Metrics & Performance
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
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%.
In Practice
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 It 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.
VC Beast Take
Graduation rates can be misleading. A fund could have a high graduation rate by investing only in safe, consensus deals that easily raise follow-on but never generate venture-scale returns. The best metric is graduation rate combined with the quality of follow-on investors and the valuations achieved.
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