Uploaded August 2025 | Updated September 2026, 2 weeks ago
See charts referenced in the video: newsletter.pragmaticengineer.com/p/the-state-of-vc-in-2025 . Many of the trends we discuss seem to originate from the end of zero interest rates (ZIRP). See this deepdive for more details: newsletter.pragmaticengineer.com/p/zirp
How is venture capital changing, and what do these changes mean for startups (and engineers working at startups)? In this episode of The Pragmatic Engineer, I sit down with Peter Walker, Head of Insights at Carta, to break down just this.
We go deep on the numbers: why fewer companies are getting funded despite record VC investment levels, how hiring has shifted dramatically since 2021, and why solo founders are on the rise even though most VCs still prefer teams. We also unpack the growing emphasis on ARR per FTE, what actually happens in bridge and down rounds, and why the time between fundraising rounds has stretched far beyond the old 18-month cycle.
We cover what all this means for engineers: what to ask before joining a startup, how to interpret valuation trends, and what kind of advisor roles startups are actually looking for.
If you work at a startup, are considering joining one, or just want a clearer picture of how venture-backed companies operate today, this episode is for you.
—
Brought to you by:
• WorkOS — The modern identity platform for B2B SaaS. workos.com
• Statsig — The unified platform for flags, analytics, experiments, and more. statsig.com/pragmatic
• Sonar — Code quality and code security for ALL code. sonarsource.com/pragmaticsecurity
—
The Pragmatic Engineer deepdives relevant for this episode:
• The end of 0% interest rates: what it means for tech startups and the industry. newsletter.pragmaticengineer.com/p/zirp
• State of the startup and scaleup hiring markets in 2025 newsletter.pragmaticengineer.com/p/startup-market-in-2025
• Thriving as a Founding Engineer: lessons from the trenches newsletter.pragmaticengineer.com/p/thriving-as-a-founding-engineer
• Is Big Tech becoming more cutthroat? newsletter.pragmaticengineer.com/p/is-big-tech-becoming-more-cutthroat
• Why techies leave Big Tech newsletter.pragmaticengineer.com/p/leaving-big-tech
• Lessons from bootstrapped companies founded by software engineers newsletter.pragmaticengineer.com/p/lessons-from-bootstrapped-companies
• Senior-and-above compensation in tech newsletter.pragmaticengineer.com/p/tech-compensation
—
Where to find Peter Walker:
• X: https://x.com/PeterJ_Walker
• LinkedIn: linkedin.com/in/peterjameswalker
Where to find Gergely Orosz:
• X: https://x.com/GergelyOrosz
• LinkedIn: linkedin.com/in/gergelyorosz
• Bluesky: https://bsky.app/profile/gergely.pragmaticengineer.com
• Newsletter and blog: pragmaticengineer.com
—
In this episode, we cover:
(00:00) Intro
(03:10) Venture vs. non-venture backed businesses
(05:59) Why venture-backed companies prioritize growth over profitability
(09:46) A look at the current health of venture capital
(13:19) The hiring slowdown at startups
(16:00) ARR per FTE: The new metric VCs care about
(24:48) Why some founders are incentivized to raise at high valuations
(29:31) What a bridge round is and why they can signal trouble
(33:15) Down rounds and how optics can make or break startups
(36:47) Why working at startups offers more ownership and learning
(37:47) What the data shows about raising money in the summer
(41:45) The length of time it takes to close a VC deal
(44:29) How AI is reshaping startup formation, team size, and funding trends
(48:11) Why VCs don’t like solo founders
(50:06) How employee equity (ESOPs) work
(53:50) Why acquisition payouts are often smaller than employees expect
(57:25) Startup advisors: What they do, how much equity they get
(1:03:57) Why it’s getting harder to get from Seed to Series A
(1:06:47) A case for quitting (sometimes)
(1:11:40) How to evaluate a startup before joining as an engineer
(1:13:22) The skills engineers need to thrive in a startup environment
—
See the transcript and other references from the episode at newsletter.pragmaticengineer.com/podcast
—
Production and marketing by penname.co/. For inquiries about sponsoring the podcast, email podcast@pragmaticengineer.com.
