Navigating the New Series A Landscape for Startups

During a recent panel discussion at Seattle AI Week, venture capitalists and startup founders shared critical insights on raising capital in the evolving landscape shaped by artificial intelligence (AI). Kellan Carter, founding general partner at Fuse, and Rohan D’Souza, CEO of healthcare benefits startup Avante, emphasized the importance of solving specific problems and developing effective distribution strategies as key factors for success in securing funding.

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The median Series A funding round reached $7.9 million in the first quarter of 2025, with notable variances in funding amounts. In the third quarter, nine companies raised over $200 million for their Series A rounds, highlighting a significant shift in investor expectations. Carter noted that the current environment favors those with "unfair insight" that excites investors, particularly in the AI sector, which accounted for 51% of all funding and 22% of deals in Q3 2025.

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Carter pointed out that investors are increasingly drawn to founders with deep domain knowledge who can articulate customer problems effectively. He stated, “Product won’t win; distribution will win,” underscoring the necessity for startups to have a clear and innovative distribution strategy in the AI landscape. D’Souza added that while customers may experience "FOMO" regarding AI, they often harbor "FOMU," or fear of messing up, indicating a need for founders to guide customers in understanding AI's potential to enhance productivity.

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D’Souza discussed how securing fresh capital can serve as a signal to enterprise buyers, alleviating concerns about the viability of early-stage startups. He expressed the importance of proactively pursuing funding to demonstrate stability and growth potential, even when immediate financial needs may not necessitate it. He advised founders to focus on established competitors rather than similar startups, as the latter may distract from the larger market dynamics.

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Transparency with investors is crucial, according to D’Souza, who stressed the need for clear communication regarding timelines for product development. Avante's strategy included deliberately planning no recurring revenue for 2024 and running a paid early adopter program, which helped create a sense of scarcity and urgency around their offerings. D’Souza concluded by advising fellow founders to concentrate on excelling in one core area, stating, “focus on the one core thing that you do 100X better.”

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• “There’s so much trust that had been built,” — Kellan Carter, Founding General Partner, Fuse

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• “Distribution will win.” — Kellan Carter, Founding General Partner, Fuse

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• “Be very clear about your timelines,” — Rohan D’Souza, CEO, Avante

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• “We created a little bit of scarcity and FOMO around this concept of an early adopter program,” — Rohan D’Souza, CEO, Avante

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This panel discussion highlights the evolving dynamics of venture capital in the AI era, emphasizing the need for startups to adapt their strategies to secure funding and thrive in a competitive landscape.

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