Only 7% of Startups That Raised Seed Funding Reach Series A Within Two Years

Of the Latin American startups that raised a seed round in 2023, only 7% had secured a Series A two years later, according to LAVCA's 2025 Latin American Startup Ecosystem Insights, based on data as of June 30, 2025. This figure helps put one of the central ideas from Episode 09 of The Seat into perspective. In that conversation, Matt Carrasco speaks with Camila Rueda, a partner at Rockstart LATAM and co-founder of Niilo: raising capital is not an achievement; it's a commitment.

Venture capital doesn't buy a company: it buys time

Camila Rueda put it plainly when Matt asked what advice she would give her younger self from five years ago. After answering "patience," she explained:

"Venture capital, in a nutshell, is buying time with money. Literally. It's shortening the time it takes to reach an exit from fifty years to ten. And I think that comes with very human consequences."

This definition changes the question a founder should ask. If funding from a venture capital firm is meant to compress time, it only makes sense for companies that can grow fast enough to justify that acceleration.

That's our interpretation, and the data supports it: in the United States, the world's most developed venture capital market, an average of just 0.1% of new businesses received venture capital funding between 1981 and 2001, according to a study by Manju Puri and Rebecca Zarutskie published by the NBER in 2008, based on business records from the U.S. Census Bureau.

Raising capital is the first step of a responsibility, not the goal

For Rueda, the problem begins before the first meeting with a fund. Many founders start fundraising, she says, because they're pursuing the wrong incentive:

"It comes from this misguided incentive where we believe the goal is to raise capital."

She sums it up in one sentence:

"Raising capital is not the goal. Raising capital is the first step of the responsibility."

That responsibility has a concrete form: after the seed round comes the next funding round, and few companies make it that far. LAVCA defines a startup as having "graduated" when it raises a Series A after its seed round.

Where is venture capital going in Latin America?

The money hasn't disappeared. Venture capital firms invested USD 2.2 billion in early-stage rounds in Latin America in 2025, accounting for 52% of the total and marking the highest annual amount invested at that stage since 2022, according to the 2026 LAVCA Trends in Tech.

But the same report shows where that money is going: between 2023 and 2025, half of early-stage investments were follow-on rounds in companies already in the funds' portfolios.

We see an industry that prefers to reinvest in companies it already knows. Rueda, who spent years on the investment side, described this tension in the episode: funds in the region define themselves as risk capital, but in her view, they don't always put their money into the riskiest opportunities.

She also explained why:

"But I was on the other side, and you also know: there just isn't that much liquidity. The investors who put money into these funds here are very different from those in the United States."

Why liquidity changes the rules of the game

The figures from Colombia point in the same direction. More than 50% of the capital invested in Colombian startups comes from foreign investors, according to KPMG's Colombia Tech Report 2024–2025.

The same report highlights the limited availability of investment and financing sources in Colombia and warns that, after Series A or Series B, startups find that very few funds are capable of supporting their next stage of growth.

The contrast with the United States lies in how much money flows back into the ecosystem. U.S. venture capital funds closed 2025 with USD 66.1 billion in new commitments, while exits involving venture-backed companies totaled USD 297.6 billion across approximately 1,635 transactions, according to the Q4 2025 Venture Monitor by PitchBook and the NVCA.

Those exits return capital to fund investors, allowing it to circulate again. When capital returns are limited, taking risks becomes more difficult. That's the cycle Rueda describes, and it isn't a character flaw on the part of venture capital firms.

In our conversation with Ana María Mayorga from KPMG, the Colombia Tech Report had already revealed another gap in the ecosystem. This one is about capital that arrives but doesn't stay.

The human cost of compressing time

The second half of Rueda's metaphor, "very human consequences," comes from something she witnessed firsthand.

Rueda supports founders through coaching sessions, and she shared that those conversations were rarely about the business itself:

"Even though I set aside my hours for product discussions, everything ended up becoming deeply human conversations: I want a divorce; my wife or husband can't stand me anymore; I'm going to go bankrupt. If my startup doesn't exist, then I'm nobody."

If venture capital compresses fifty years into ten, the pressure of those years doesn't disappear. People carry it.

Who decides whether a startup should raise capital?

According to Rueda, not even she does. Toward the end of the conversation, she stepped back from the authority her position might suggest:

"The investor is never going to be right. Never. The founder won't be either. The only one who will be right is the user, because that's the market speaking to you: I pay you or I don't, I use your product or I don't."

Coming from a venture capital partner, that's almost a decision-making rule: if users aren't paying for or using the product, buying time only accelerates the question.

If you want to explore where the first funding can come from, Startus has a guide on what seed capital is and how to get it.

The question that remains open

If barely one in ten seed-funded startups reaches Series A within three years, and much of the capital entering the region comes from abroad, the underlying conversation isn't about how to raise more money.

It's about what kinds of companies make sense to build with the time that venture capital buys in this region, and who will eventually acquire them.

The question Camila leaves for the next guest on The Seat: How can corporations and investors be brought into the conversation from day one as potential future buyers of a startup, and what concrete actions can founders take to make that happen?

A starting point: What a corporation needs to hear that your investment deck doesn't say.