Most Series A rounds fail for reasons that have little to do with the underlying business. According to the venture advisory firm Burkland, founders who take any offer out of desperation, pitch investors who don't fit their stage or sector, or present a muddled story routinely create problems that surface later — often at the Series B. The pattern across investor-side commentary is consistent: the mistakes are strategic, not technical, and they cluster in three areas — how the deal is structured, who the founders target, and how the story is told.
This article organizes those failure modes into a diagnostic framework of three risk areas, each paired with the specific questions a founder can ask before the first VC meeting. One useful anchor for the deal-structure discussion comes from Carta's round benchmarking data: the median Series A dilutes founders by 18.7% of ownership, against a median post-money valuation of $76.3 million and a median round size of $14.7 million. That number gives founders a concrete reference point for judging whether a proposed round is normal — or a warning sign.
Pitfall Category 1: Deal Structure & Valuation
The most common structural mistake is chasing an inflated valuation. Allied Venture Partners, whose managing partner Matt Wilson catalogued seven recurring Series A errors, puts unrealistic valuations at the top of the list: overpricing the company can lead to down rounds and damage future fundraising. Sam Altman, writing on fundraising mistakes from his vantage at Y Combinator, makes the same point more bluntly — "The biggest problem comes from chasing high valuations," he writes, noting that YC encourages companies to seek reasonable ones.
Altman's framing is worth internalizing because it reframes what a term sheet is for. "Startups are usually a pass-fail course — either you succeed or you don't," he writes. "The important thing is to get good investors, clean terms, and not spend too much time fundraising." In other words, a valuation that maximizes this round's headline number is not the objective; a cap table and investor syndicate that keep the company fundable at the next round is.
Desperation is the other structural trap. Burkland's guidance is direct: when cash is tight, taking the first term sheet is tempting, but accepting unfavorable terms or partnering with the wrong investors creates challenges during the Series B. Founders running low on runway are the most likely to trade away control for speed — which is precisely when they should slow down and compare offers. Allied's practical recommendation is to seek at least two independent term sheets before signing, both for negotiating leverage and to establish a sense of market norms.
