling from 18% of all funds in 2021 to 10% today (and just 14% of VC dollars, down from 35%–45% historically).

If a $200M fund led your last round, they haven't raised a new fund since 2024 and are hoarding reserves for their top winner.

Together, these dynamics pushed Series A and B deal count down over 50% to an all-time low 24% of VC deals.

Insider bridge rounds have been cut in half: follow-on rounds led solely by existing investors fell from 24% in 2022 to 12%.

No investor tells you with ten months of cash left that they won't bridge you. Letting you burn cash to swing for the fences is a free call option for them. You only find out the bridge is dead when you have 60 days of cash left.

When insider bridges die, venture debt vanishes too. Early-stage venture debt deals fell 80%, from 522 in 2021 to just 104 so far in 2026.

Stop burning cash for a round or bridge that isn't coming.

At seed without product-market fit, your only move is to slash burn to buy time.

If you're a Series A founder chasing a Series B, force the truth at your next board meeting. Present a two-track budget: a high-burn Series B plan vs. a low-burn Default Alive / M&A plan. If your board wants you to keep burning for growth, ask insiders to commit to a bridge backstop if specific milestones aren't hit by month 6.

If you're still sub-scale, you can't cut your way to profitability. Use your remaining runway to run a disciplined M&A sprint.

If you have real revenue scale, or just closed a round, you have more options. Cut burn while you still have plenty of cash and pivot to profitability. Or prepare to pursue a recap, aligning new investors and your valuation with your current trajectory.

Take charge of your startup's destiny.