Record startup funding, yet many founders hit a wall at round two

Investors put $515.8 billion into startups over the past nine months, according to Inc. Even so, many founders are hitting a wall at the next step, known as the Series A. That is the first big round of funding after a small early check.

What is going on

Inc. calls it a weird year for private capital markets. That means the world of money flowing into companies that are not listed on the stock market. Plenty of money is moving, but it is not reaching everyone evenly. The squeeze shows up at the Series A, where a young company has to convince investors to write a much larger check than the first one. Inc. frames this as a Series A cliff.

Who it affects

Founders feel it first. Employees at young companies have a stake too, because a company that cannot raise its next round may have to slow down or cut costs. Inc. says the choice of investor partner matters more in an uneven market. The practical point: pick backers who can stay with you beyond the first check, and expect tougher questions.

What is not known

The full article was not available for this report, so key details are unclear. It is not known which kinds of startups are hit hardest, how many founders are stuck, or what investors now ask for before a Series A. The $515.8 billion figure and the squeeze at the Series A come from Inc.'s summary of the story.