If a startup raised a top quartile Seed round, Series A, B, & C, they typically would have grown headcount by about 6% in the last twelve months. The headcount growth rate for all other companies? About double at 12%.

Here’s the catch : the difference isn’t statistically significant.

In fact, comparing the headcount growth rates across top quartile fundraisers to bottom 3 quartile fundraisers, the result is the same. No statistically significant difference in headcount.

The chart does suggest the delta between the top & bottom quartiles does widen with stage.

But plotting the Series C size by headcount, the dispersed data underscores the point that great fundraises do not correlate to team size growth in this environment.

Why look at headcount growth? It’s a proxy for financial success. Startups with more business than they can handle should be scaling their teams to satisfy market demand.

What are some hypotheses for these data?

• great fundraising ability & product market fit may overlap sometimes but not all the time
• most companies have focused this year on efficiency rather than growth given the macroeconomics, irrespective of the balance sheet
• more companies are able to scale revenue independently of headcount because of AI or product-led growth
• larger fundraises are pre-emptions that occur in hot spaces like AI where the companies raise capital to have the option to grow, but are waiting to exercise it

Thanks to Theory’s own Lauren DeMeuse for pulling together the data & to Terrence Rohan for inspiring it.