The Main Story: The Messy Middle That Nobody Talks About
The graveyard of startups is not filled with companies that had bad ideas. It's filled with companies that had good ideas, proved they worked, raised Series A, hired aggressively, and then collapsed under the weight of their own growth. Roughly 35% of Series A companies go on to raise a Series B. Of those that do, a significant fraction fail to reach Series C — not because the market disappeared, but because scaling from 30 people to 300 is a categorically different challenge.
The most common killer: premature hiring. The company closes its A round and immediately triples headcount. Sales teams are hired before a repeatable sales process exists. Engineers are hired before product priorities are clear. Managers are hired before there are enough people to manage. The result is expensive chaos — a burn rate that quadruples while the revenue growth that justified the investment fails to materialise.
The second killer: unit economics that nobody wants to look at. At the Series A stage, most investors accept shaky unit economics on the promise that scale will improve margins. In practice, customer acquisition costs often increase after the easy customers have been acquired, and the next wave requires more expensive channels and more hand-holding. The company grows revenue but burns cash at an accelerating rate, with economics that are deteriorating rather than improving.
The companies that survive the messy middle — Stripe, Figma, Notion — share a common trait: they built systems and processes for scale before they needed them. They hired slowly when they had the money to hire fast. They treated the messy middle as a known hazard, not an unexpected surprise.
Read the full deep dive on Series B mortality
Quick Take: The Seed Stage Is Overheated Again
After a brief cooldown in 2023-2024, seed-stage valuations have returned to peak levels — driven almost entirely by AI startups. Pre-product AI companies are regularly raising $5-10 million seeds at $30-50 million valuations. The bull case: AI companies can reach revenue faster than traditional SaaS. The bear case: most of these valuations assume growth rates that only a handful of companies in history have achieved. When the music stops, the Series A crunch will be severe.
The Stat That Matters
$1.75 billion — the amount Quibi raised before launching. It shut down in six months. The total revenue generated was a fraction of the raise. This remains the single most expensive lesson in the difference between product-market fit and scalable product-market fit.
What We're Watching
The growing trend of "Series A-skip" companies — startups that raise a large seed round and then go directly to Series B, bypassing the traditional A round entirely. This approach, popularised by companies like Figma and Notion, reduces dilution and gives founders more time to find product-market fit before facing the growth expectations that come with institutional Series A investors. Early data suggests these companies have higher survival rates through the messy middle.