InvestTN Q3 update for founders building in Tennessee, across the Southeast

December 8, 2025

Blog, News

By Jay Teamer and Reed Hooks

Introduction

The national venture capital market continues to consolidate around a small number of large coastal hubs.

While the United States recorded roughly $80.9 billion invested across 4,208 deals in Q3, the majority of that capital still flowed into the Bay Area, New York, Los Angeles, and Boston. A small number of very large financings also captured a disproportionate share of total dollars.

For founders building outside those hubs, this creates a fundraising climate that requires more time, clearer proof points, and stronger financial fundamentals.

This report focuses on the dynamics that are shaping early-stage fundraising in non-hub regions and offers practical guidance from an investor’s perspective.

Startup trajectory and insights

Current landscape overview

Venture capital remains concentrated in a smaller set of large deals. Even though more than 4,000 companies raised funding in Q3, the bulk of the capital went into a handful of very large rounds. Investors across the country are writing bigger checks, but they are placing them in fewer companies. For founders building in regions like Tennessee, this means that traction must be unmistakable before capital moves.

The non-hub premium on traction

In the Southeast, founders must meet a higher bar to win national attention. Investors now expect strong early revenue quality, repeatability in customer acquisition, healthy margins, and clear evidence of return on investment for hard-tech and health-tech solutions. Vision alone no longer moves capital. Discipline and proof do.

Round dynamics and capital structure pressure

Seed rounds continue to trend larger and more expensive while ownership percentages shrink. According to multiple datasets, median deal sizes have risen across nearly every stage. Series A deal sizes now sit near $26.9 million on a median basis, and Series B rounds have grown to a median of $43.5 million. For smaller regional funds, this makes maintaining ownership difficult. Founders feel this too. When early investors are unable to participate in future rounds, dilution can accelerate quickly and cap tables can become fragmented.

The best way to prevent that outcome is to design rounds that preserve alignment. Set valuations that match your milestones, give early investors meaningful pro rata rights, and raise capital in stages tied to clear proof points. This approach protects founders, keeps early champions at the table, and creates a structure that national investors look for.

Liquidity cycles are longer

Startups are staying private for longer periods. IPOs remain limited, and most companies will operate privately for close to a decade before seeing an exit. Founders can no longer build around expectations of quick liquidity. The teams that win in this environment operate lean, extend runway, and focus on measurable value creation at each stage.

Longer cycles also change how founders should think about optionality. Instead of aiming for a single major outcome, it is smarter to build toward multiple paths. These may include profitability, strategic partnerships, targeted acquisitions, or longer-term independence. Preparing for more than one possible outcome keeps a company fundable and resilient.

Investor perspectives: what founders should focus on now

Design rounds your insiders can support

Regional investors often have limited follow-on reserves. Structure your rounds in a way that keeps them meaningfully involved. Fair valuations, clear pro rata access, and milestone-based raises show discipline and stability. Future investors notice this.

Prove value early and often

Investors in non-hub markets respond to results, not roadmaps. Demonstrate ROI through strong unit economics, customer retention, repeatable sales processes, or verifiable cost savings. Clear proof shortens diligence and increases conviction.

Build toward optional outcomes

With M&A activity rising, founders should identify and engage potential strategic partners early. Pilot programs, integrations, and shared IP can serve as validation points that attract both investors and acquirers. Optionality is an asset in today’s market.

Case Studies from the InvestTN Portfolio

Daily Crunch: scaling a mission-driven snack brand

Milestone: Their largest commercial launch to date, scheduled for August 2025.
Daily Crunch, a Nashville-based company producing sprouted nut snacks, recently secured a major new partnership with Albertsons that will put their products in 1,300 stores. This marks their transition from natural and health-focused retailers into mainstream grocery. Co-founder Laurel Orley describes 2025 as a year of building, with a completed Series A, expanded R&D, and new product lines.

InvestTN’s role: InvestTN led Daily Crunch’s Series A and introduced the company to an additional investor. Daily Crunch credits Tennessee’s investor ecosystem with helping turn early ideas into national growth. Their goal is to become a staple in pantries across the country while remaining proud of their Tennessee roots.

Lessons for founders:

Local investors can catalyze a successful Series A outside coastal markets
Product, packaging, and brand maturity matter when entering large retail
Staying true to mission can strengthen national expansion

Bugle: scaling volunteer management for social impact

Milestone: Seed round investment to double volunteer engagement from 2024 to 2025.
Bugle, founded by Army veteran Ryan Johnson, is a platform for nonprofits to manage volunteers, track events, and convert engagement into donations. The company already serves hundreds of nonprofits across the United States and in several other countries. Their long-term goal is to double global volunteering by 2036.

InvestTN’s role: InvestTN invested alongside the PenFed Foundation’s veteran entrepreneur program, supporting Bugle’s operational expansion. The team notes the significance of backing a veteran-led company with Tennessee roots and a mission centered on service.