Startup Valuation Delta: H2 2025

Median pre-seed valuations in H2 2025 have climbed to $5.61M, up from $4.78M in 2024 and back above the 2023 level of $5.71M. At the same time, the median capital requirement has risen to $0.80M — the highest since 2022. This is not a return to ZIRP-era exuberance: the 2022 peak of $7.20M remains well above current levels. Instead, it signals a more grounded recovery, where founders are pursuing businesses that genuinely require more capital to get off the ground. The simultaneous rise in both valuations and capital requirements suggests a compositional shift in the types of companies entering the pre-seed stage. Founders are increasingly tackling problems that demand real infrastructure, hardware, or regulatory navigation — not just shipping software MVPs.

Implied dilution — what a founder would give up if they raised the median capital requirement at the median valuation — tells the rest of the story. Q3 2025 saw a notable spike to 17.4%, reflecting a quarter where capital requirements jumped to $1.10M while valuations held around $5.2M. But Q4 2025 dropped sharply to 8.9%, as valuations rose and capital requirements normalized. The H2 2025 average of roughly 13% is broadly in line with the 2022–2024 range, suggesting that while the makeup of pre-seed companies is shifting, the overall terms have remained stable. Founders raising for more capital-intensive businesses are commanding higher valuations to match, keeping dilution in check.

The United States (27.7%), the Middle East (24.7%), and Europe (20.1%) lead in average implied dilution — not because founders are getting worse deals, but because they are raising significantly more capital. The US has the highest median capital requirement at $1.75M, the Middle East at $1.51M, and Europe at $0.87M. These are markets where founders are building fintech platforms, energy infrastructure, and other capital-heavy ventures that require substantial upfront investment. By contrast, Latin America (10.2%), Oceania (10.6%), and Southeast Asia (12.0%) show markedly lower dilution. These regions tend to have lower capital requirements — $0.31M, $0.53M, and $1.25M respectively — consistent with a stronger focus on software and lighter business models. Africa sits in between at 14.9% dilution, reflecting an ecosystem that is beginning to diversify beyond pure software but has not yet reached the capital intensity of more mature markets.

Software & IT stands out with the lowest implied dilution at 13.2%, despite having the highest average valuation ($5.61M). This is the classic pre-seed profile: relatively modest capital requirements ($0.85M) against strong valuations, reflecting the capital-light nature of software businesses. Finance (21.0%) and Energy/Climate (20.5%) tell the opposite story — higher capital requirements of $1.33M and $0.87M respectively push dilution well above the software baseline, even though valuations in these sectors are comparable or lower. This pattern reinforces the central finding of this report: the pre-seed landscape is evolving. The growing share of capital-intensive industries at the earliest stage suggests that founders are increasingly using the pre-seed round not just to build an MVP, but to lay the groundwork for businesses that require real capital — whether that's regulatory compliance in fintech, physical infrastructure in energy, or complex supply chains. Pre-seed is no longer synonymous with "just software."