Lead vs Follow Investor Check Size: Seed, Series A

Originally published in MondayVC Newsletter, Edition 5, May 13, 2024, on LinkedIn. Figures are as of 2024.

Key numbers: in the US in 2023–2024, median lead investor checks were about $300K at pre-seed, $1.5M at seed and $6.9M at Series A; follow investor checks were about $150K, $360K and $600K. Per Aumni, the lead took 41% of a seed round and 66% of a Series A.

— What's the average temperature of patients in the hospital?
— 36.6°C (98.6°F), including the morgue and the infectious diseases ward.

Average check sizes in my last article may not be actionable for the VC unit economics. Lead and follow types of investors in a round have significantly different checks.

In corner cases there are co-leads or no-leads in the round. For detailed observation, read 'Lead vs. Co-Lead, what's the deal?' by Jason Yeh.

Lead Investor Stake and Check Size#

Finding the average lead investor's share in a funding round is challenging:

According to Jason's article, more than 50% of the round on average.
80% of the Series A round according to a Startup School lecture by YC's MD of Finance Kirsty Nathoo in 2018.
66% for Series A and 41% for Seed stages according to Aumni.

The Venture Beacon Year-End 2023 Report by Aumni (a J.P. Morgan company) declares median lead investor check sizes for the US:

$1,500,000 for Seed
$7,500,000 for Series A

Line chart of median lead investor check size by company stage, 2019 to 2023, for Series Seed, A, B, C and D+. Series D+ peaks at $54.2M in 2021 and ends 2023 at $27.5M; Seed and Series A stay lowest throughout — Median Lead Investor Check Size by Company Stage, Aumni 2023 Report.

It also states the median round sizes:

$3,700,000 for Seed
$11,300,000 for Series A

Taking the lead investor check size from the round size results in 66% for Series A and 41% for Seed stages, according to Aumni.

Aumni's round sizes align with data from Carta, Crunchbase, PitchBook, and KPMG reports, so the median across different sources can be estimated:

Table of VC round sizes in the US by source. Pre-seed: Carta $330,000, Crunchbase $550,000, Aumni N/A, KPMG $550,000, PitchBook $600,000, median $600,000. Seed: $3,150,000, $3,250,000, $3,700,000, $3,000,000, $3,000,000, median $3,200,000. Series A: $9,300,000, $17,500,000, $11,300,000, $10,500,000, $5,000,000, median $10,500,000 — Median VC round sizes in the US: Pre-Seed at $0.6M, Seed at $3.2M, Series A at $10.5M, according to reports by Carta, Crunchbase, Aumni, KPMG, and PitchBook.

Using different lead investors' shares from cross-sourced median funding rounds results in check sizes that align with the Aumni report: $1.5M for Seed and $6.9M for Series A.

For pre-seed, let's assume the lead investor's share is 50% of the round, resulting in a median check size of $300K.

Table of median lead investor check size in the US, 2023/2024, by the lead's share in the round. Pre-seed at 50%: $300,000. Seed at 41%: $1,300,000, at 50%: $1,600,000, median $1,500,000. Series A at 50%: $5,300,000, at 66%: $6,900,000, at 80%: $8,400,000, median $6,900,000 — Median Lead Investor Check Sizes in the US for 2023/2024: Pre-seed at $0.3M, Seed at $1.5M, Series A at $6.9M, according to reports by Carta, Crunchbase, Aumni, KPMG, and PitchBook.

Follow Investor Check Size#

Subtracting the lead investor's check size from the total round allows to see the remaining pie for follow investors. This remainder needs to be divided by the number of round's investors minus the lead, to determine the co-investor's check size.

Number of Investors Per Round#

According to my latest analysis of Crunchbase, the average number of investors:

Pre-seed: 2.1
Seed: 4
Series A: 5

PitchBook states that 3.5 investors is the average for all funding series, aligning with Crunchbase data. However, Aumni reports an average of 13 investors for Seed/Series A rounds. This significant discrepancy lacks a clear explanation.

Update: See the comments on the LinkedIn article for an explanation of why the data is so different.

Bar chart of median syndicate size by stage from Aumni: Series Seed 13, Series A 13, Series B 11, Series C 12, Series D+ 13 — Syndicate Size: The number of legal entities listed on the schedule of purchasers in an equity financing.

Let’s use both Crunchbase and Aumni data for party size, assuming that with the Aumni approach, pre-seed rounds contain the same 13 minus 1 investors.

This results in follow investor pre-seed checks of either $30K or $270K, with a combined median of $150K. The lower figure is realistic, particularly for angel investments.

For seed deals, follow investor checks range from $140K to $570K, with a median of $360K.

For Series A, the checks range from $300K to $900K, with a median at $600K.

Table of median follow investor check sizes in the US, 2023/2024, by number of follow investors. Pre-seed: 1.1 investors $270,000, 12 investors $30,000, median $150,000. Seed: 3 investors $570,000, 12 investors $140,000, median $360,000. Series A: 4 investors $900,000, 12 investors $300,000, median $600,000 — Median Follow Investor Check Sizes in the US for 2023/2024: Pre-seed at $150K, Seed at $360K, and Series A at $600K, according to reports by Carta, Crunchbase, Aumni, KPMG, and PitchBook.

Location and Industry Considerations#

Today, I used only US data, but it can be projected onto other regions with some assumptions. Another important factor to consider when evaluating check sizes is the industry.

With prevalent hypes around ecommerce, SaaS, and AI, these internet/software tech startups often come to mind first when discussing VC. However, VC also covers ventures in biotech, hardware tech, and many other capital-intensive deep tech sectors, which might require different check sizes.

All totals and medians in the reports I've analyzed to find check sizes were based on average industry data. However, in reality, investment focus and industry specifics can lead to varying check sizes.

Just as examples to illustrate how industries might differ. The US VC Valuations Report 2023 ANNUAL by PitchBook shows a difference in deal value between AI and biopharma startups:

Seed stage in AI averages $3.5M versus $8M in biopharma.
Early-stage (A/B) in AI averages $7.1M versus $50M in biopharma.

Two PitchBook line charts of median US VC deal value by stage. AI, 2017 to 2023: seed $3.5M, early-stage $7.1M, late-stage $9.0M, venture growth $19.0M in 2023. Biopharma, 2020 to 2023: seed $8.0M, early-stage $50.0M, late-stage $12.0M, venture growth $12.6M in 2023 — Median AI VC deals versus Biopharma VC deals, PitchBook, 2023.

Conclusion#

Analyzing check sizes with differentiation between lead and follow investors makes the average check sizes of $200k/800k/2700k from my last article appear less sensible, yet they may still be applicable for non-lead deal cases.

I appreciate the approach of combining lead and follower investments, and these new figures provide insights into capital deployment strategies for first-time funds leveraging both roles.

Starting with, for instance, a $10 million capital fund, acting as a lead in seed/A stages is not feasible, but it is possible in pre-seed. As we move to larger funds, leading some seed deals with Fund 2 and 3 becomes more viable.

This underscores the importance of building VC partnerships with more mature firms capable of leading deals and whose strategy and decision-making processes are a good fit.

Previous in MondayVC Newsletter: Edition 4, Check Size by Stage.

Next in MondayVC Newsletter: Edition 6, Fair Startup Valuations.