Crossing the Chasm — from Seed to Series A

John Hall
9 min readJan 18, 2022

The startup world has changed out of all recognition over the past 10 years. The explosive growth in venture capital and the ecosystem that it supports has been a major driving force. Capital deployed globally last year was up more than 10x over what it was a decade earlier.

VC has become the funding mechanism of choice for ambitious entrepreneurs that aspire to build global category leaders of real scale and enduring success. As the 2021 State of European Tech Report revealed, “..the number of companies that have raised venture capital to fund their journey far exceeds those that take alternative paths.”

On the face of it, with funding at record levels, there has never been a better time to be a startup founder.

But not all boats have risen on this tide. The 10-year spending boom has not resulted in a similar increase in the number of startups being funded, up just over 2x for the same period. In fact, for the past 3 years, the number of new startups closing rounds at the formative Seed stage has actually been in decline.

And whilst the graduation rate of Seed stage businesses to Series A did see some improvement in 2021, making this critical transition remains one of the biggest hurdles for founders (and a major focus for Duet Partners). Usually associated with attaining product/market fit and the beginning of early scaling, many other stars must also align.

Founders seeking to lead their startups through this phase must better understand the changing needs and aspirations of the VC asset class. For example, they must not fall into the trap of thinking that frothy market conditions have made the funding process any easier, or by hitting a few key metrics they will ‘qualify’ for funding.

Even on the back of a record year of investment in 2021, almost one-fifth of founders say it has become harder to raise capital.

The sacrifice of growth potential — the ‘missing 6%’

The road to startup success has never been easy. Research by McKinsey has shown that in both the US and Asia, only around 20% of all startups that successfully secure Seed funding eventually go on to exit or reach Series C.

John Hall

Founder & CEO of UK startup to scaleup advisory firm Duet Partners