Katherine Naylor Pullman started Our Third Place, a networking group for women in media, as a part-time side project. It began four years ago with monthly, then weekly, dinners. Women in Chicago and Los Angeles reached out, wanting to host their own dinners. Now, Our Third Place is in 40 cities, and running it has blossomed into a full-time gig for Naylor Pullman, who left a previous job in brand partnerships.
Our Third Place has grown to 1,800 members without big investors, and that’s by design. “If someone were to throw us millions of dollars, they would then want millions of members,” Naylor Pullman says. “I firmly believe you cannot scale community by the millions.” She and the company’s CEO, Ashley Preininger, are building by seed-strapping, a tactic where companies raise smaller investments and forgo the traditional venture capital cycle of Series A and Series B fundraising, and then grow the company through revenue. They’re raising money now from family, friends, and members, because they can work within that smaller fundraising space, and keep costs for members lower when the company isn’t beholden to massive investor returns. “We actually don’t feel like we need a huge influx of cash to do what we need to do,” Preininger says.
Seed-strapping has become more appealing to founders as venture capital funding waned following the 2010s boom and the end of the zero-interest rate policy. The shift also comes amid the rise of the single-person startup, as more founders deploy AI agents to help with coding, accounting, marketing, and other tasks that once required expensive labor. The founders who spoke with me for this story tell me they’re taking an alternate path to funding by choice, seeing that more money can come with more problems — more commitments, more expectations, and less control of their company. Amid “all the fundraising doom and gloom,” says Caroline Lewis, managing partner at early-stage venture firm Nura Ventures, “the rules are being rewritten.”
“You can go back to business fundamentals of building a product that customers want to buy, then you can raise some capital and get some decent traction, and don’t necessarily have to be beholden to the traditional venture train,” Lewis says.
For some founders, hopping off the venture capital treadmill allows them to build at the speed they want.
Seed-strapping isn’t new. Software company Zapier seed-strapped before the term was in the zeitgeist, raising just $1.3 million seed-strapping and eventually growing to hundreds of millions in annual revenue. But the tactic has gotten new attention as founders struggled to raise venture capital. The number of global venture deals has steadily fallen from more than 17,000 in the first quarter of 2022 to about 8,500 in the second quarter of 2026, according to data from Pitchbook. Deal value is hitting an all-time high, but that’s largely fueled by big deals with OpenAI, Anthropic, and xAI. Since late 2024, AI startups have captured at least half of venture funding, with their stranglehold on the market climbing to 80% at the beginning of this year, according to Crunchbase. Anthropic, xAI, OpenAI, and Waymo accounted for nearly two-thirds of the money invested that quarter.
The market is bifurcated between those companies that need lots of capital and can bring massive returns, and all the other good ideas that may need less compute power, less labor, and would bring smaller returns, says Charles Hudson, managing partner at venture firm Precursor Ventures. Big venture funds look for areas where they can make large investments and look for massive returns. “The biggest challenge is: how do you finance these companies through that little middle period?” He says. “There’s lots of money to get started. If you’re building something big, there’s lots of money to shoot for the moon.” But for companies that raise a seed round of a few million, and may need another few million down the line, there could be fewer investors in that sweet spot. “Who’s going to provide you that money?”
The number of global venture deals has dropped from more than 17,000 in the first quarter of 2022 to about 8,500 in the second quarter of 2026.
According to Carta, 41% of the US-based companies that raised a seed round in 2022 didn’t fundraise beyond that. Another 21% continued to fundraise, but did not pursue a Series A round. These companies have also maintained lower headcounts than those that did raise a Series A round or beyond, sticking with median staff numbers of between six and eight people, compared to 22 at firms that raised more money.
About half of startups that raised seed money in 2018 moved to a Series A within three years, according to data provided by Carta. But among those that raised a seed round in 2022, fewer than a third of new startups made the leap to a Series A by 2025. “The overall trend is that graduation rates have decreased,” Hamza Shad, insights manager at Carta, tells me in an email. “This suggests that seed-strapping — whether willingly or unwillingly — has become more common.”
Lauren Dines worked in venture for five years, but left to found and work full-time on Breaknine, an AI startup that handles personalized outreach, late last year. “While I was in venture, I saw a lot of companies where I was like, this is a good idea, it’s just not venture scalable.” By steering away from the venture route and shunning expectations of massive growth, she can potentially accelerate the typical venture timeline, exiting in three to five years instead of seven to 10. It’s potentially less risky than seeking to raise tens of millions of dollars and get returns in the hundreds of millions.
Dines says her goal is to grow her business, and then make a strategic decision about how to move forward. “It was never my dream to have a venture-backed business.” Dines thought about: “What do I need, and how can I best get there?” when it comes to her own needs and life. “This is probably the most efficient path to getting there.”
Women have also struggled to raise venture capital, with all-female leadership teams taking home just 6.5% of venture deals in 2024. But women founders and investors make up nearly half of all angel investors. Boot-strapping and seed-strapping are ways around the funding blocks. That’s part of the thought process behind how Shannon Davenport, who founded Esker Beauty, has built her company. She boot-strapped it for about four years, then went looking for venture capital. But Davenport says she found that the VCs had a thesis for how her business should fit the market that didn’t align with what she knew about her products and customers. She raised smaller investments in a seed stage, and now, says her company is approaching profitability, targeting the end of the year.
“My most important valued asset is my time,” Davenport says. And chasing venture money ate away at the time she could spend doing the product work that she’s passionate about. “Instead of being super obsessed with your customer, you’re super obsessed with the investors. You have to pick what’s your priority.” AI also makes this easier. Subject matter experts can do more with AI to start, and may need fewer hires, saving them money. Davenport says she has built an AI-powered dashboard to act as an assistant, pulling in metrics on everything she needs to know about the business. She has a small full-time staff of three, but AI takes on some tedious tasks. “I kind of have a personal assistant now that I could not afford before,” she says.
At a time when the fundraising game is changing rapidly, there’s opportunity in going back to the business fundamentals.
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