The Great Graduation Slowdown – Startups Now Take 10 Years to Reach Series D

In Silicon Valley Bank’s latest State of the Markets: H2 2025 report, one section captures a defining shift in the venture ecosystem: the timeline for startups to progress from seed to Series D has stretched to nearly 10 years, about a 45% increase since 2022. That single metric reframes how founders plan, how funds pace reserves, and how limited partners think about cash conversion. The conveyor belt has slowed and appears likely to persist at this new pace in the near term.

The End of the “Graduation Economy”

Historically, the venture model relied on velocity, with companies raising successive rounds quickly, compounding value as they grew. That rhythm has broken. SVB’s data shows that only ~9% of seed-funded startups from 2022 reached Series A within three years, down from ~22% for the 2020 cohort. Across stages, graduation rates are at record lows. The system built for “progression by default” has become “progression by exception,” with each step up the stack demanding clearer proof points and more operating discipline than the cycle before.

The median time to move from seed to Series A now exceeds ~36 months. From A to B, the gap has widened similarly. And from inception to Series D, the total timeline is now roughly a decade. In practical terms, founders are re-sequencing milestones, prioritizing revenue quality and runway over headline growth, because capital now rewards durability more than speed.

This shift is a structural recalibration driven by a tighter price of capital, a more selective growth market, and investor expectations shaped by the last few turbulent years.

Bridges, Extensions, and the New Normal

To fill the gap, startups are increasingly resorting to bridge and extension rounds, which are smaller, often insider-led financings that keep companies afloat between milestones. SVB’s survey of its top-performing portfolio companies found that ~25% raised a bridge or extension in the last 12 months. Among stronger names, these rounds function as a way to align burn and milestones with slower funding cycles and tighter valuation bands.

Conversely, weaker companies are finding fewer soft landings. As later-stage capital concentrates in fewer, larger bets (especially in AI), the tail of companies without clear breakout paths is being triaged earlier, through pivots, tuck-in M&A, or wind-downs, rather than carried indefinitely.

For funds, this normalizes a toolset that used to be exceptional: structured extensions, intervalled insider notes, and milestone-based tranched financings. The optics around “bridge” have improved because the market understands the timing problem; even healthy companies often need more time between rounds.

Why It’s Taking Longer

The elongation reflects a mix of capital behavior, valuation dynamics, operating priorities, and public-market selectivity.

After the 2021 boom, investors are deploying follow-ons more cautiously, with tighter committee processes and stronger inside-lead dynamics.

At the same time, AI mega-deals are skewing dollar totals; non-AI companies face compressed multiples and tougher benchmarks, and there’s no “typical series” anymore, which forces teams without an AI tailwind to build more proof, which takes more time.

Operating discipline is back. Companies are trading blitzscaling for resilience and better unit economics, a path that takes longer but is what today’s market is willing to finance.

Finally, the IPO window is selectively open for bigger, steadier issuers with stable and proven revenues and measured growth. Put together, these forces have created a more patient but less dynamic venture cycle: capital is still available, but it’s choosier, pricier, and slower to commit.

The Domino Effect

For early-stage investors, slower graduations defer DPI and stretch fund lifecycles, demanding bigger reserve cushions and shifting models from 24-30 month step-ups to 36-48 months.

For LPs, especially endowments and pensions, delayed distributions compound existing liquidity challenges, because predictable obligations can’t be funded with unpredictable cash; commitment pacing and secondaries usage are being re-tuned to this new cadence.

For later-stage investors, deal scarcity and valuation dispersion make entry points harder to time, pushing toward deeper commercial diligence, staged checks, and a premium on businesses that already exhibit durable growth and operating leverage.

Across the ecosystem, feedback loops are simply longer; signals that once arrived in quarters now take years, and strategy has to stretch accordingly.

The Narrative Risk (and How to Avoid It)

It’s easy to mistake “slower” for “worse.” SVB’s data doesn’t say companies aren’t progressing; it says the market now demands more proof between steps. The companies that internalize this and take steps such as tighten focus, build margin, and pace capital, can still graduate; they just do it with stronger foundations and fewer mispriced rounds.

Similarly, bridges aren’t inherently red flags. In top-quartile portfolios, they’re often the price of patience; a tactical tool to thread the longer path from product-market fit to defensible unit economics. Signals of health are the same as ever: velocity of learning, improving CAC payback, resilient net retention, and disciplined hiring.

The Takeaway

SVB’s report distills the moment starkly: half as many startups now graduate within three years as they did pre-2020. If any other system (say, education) showed graduation rates collapsing this way, it would trigger alarms and that’s the point: the venture “graduation economy” has slowed enough to demand new playbooks.

The graduation slowdown marks a structural shift, one that tests patience, redefines performance horizons, and demands more flexible capital structures. Venture’s long game has always required endurance; in 2025, time itself has become the new moat. The winners may not be the fastest by calendar; the new normal may have winners that are the most efficient at turning extra time into compounding advantages.

Chief Brand & Investor Relations Officer

Sneha Dadrwal

Frequently Asked Questions

Q: Why did the time from seed to Series A (which was within three years) drop from ~22% (2020 cohort) to ~9% (2022 cohort)?

A: Higher bars at each round, tighter follow-on processes, valuation dispersion, and capital concentrating in fewer names, especially AI, have stretched timelines.

Q: Are bridge/extension rounds a distress signal?

A: Not necessarily. SVB finds ~25% of top performers used bridges/extensions in the past 12 months; for strong companies they function as a timing tool to convert extra months into clear milestones.

Q: What does “no typical series anymore” mean in practice?

A: Round labels (A, B, C, etc.) don’t map neatly to standard revenue/metric bands. Valuation dispersion and AI effects mean the proof required between letters varies widely.

Q: What signals still indicate healthy graduation odds?

A: Velocity of learning, improving CAC payback, resilient net retention, path to blended margins, and disciplined hiring.

Sources

1. State of the Markets: H2 2025. Silicon Valley Bank, 2025.