Inside the Numbers: Carta's 2025 AI Funding & Equity Insights with Peter Walker
Head of Insights Peter Walker reveals breakthrough trends in AI valuations, equity splits, and capital efficiency reshaping startup funding.
Last month, I hosted Peter Walker, Senior Director of Insights at Carta, for an exclusive deep dive into the AI startup landscape. Drawing on insights from Carta’s extensive dataset and firsthand venture experience, Peter shared a wealth of information—from the nuances of early equity splits to the evolving role of AI in startup funding and scaling.
If you missed the webinar and would like to catch up, you can watch the full session on our Agentic podcast (episode below).
Here are the key takeaways from each segment of the discussion:
What's Happening in AI?
Peter’s analysis started at the very beginning of startup formation—specifically, how the makeup of founding teams is changing. Data from over 43,000 startups on Carta reveals that solo founders have become increasingly common. However, when it comes to raising venture capital, teams still have the advantage. VCs tend to prefer co-founding teams due to the complementary skill sets and built-in support that multiple founders can offer, especially in technology-driven markets.
He also emphasized that there’s no “one size fits all” approach to splitting equity. While equal splits such as 50/50 for two-founder teams are popular, the data show that many startups opt for other arrangements. The key takeaway? Avoid a default equal split simply because it seems easy—open, honest conversations about equity early on are essential to protect your company and ensure alignment as you grow.
Innovations in Equity and Team Building
A significant portion of our discussion delved into the mechanics of equity management:
Vesting Schedules: Peter underscored the necessity of founder vesting schedules—typically a four-year vest with a one-year cliff—to safeguard against the risks of early team departures. In some cases, as companies remain private for longer periods, vesting periods are even extended.
Advisor Equity: Contrary to the common starting point of 1% equity requested by advisors, the median equity actually granted is closer to 0.25%. This difference highlights the importance of aligning equity with the tangible value advisors bring to the table.
Employee Equity: For early hires, the data suggest that equity grants are generous—often around 1.5% for the first hire—but the percentage quickly tapers off with additional team members. This reinforces the challenge founders face when scaling teams in a capital-efficient manner.
Venture Landscape
The discussion then shifted to the evolving venture ecosystem. Peter noted that the feverish pace of funding during 2021—a period marked by overfunding—has left a lasting impact. Startup founders are now facing extended fundraising cycles, with the time between rounds stretching well beyond the historical norm of 18–24 months. This change forces companies to become more capital efficient, as reflected in the trend toward building smaller, leaner teams. For instance, while the average Series A company once employed about 21 full-time staff, recent trends show this number dropping to approximately 15.9. This reduction is not a sign of weakening growth but rather an adaptation to the availability of AI tools that enable leaner, faster operations.
Future of AI Startups
Looking ahead, Peter’s data paint an optimistic yet challenging picture for the AI ecosystem. AI startups continue to command premium valuations, underscoring how deeply AI is transforming value creation and market dynamics. Although these higher valuations come with similar dilution levels—about 20% per round—they signal a significant shift in investor sentiment. Peter also discussed the rapid infusion of capital into AI ventures, noting that more than one in three dollars globally now goes toward AI companies. Moreover, rounds specific to AI show a 30-50% premium in both valuation and cash raised compared to non-AI rounds. Despite the pervasive hype, Peter stressed that merely adding “AI” to a pitch isn’t enough. Investors expect the core value proposition of the company to be inseparable from its AI capabilities—if the technology is removed, the business should struggle to deliver on its promise.
How to Build and Invest in AI
For founders and investors alike, Peter shared actionable strategies for navigating this complex landscape. He advised that startups focus on efficient capital deployment by building lean operations that leverage AI to reduce headcount while boosting performance. Founders should also develop a thoughtful equity strategy—whether addressing co-founder splits, vesting schedules, or advisor allocations—to set a solid foundation for long-term success. With extended fundraising cycles now common, it is crucial for founders to balance growth ambitions with capital efficiency and be prepared to meet increasingly rigorous investor metrics.
Final Thoughts
Peter’s insights reinforce that while the AI landscape is marked by high valuations and rapid innovation, the fundamentals remain unchanged. Sound business metrics, clear value propositions, and efficient capital deployment continue to be the cornerstones of success. The challenges stemming from the overfunding in 2021 and the resultant extended fundraising periods have prompted a shift toward more sustainable and nimble business models. For founders and investors in the AI space, keeping these benchmarks in mind will be crucial for navigating the current market and future disruptions.
If you’re a founder building in the AI space—whether in agentic AI, vertical applications, or compute infrastructure—we’d love to hear from you. Pitch us here!
For more insights on the evolving AI startup landscape, check out our Agentic podcast for more insights on the AI revolution, and follow me on social media (LinkedIn, X, Instagram, TikTok) for the latest updates.