The Middle-Stage Startup Apocalypse: Why Series B Is Becoming a Graveyard

Observing many startups in Series B has presented a clear pattern: it's a turning point for dreams. Startups go into Series B with high-flying ideas, some degree of success, and a good-looking pitch—only to be met with a chilling rejection from investors. The rationale for this description is found in middle-stage startup being defined as today's versions of dinosaurs: too slow to change, too risky to grow, and quite vague enough to produce confidence.

Series B isn't what it used to be. According to Crunchbase, Series B funding deals fell by 28% in 2024. And it certainly isn't because investors have suddenly become stingy; it's because they've become smart. They are now laser-focused on either early-stage companies with limitless potential or late-stage juggernauts with undeniable proof of concept. The middle? It's a no-man's land, and it's not getting any better anytime soon.

The Intermediate Stage as a Misleading Period

At this stage in Series B, the parameters switch drastically. You can no longer rely just on the irresistible appeal of a visionary, zealous founder. Capital should be backed by actualities. Investors want performance measures—the real thing—that indicate scalability instead of some fluffy indicators of how a company is performing. They also want a leadership team to be in a position to deal with the pressures of high growth without fragmentation.

There is work to be done here, as many Founders have given me a chance to interact with them. I mostly focus on lively Q&As with an unending stream of hard questions. By never letting up, I'm very good at ensuring they interact with the topics vividly. And many, many founders thought they were crushing it until I asked them one or two roasting questions.

1. How lean is your operation?

2. What factors lead to your burn rate being like a bonfire's?

3. What constitutes your real market fit?

(Hint: "Everyone" is not a target audience.)

4. How are you different from the 10 other startups pitching the same thing?

(No, possessing "passion" isn't enough.)

Investors Have Changed—So Should You

Let’s be real: investors are playing a different game now. They’re not handing out cash to anyone with a good story and a few paying customers. They’ve become surgeons, cutting away anything that doesn’t look like it’s worth their time. And frankly, I don’t blame them. Would you bet on a middle-stage startup that’s still figuring things out, or double down on a company that’s already proven it can dominate?

Marc Andreessen put it best: "The best investment decision is the hardest to make." Currently, the toughest decision for investors is whether to take a risk in the intermediate space. Most investors are choosing to sit it out.

Fundamental Strategies for Modern Business Leaders

If you are a Series B founder—or need to become one—be downright undeniable. Not good. Not promising. Undeniable. That means leaner operations, tighter pitches, and an almost obsessive focus on what sets you apart.

Here's what I'd tell you if you walked into my office:

1. Eliminate Excess: If your staff has too much in terms of numbers or your rate of expenditure is unsustainable, you must correct it early. Investors want to see intelligent growth and not just expansion.

2. Provide empirical proof: It's worth noting that I do not mean predictions in a best-case scenario. Instead, I want real and quantifiable proof that proves your model's effectiveness.

3. Be Brutally Honest: If your product, market, or leadership has cracks, address them now. Investors will find them anyway—better they hear it from you.

Extinction versus Evolution

Do not let the mid-stage define a graveyard for you. As long as you maintain your self-awareness, show some humility, and put up a fight, you will come out just fine. The startups that get through Series B are not lucky; they are strategic and focused, and they have what it takes to do the hard work. The rest? Well, natural selection does not have much mercy on them.

You are not alone in feeling the heat. But let's be clear: midstage is no reason to coast. It is a proving ground, and only the strongest survive. So ask yourself this: Are you building a company that investors simply can not ignore? Or are you just hoping to survive? Because in this game, hoping is not enough.