Small Late-Stage Rounds Are Fading Away

Go big, or pay your own way. That’s increasingly the mindset among investors in late-stage startups.

While total late-stage investment has risen in the past few years, less is going to smaller deals. Funding to late-stage rounds of $30 million and under has been particularly weak, declining for six years in a row, per Crunchbase data.

Now, it’s circling a low. In 2025, U.S. investment in these smaller rounds at Series C and beyond totaled just $1.36 billion across just 69 rounds. That’s less than 2% of all investments at later stage.

For the first few weeks of 2026, the decline in smaller late-stage rounds looks much sharper. So far this year, they’ve accounted for about 0.2% of all late-stage funding, a record low.

Wandering down later-stage memory lane

The small share of funding going to sub-$30 million rounds may not sound surprising to those following recent giant financings. After all, these are the glory days of generative AI, where the $40 billion round is an actual thing.

But it wasn’t that long ago that smaller late-stage rounds were a big part of the startup pipeline. Back in 2016, more than half of later-stage rounds were below $30 million. Such rounds accounted for more than a sixth of all investment at that stage.

Last year, by contrast, sub-$30 million late-stage rounds were just 16% of all deals and 1.6% of all investment at that stage.

Only room for big fish

What happened? It looks similar to the trends we’ve seen at seed. Once largely populated with rounds of a couple million dollars, seed now regularly features deals of over $100 million. Yes, smaller rounds are still getting done, but they’re not where the asset class is concentrating its capital.

One simple explanation across stages is that investors are increasingly in consensus about who they see as the likely big winners. They’re putting their money behind a few standouts rather than spreading their bets. It’s a reasonable approach for a world where top public companies are valued in the trillions, and few smaller venture-backed companies even make it to the public markets.

A constrained environment for some core acquirers might also be a contributing factor. In the past, the idea of selling to a tech giant might have been a viable option for a non-unicorn. These days, concerns around antitrust scrutiny and other factors have led large-caps to pull back on smaller deals, with the five largest tech companies in particular showing scant appetite for small-scale M&A.

Private equity is also a less interested acquirer lately, as higher borrowing costs make debt-financed purchases costlier. Venture-backed startups are typically not throwing off a lot of cash flow, making them a poor contributor to servicing debt.

Bottom line, there aren’t as many clear paths to the good-but-not-phenomenal type of exit a later-stage startup could realistically envision. Yes, startups are still buying other startups, but these are often smaller purchases.

The preeminent use case for a smaller late-stage round may have more to do with the company itself than exit prospects. Some companies may not need that much to get to their next milestone. Yet without any fresh capital, they’re unlikely to get there at all.

This also sounds a lot like real life. But these days, the startup funding world is resembling that less and less.