As venture capital funding experiences a resurgence fueled by the global artificial intelligence boom, early-stage founders must navigate a vastly different fundraising landscape. This new environment reflects wider Series A investment ranges, changing expectations, and a growing emphasis on distribution over mere product innovation.
These themes emerged at a recent panel during Seattle AI Week, where investors and founders shared valuable insights for entrepreneurs preparing to raise capital in 2025. The discussion included Kellan Carter, founding general partner at Bellevue-based firm Fuse, and Rohan D’Souza, CEO and co-founder of Avante, a Seattle startup that helps companies lower HR and benefits administration costs.
Carter and D’Souza have established a strong working relationship, as Fuse led Avante’s $10 million seed round in late 2023, supporting the startup before it generated significant revenue. Their relationship, built over several years, highlighted the importance of trust, industry knowledge, and founder commitment in an era when AI makes many startup pitches sound similar.
The New Series A Era: Big Checks, Bigger Variance
The session’s title, “The New Series A Landscape,” reflects a reality that many founders are already noticing: Series A expectations are changing rapidly, and the variation in round sizes is growing dramatically.
Data supports this trend. In the first quarter of 2025, the median Series A round was $7.9 million, according to Carta. However, later that year, numerous startups—nine in Q3 alone—raised over $200 million each for their Series A rounds, as reported by CB Insights. The gap between modest early raises and blockbuster mega-rounds is now wider than ever.
“The variance for Series A is wider than ever,” Carter noted, mainly due to AI-driven investor excitement. For the companies attracting these large rounds, he mentioned that the key differentiator is what he calls “unfair insight”—a clarity so compelling that investors feel driven to issue hefty checks.
“The insight is so clear that it gets investors excited to cut that big of a check because the prize is so significant right now,” he explained.
The numbers back up his claim. Venture funding is currently at a three-year high, largely driven by AI. In Q3, AI-related startups accounted for 51% of all global funding and 22% of deal activity. The capital is flowing, but it is not evenly distributed. It is concentrating around founders who can convincingly express a transformative, defensible, and deeply informed viewpoint.
AI Is Everywhere-But Investors Want More Than Buzzwords
Carter pointed out that almost every pitch he encounters includes an AI aspect. Some utilize AI meaningfully, while others mention it just to follow suit. “AI is always in the pitch now-even if it’s not really AI,” he joked.
For Fuse, Carter emphasized that the focus is not on whether a startup uses AI but on whether the founder truly understands the customer’s most urgent and costly problem. Domain knowledge, he insisted, is far more important than flashy technology.
“Investors favor founders who comprehend a first- or second-priority customer issue better than anyone else,” he said. “They possess insights that lend them credibility in conversations with customers.”
As AI reshapes the development and sale of software, Carter added that founders should think beyond their products and heavily emphasize their go-to-market strategy.
“In this environment, product alone won’t win; distribution will win,” he stated. A strong product is insufficient; founders need to present a smart, unique, or proprietary plan to get that product into customers’ hands more quickly and effectively than their competitors.
Carter expressed that Fuse is particularly interested in founders with extensive domain experience who can clearly outline both a compelling problem and a distinctive distribution strategy-qualities that stand out in a space where AI has made building functional software easier.
Talking About AI: How Founders Should Tailor Their Message
While AI dominates fundraising discussions, D’Souza stressed that founders should adjust how they discuss AI based on their audience. Customers and investors react very differently, and mixing up these conversations can lead to mistakes.
Customers may openly express “AI FOMO”-fear of missing out-but they often operate from a mindset he calls “FOMU”: fear of messing up. Many enterprise buyers feel pressure to adopt AI solutions but remain cautious about risks, compliance, and unproven workflows.
“As a founder, it’s your job to help customers understand that this is about unlocking a new realm of productivity,” D’Souza said. The approach should be educational and practical, not overly eager or futuristic.
Conversely, when speaking to investors, the focus should be on economic leverage. D’Souza explained that founders must show how AI directly enhances margins—whether through faster onboarding, lower support loads, reduced customer acquisition costs, or streamlined operations.
