2025 Carta Insights: A Founder-Focused Guide for Startups in the Southeast

We get asked all the time by founders what factors they need to consider when contemplating a new raise. Use of funds, hiring needs, competitive landscape, and choice of financial instrument (SAFE, convertible, or priced round) are always at the forefront of those conversations, but as the fundraising landscape continues to evolve, understanding what is "market" is also critical. Peter Walker, head of Data and Insights at Carta recently released a helpful guide on current trends for 2025, delivering actionable benchmarks that tailor national trends to regional realities. The following is a bit of a deep dive into a few of the data points we at ASC found particularly relevant for Southeastern startups.

Fundraising Instrument Trends

In the realm of fundraising, the Simple Agreement for Future Equity (SAFE) continues to dominate Seed stage funding rounds. Most SAFEs issued now incorporate post-money caps, which provide clarity around dilution. While stacking SAFEs remains commonplace until traction or institutional leads develop, excessive stacking can complicate future funding rounds and lead to unpredictable founder dilution (we plan to address this issue in our next blog post).

Moreover, as startups contemplate the switch to priced rounds versus convertible notes, it’s essential to understand that the latter often leads to uncertainty concerning future valuations. Founders will need to assess their strategic approaches, especially where investor signaling plays a key role.

Valuations, AI Premium, and Dilution

The current startup ecosystem is witnessing a phenomenon known as the "AI premium," wherein companies possessing AI capabilities tend to secure higher valuations. While this premium heightens competition, founders must also be cautious of the associated dilution. For instance, median founder ownership decreases significantly from 56% post-seed to just 23% by Series B. Understanding these dynamics is crucial for maintaining justifiable ownership levels through each funding stage.

In the South, we typically see smaller rounds for Pre-Seed and Seed. While valuations tend to also be lower, the cost to operate in the South creates an advantage where Post-Seed founders can often retain closer to 65% of the capital stack, as opposed to the national average of 56%. At the end of the day, the best actions to control founder dilution are to be capital efficient, hire thoughtfully, and start your fundraising process at least 6 months before you will need the cash.

Equity Splits, Vesting, and Benchmarks

When it comes to equity splits and vesting arrangements, founders should be aware of emerging patterns. The standard vesting schedule still largely consists of a 4-year term with a 1-year cliff, but a growing number of later-stage and private equity-backed firms are now considering 5 to 6-year vesting plans. This increased timeframe can strengthen retention, particularly during the volatile early years of startup growth.

Further analysis indicates that new CEO equity grants typically range from 2% to 2.5%, while a robust employee option pool of 10% to 20% is considered standard in Series A to C funding rounds. Given that nearly half of two-founder teams in 2024 are choosing equal equity splits, founders should tailor their equity discussions and vesting terms not just for initial attraction but for long-term retention of key talent.

If you are Pre-Seed or Seed and raising your first institutional round (read: not friends and family or family office funding), you may not yet have a founder vesting schedule. Don't be surprised when investors ask you to do this. We often see early stage founders who are unfamiliar with market vesting schedules get a bit of sticker shock when they see one on a term sheet. In reality, having a solid vesting schedule is what's best for the company. If a founder is to fall ill, have to leave the company, or even if they are removed with cause, whatever equity they retain is only valuable in the end if there is enough left in the cap table to incentivize the replacement CEO or leadership team. This is especially critical for multi-founder teams.

Composition of Founding Teams

Another notable trend highlighted in the Carta Insights report is the rise of solo founders, likely due in part to AI adoption and the ease of shipping minimum viable products with small teams. In 2024, solo-led startups accounted for 35% of new companies, but they face unique challenges; only 17% of these founders successfully secure venture capital funding. This statistic underscores the importance of team dynamics and the advantages of having partners who can bridge skill gaps and share the burdens of leadership.

There has been a significant shift towards equal equity splits among co-founders. The median split between two founders has recently shifted from a 60/40 arrangement to an equitable 51/49. This trend, particularly among teams of two or three, signals the need for intentional discussions about equity at the outset of a venture. Not only does it foster collaboration, but it also enhances appeal to potential investors who value fair structuring.

Option Pools and Grant Evolution

As startups graduate from Seed to Series A funding, adjusting option pool sizes is critical. Generally, a 10% to 15% option pool is standard for seed and Series A rounds, with that figure rising to approximately 18% by Series C. However, grant sizes per individual are trending downward, necessitating strategic planning. Founders should assess their future hiring projections and calibrate their option pools accordingly, rebalancing them during subsequent funding rounds to avoid excessive dilution.

In the Southeastern context, startups may need to offer somewhat larger option pools to attract top talent, although we often see a refresh to10-15% as market at the Seed stage.

Hiring Timelines and Runway Planning

The hiring landscape has shifted significantly post-2022, with a renewed focus on sustainable, milestone-driven scaling over rapid growth. Founders should aim for a runway of 18 to 24 months with their raise. This is easier said than done, however. If you are having trouble raising enough capital, take it as a signal to potentially adjust your spend and extend your runway through strategic hiring or cost cutting, not growth at all costs.

With the volatility inherent in early-stage environments, prudent cash management and runway planning can help navigate the unexpected downturns or delays later on. When you go to fundraise, make sure to have a clear (and conservative) outline of your use of proceeds to share with potential investors. This projection should provide both parties a realistic outline of your cash needs, not a "shoot for the moon" stretch goal crafted to try and win over the investor with unrealistic revenue or expense targets.

Alternative Capital and VC Alternatives

Revenue-based financing, grants, and angel syndicates are increasingly viable options for funding, particularly in regions like the Southeast where traditional VC presence is more limited (despite our best efforts!). Even so, these alternative instruments will require founders to share realistic financial projections and sometimes even historical GAAP financial statements, something early stage founders may not already have in hand. For example, if you decide to apply for an SBA loan, expect a long dilligence process, extensive financial data requests, and likely a 2-3 month timeline to close (sometimes with a personal guarantee).

Practical Checklist for Southeastern Founders

For those building startups in the Southeast, implementing best practices based on these insights can increase your chances of raising capital. Founders must consider the following:

• Decide early on pricing versus stacking SAFEs; priced rounds aren't as expensive as the internet may lead you to believe and are often preferred by VCs

• Benchmark equity and option pools against regional peers, and don't be surprised when a potential investor asks key people to be put on a vesting schedule

• Utilize standard 4-year vesting schedules for new hires, but consider extending to 5–6 years for key retention post Series A

• Maintain a tight watch on monthly spending to extend runway effectively, and start you next raise early to avoid stress and a rushed process

• When fundraising, come to the table with fully prepared financial statements and a realistic projection of 12-24 months of revenue and expenses, not just a hockey stick chart to look pretty

• If you are a Pre-Seed startup, network with local angel investors, incubators, and university-affiliated programs early and often. If an investor says they aren't a fit, be sure to ask if they have anyone in their network who might be