Guest Opinion: When I moved to Seattle in 2000 and started in venture capital, I read the book “The Silicon Boys: And Their Valley of Dreams,” which told the story of how venture capital drove the innovation ecosystem.
Entrepreneurs toiled day and night in their garages. Venture capitalists discovered these entrepreneurs, writing “small” checks for ownership and partnering side by side to build blue-chip companies. John Doerr of Kleiner Perkins alone backed Intuit, Netscape, Amazon, and Google.
More than 25 years later, venture capital is going through a dramatic evolution, chasing once-in-a-lifetime IPOs like SpaceX, Anthropic and OpenAI. There is more venture capital available than ever before, and it is harder than ever for most founders to get funded, especially if you are not working on foundational AI.
Today’s founders need to think hard about alternative financing and growth strategies, rather than relying on venture capital. But before we get to those solutions and ideas, here are just a few examples of what’s happening in the market.
Anthropic envy: The Wall Street Journal covers the story of Spark Capital’s Yasmin Razavi, a former McKinsey consultant who invested $75 million in Anthropic when much of Silicon Valley passed at a $4 billion valuation in 2023. That stake is now worth about $7 billion — nearly 100x in three years! Silicon Valley is now chasing this pattern.
More money, fewer winners: In 2025, US venture firms deployed roughly $319 billion, according to the PitchBook-NVCA Venture Monitor. In the first half of 2026 alone, they put in $412.7 billion, more than all of 2025. Capital has never been more abundant. But according to Silicon Valley Bank, 33% of all US venture dollars went to the top 1% of companies by valuation, up from 12% in 2022.
Seed valuations for the “right company” are at an all-time high. The bar for the next round is not a little higher. It is roughly double what it was a few years ago.
Peter Walker from Carta tracks seed valuations over time showing that the top 5% of seed deals are up 177% year over year, rising from about $72 million to $200 million. Carta found that 30.6% of companies that raised a seed round in early 2018 reached a Series A within two years. For the 2022 cohort, that number fell to 15.4%.
The practical takeaway for founders: The median revenue you now need to raise a Series A has roughly tripled, to about $3.5 million in ARR.
VC for the select few: A company that would have raised easily a few years ago now can’t get funded at all. Reid Christian from CRV argues the way to raise now is to be “Legible to Capital.” Two kinds of startups are getting funded, he says: “stupidly obvious credentialed teams with a semblance of an idea” priced at $50-200M, and later-stage rounds that “don’t require any amount of thinking.”
If the founders are the right demographic — “young, cracked, or repeat,” the right schools, “nepo, etc.” — capital finds them. Everyone else, he writes, is “just fighting pattern recognition in a lemming industry.”
So what should a founder do?
Go for it and raise VC: If you are building the next OpenAI, go raise VC. Recruit the best team possible and swing for the fences. Make sure you execute and your growth rates match the high expectations for a 2026 VC-backed company.
Heather Redman of Flying Fish Partners says companies “are getting pre-seed financed at ‘modest’ valuations and then going and executing like crazy to show dramatic growth … and raising great successive follow-on rounds.”
Seattle’s Tin Can is a great example of a contrarian bet (landlines for kids) that is showing tremendous growth and follow-on VC funding success.
Seek other sources of capital: Kirby Winfield of Ascend says, “If you don’t have reasonable confidence in hitting $3M-$5M ARR within 18-24 months of your first commercial contract you probably shouldn’t raise venture in 2026.”
If that’s not you, that’s fine — it just means priced venture equity may be the wrong instrument. Other sources of capital to consider:
- Angel funding: Individual angel investors write smaller checks, move faster, and don’t carry the same growth expectations or blocking rights as institutional VCs. A round assembled from angels lets you raise less, give up less ownership, and avoid the signaling trap where a lead investor’s follow-on decision dictates your next round. The tradeoff is more relationships to manage and less firepower behind you for follow-on financing — but you keep control of your own timeline.
- Venture debt: For companies with revenue and real margins, venture debt extends runway without dilution. It’s a loan taken alongside or shortly after an equity round, repaid over time with interest. The catch: it usually assumes an equity sponsor standing behind you, and it’s debt that must be paid back, so it works best as a bridge to a clear milestone.
- Revenue-based financing: This approach, which advances capital against your recurring revenue, is one of the fastest-growing categories in startup finance. If you have predictable revenue and real margins, you have more options than a priced equity round. Providers advance a multiple of your monthly recurring revenue and get repaid as a percentage of it. It’s built for exactly the company this market has stranded: too small for a mega-round, too healthy to need one.
Get profitable fast: The cheapest capital you will ever raise is your own revenue. The best founders are not thinking about VC or chasing the next investment milestone. They’re heads-down building their businesses. AI has made this easier than at any point in history. A small team that controls its own burn controls its own destiny.
Aviel Ginzburg of Foundations and Founders’ Co-op offers this parting advice for founders: “Recognize that venture is just as confused as they are. We aren’t gatekeepers here, we’re getting disrupted.”
