Sitting it out: Why some investors are staying out of mega-series A rounds

VCs discuss why more isn’t always better when it comes to series A rounds

As series A rounds continue to balloon, some VCs are opting to stay away from super-sized rounds, arguing the large boluses of cash up front can erode financial discipline and constrain exit options, hurting returns.

Large A rounds are becoming in vogue: this year’s tally of series A rounds breaking the $100 million barrier is already at four, roughly on track to meet last year’s total, when 10 companies raised over $2 billion on aggregate (see Figure: “$100M and up”).

Since 2014, 27 companies have raised series A rounds above $100 million, compared with one in the five years prior.

The trend extends to A rounds in the $50-$100 million range too. Since 2014, 74 companies have raised series A rounds in that band, compared with seven in the previous five years.

The average size of a series A round has jumped from $14.4 million in 2014 to $33.4 million year-to-date.

Advocates of these mega-rounds say they give companies the ability to pursue more therapeutic avenues and focus on development instead of fundraising.

Many entrepreneurs are

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