Investors Explain How to Raise a Series A in 2026 — and Warn of a Coming Correction
In today's market, no single metric defines what a Series A is or how to raise one. At this year's TechCrunch Disrupt, three investors offered founders advice on raising a Series A — and one appended a stark warning. With capital pouring into AI and revenue figures being inflated to justify sky-high valuations, a correction could arrive as soon as 2027.
A Market Unlike Any Other
The warning came from Shailendra Singh, a managing director at Peak XV, who spoke alongside Jahanvi Sardana, a partner at Index Ventures, and Janelle Teng Wade, a partner at Bessemer.
"Seed and venture, I've never seen it as dysfunctional as it is now," Singh said, adding that the current market is one of the hardest to raise in that he has witnessed.
"The burden is high to convince any top firm that you are among the few special companies that can break out, and then the dispersion is very high on the terms you might get, how much capital you can raise, and what terms you can raise it on," he continued. In fact, it's now common to see a company trying to close a round at as many as three different prices at once. "It's a crazy sign of market froth," he said.
"We're calling it the 'tranchopalooza,'" Sardana added, referring to the way rounds are being split into tranches, or separate chunks.
What Investors Look For in a Series A Pitch
Beyond the warnings, the investors laid out what they look for in a Series A pitch. First is a persuasive story about why a founder has a shot at building a big company. "Founders who can attract very high-quality talent have an advantage," Singh added.
What a founder builds matters, too. Teng Wade said capital is flowing into areas such as defense, robotics, and AI infrastructure. She also noted that foundational model companies are moving toward vertical integration — taking on more of the stack themselves — but there is still room for newer players, including neo-clouds that rent out AI computing power and neo-labs focused on AI research.
Metrics Still Matter — But the Rules Have Changed
Metrics still help a great deal, but they are less clearly defined than they used to be, especially in an era like AI, where running a company is extraordinarily expensive. Teng Wade gave an example of how her firm evaluated Anthropic in its early days, when its margins were negative and it was spending heavily on compute.
One partner on her team, however, felt that AI would be "bigger than everything we've ever expected in terms of price premium on the frontier models," she said, "becoming a substitute for other types of software." The logic was that even with money-losing margins, the market would be large enough to pay off if the company became one of the top three players. Anthropic is now reportedly preparing an IPO at a valuation of around $2 trillion. It told investors this month that it was profitable on an adjusted basis, though that measure excludes some costs.
The Importance of Honesty in a Frothy Market
The investors also stressed the importance of honesty in a market where inflated annual recurring revenue (ARR) numbers swirl alongside headline valuations.
"I tell founders, if you ever show a chart which shows cumulative revenue or cumulative ARR, that is a massive red flag," Singh said. "It means that your time series data is not good, because cumulative data is a big lie." He added that it is important for a company to be intellectually honest in how it presents itself and engages during bull cycles.
The Looming Correction
Singh said the market is full of "false positives" because "it can't be that every company is going to be successful. This is as optimistic as I've seen the venture world in two decades, and normally that's a sign. I think 2027 will be different. I think we will see a correction."