The venture market in Q3 2025 resists simple characterization. Secondary market transaction volume remained muted, yet premium pricing rose to 38% of deals, up from 27% in Q2, marking a clear shift toward quality. Preferred stock made up 47% of transactions, up from 33% in 2024, reflecting investor preference for holdings with stronger protections and potential for distributions despite limited IPO or M&A activity.
In convertible security financings, SAFEs strengthened their position. Investment amounts improved across most ranges, and valuation caps increased quarter-over-quarter, except for SAFEs over $5M, which saw a 7.2% decline. SAFEs continue to dominate pre-seed rounds, comprising more than 92% of early-stage financings.
Convertible notes, meanwhile, declined across various investment ranges. Despite decreasing investment amounts, convertible notes saw higher valuation caps in the $50k to $250k and $1M to $5M investment ranges. Convertible notes remain more common after priced equity rounds, holding nearly a 30% share of such financing transactions.
Key Takeaway: Q3 trends show investors concentrating capital on high-quality secondary assets and founders leveraging flexible convertible instruments in early rounds. SAFEs continue to be the dominant fundraising vehicle before a priced round, while convertible notes remain popular after priced equity rounds.
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