See charts referenced in the video: newsletter.pragmaticengineer.com/p/the-state-of-vc-in-2025 . Many of the trends we discuss seem to originate from the end of zero interest rates (ZIRP). See this deepdive for more details: newsletter.pragmaticengineer.com/p/zirp
How is venture capital changing, and what do these changes mean for startups (and engineers working at startups)? In this episode of The Pragmatic Engineer, I sit down with Peter Walker, Head of Insights at Carta, to break down just this.
We go deep on the numbers: why fewer companies are getting funded despite record VC investment levels, how hiring has shifted dramatically since 2021, and why solo founders are on the rise even though most VCs still prefer teams. We also unpack the growing emphasis on ARR per FTE, what actually happens in bridge and down rounds, and why the time between fundraising rounds has stretched far beyond the old 18-month cycle.
We cover what all this means for engineers: what to ask before joining a startup, how to interpret valuation trends, and what kind of advisor roles startups are actually looking for.
If you work at a startup, are considering joining one, or just want a clearer picture of how venture-backed companies operate today, this episode is for you.
—
Brought to you by:
• WorkOS — The modern identity platform for B2B SaaS. workos.com
• Statsig — The unified platform for flags, analytics, experiments, and more. statsig.com/pragmatic
• Sonar — Code quality and code security for ALL code. sonarsource.com/pragmaticsecurity
—
The Pragmatic Engineer deepdives relevant for this episode:
• The end of 0% interest rates: what it means for tech startups and the industry. newsletter.pragmaticengineer.com/p/zirp
• State of the startup and scaleup hiring markets in 2025 newsletter.pragmaticengineer.com/p/startup-market-in-2025
• Thriving as a Founding Engineer: lessons from the trenches newsletter.pragmaticengineer.com/p/thriving-as-a-founding-engineer
• Is Big Tech becoming more cutthroat? newsletter.pragmaticengineer.com/p/is-big-tech-becoming-more-cutthroat
• Why techies leave Big Tech newsletter.pragmaticengineer.com/p/leaving-big-tech
• Lessons from bootstrapped companies founded by software engineers newsletter.pragmaticengineer.com/p/lessons-from-bootstrapped-companies
• Senior-and-above compensation in tech newsletter.pragmaticengineer.com/p/tech-compensation
—
Where to find Peter Walker:
• X: https://x.com/PeterJ_Walker
• LinkedIn: linkedin.com/in/peterjameswalker
Where to find Gergely Orosz:
• X: https://x.com/GergelyOrosz
• LinkedIn: linkedin.com/in/gergelyorosz
• Bluesky: https://bsky.app/profile/gergely.pragmaticengineer.com
• Newsletter and blog: pragmaticengineer.com
—
In this episode, we cover:
(00:00) Intro
(03:10) Venture vs. non-venture backed businesses
(05:59) Why venture-backed companies prioritize growth over profitability
(09:46) A look at the current health of venture capital
(13:19) The hiring slowdown at startups
(16:00) ARR per FTE: The new metric VCs care about
(24:48) Why some founders are incentivized to raise at high valuations
(29:31) What a bridge round is and why they can signal trouble
(33:15) Down rounds and how optics can make or break startups
(36:47) Why working at startups offers more ownership and learning
(37:47) What the data shows about raising money in the summer
(41:45) The length of time it takes to close a VC deal
(44:29) How AI is reshaping startup formation, team size, and funding trends
(48:11) Why VCs don’t like solo founders
(50:06) How employee equity (ESOPs) work
(53:50) Why acquisition payouts are often smaller than employees expect
(57:25) Startup advisors: What they do, how much equity they get
(1:03:57) Why it’s getting harder to get from Seed to Series A
(1:06:47) A case for quitting (sometimes)
(1:11:40) How to evaluate a startup before joining as an engineer
(1:13:22) The skills engineers need to thrive in a startup environment
—
See the transcript and other references from the episode at newsletter.pragmaticengineer.com/podcast
—
Production and marketing by penname.co/. For inquiries about sponsoring the podcast, email podcast@pragmaticengineer.com.
