Larger, faster funding rounds make it harder for small funds to retain ownership

Some funds that raised in 2024 aimed to own 5%–10% of companies at pre-seed or seed, but almost all of those managers are now happy to get 3% in a round, according to an example in the source. Sharp markups and fast follow-on financing can force managers to revise ownership targets even within a single investment period.

Smaller funds also face a growing challenge in maintaining their pro rata share as companies move quickly through financing rounds. In the past, managers used SPVs and later dedicated follow-on funds to help preserve those stakes. Both approaches are now more difficult as rounds grow rapidly and larger firms enter at earlier stages.