Investors want to see how AI affects the numbers; customers want to know how AI reshapes their work.
Avante’s Early Playbook: Scarcity, Intentionality, and a Different Kind of Ramp-Up
Avante launched in early 2025 with the aim of transforming how companies handle HR administration and employee benefits—areas plagued by outdated software, inefficiencies, and rising costs. As a former product chief at healthcare automation company Olive AI, D’Souza had witnessed the challenges faced by HR teams at scale and brought that wisdom to Avante.
One unconventional decision the company made was to avoid targeting recurring revenue in 2024. Instead, Avante ran a paid early-adopter program-not free pilots-with a select group of customers. The goal was to test, refine, and validate the product in a controlled setting.
“We created some scarcity and FOMO around this early adopter program,” D’Souza said.
After refining the product over the year, Avante publicly launched in April 2025 and turned its pilot customers into multi-year deals. This intentional pacing and focus helped the team learn quickly, manage expectations, and prepare for a strong go-to-market effort as they consider a future Series A raise.
The Role of Trust and Transparency in the Founder–VC Relationship
Carter and D’Souza reflected on their years of collaboration, which began long before Avante’s seed round. Carter highlighted that early trust is invaluable, urging founders to start building these relationships well ahead of needing funding.
“There’s so much trust that has been built,” Carter said, describing his early talks with D’Souza. He cautioned founders against viewing fundraising as a one-time transaction, suggesting they treat it as an ongoing dialogue.
D’Souza agreed and emphasized that transparency is crucial, especially regarding timelines and product readiness. Many founders feel pressure to project certainty or speed, but D’Souza argued that honesty, even when challenging, fosters long-term credibility.
“Be very clear about your timelines,” he urged. “If you need three or six months to fully develop your product, be entirely open about it.”
Without that clarity, investor relationships can quickly become strained, particularly in the product-heavy early stages.
Why Founders Should Worry Less About Startups and More About Incumbents
When addressing competitive analysis, D’Souza noted that founders often focus too much on other early-stage startups in their field. He believes the real threat comes from established multi-billion-dollar incumbents that already dominate the industry.
Founders should instead ask: What are the incumbents doing right now? How fast are they moving toward this opportunity? And how can we get there ten times faster?
Carter added that Fuse is cautious about investing in companies facing direct competition from major technology players like Microsoft, Amazon, OpenAI, or Anthropic. If there’s even a slight chance that these giants could enter the market and offer similar products for free-or bundle them into existing offerings—this presents a major risk.
“If we suspect that they might release a product, suddenly everyone is competing against free or bundled solutions-that’s a problem,” he said.
Why Raising Money Can Be a Signal-Not Just a Financial Need
Looking ahead to his potential Series A raise, D’Souza pointed out that funding is not solely about extending runway or product growth. Raising capital can also serve as a critical market signal, especially when selling to large enterprises.
Some enterprise buyers hesitate to work with early-stage companies, particularly those with fewer than 20 employees or limited visibility. Fresh capital, D’Souza explained, helps convey stability and longevity.
“There’s a perception of what happens if these guys disappear?” he stated. “So as a founder, I think, should we aggressively pursue more funds to clearly show that we have much more potential, even if we don’t necessarily need it?”
This strategic approach to fundraising-raising not out of necessity but to strengthen market credibility-is becoming more common as enterprise buyers scrutinize vendor sustainability, especially in AI-driven markets where new companies frequently emerge.
The One Thing Founders Must Get Right
As the session concluded, D’Souza shared one crucial piece of advice for early-stage founders: concentrate on the one core thing your product does significantly better than anyone else.
The temptation, he noted, is to expand too quickly-chasing features, markets, and customer segments before the original value proposition is clear. This distraction often arises from fundraising pressure or competitive fears. Yet, in today’s environment, where AI has simplified building new products, the only real advantage lies in exceptional execution on a narrowly defined problem.
By mastering that core area, founders earn the chance to expand, and investors gain the confidence they need to support the next stage of growth.
