Formula
How to Calculate Graduation Rate
The percentage of a fund's portfolio companies that successfully raise the next round of financing, indicating deal quality and portfolio momentum.
Portfolio Graduation Rate
Graduation Rate = Companies Raising Next Round / Total Portfolio Companies
Where
- Graduated
- = Companies that raised a subsequent funding round
- Total
- = Total companies in the portfolio cohort
What Is Graduation Rate?
Graduation rate measures the percentage of portfolio companies that advance to the next stage of financing — seed companies that raise Series A, Series A companies that raise Series B, and so on. A higher graduation rate suggests better deal selection, more effective portfolio support, and stronger alignment with the next stage's investor expectations. Typical seed-to-A graduation rates range from 20-40%.
Worked Example
The seed fund's 38% graduation rate to Series A — compared to the industry average of 25% — was a key talking point in their Fund II pitch, demonstrating that their selection process and portfolio support consistently produced fundable companies.
Why Graduation Rate Matters
Graduation rates are a leading indicator of fund performance because companies that raise follow-on funding are more likely to achieve eventual exits. For seed and early-stage funds, graduation rate is one of the few quantifiable metrics available before exits materialize.
Frequently Asked Questions
How do you calculate Graduation Rate?
Graduation Rate is calculated using the formula: Graduation Rate = Companies Raising Next Round / Total Portfolio Companies. The percentage of a fund's portfolio companies that successfully raise the next round of financing, indicating deal quality and portfolio momentum.
What is a good Graduation Rate?
What constitutes a "good" Graduation Rate depends on context — the fund's stage, vintage year, and strategy. Check our benchmarks and calculators for specific ranges.