It’s Weird Out There

What VCs Are (and Aren’t) Backing Right Now

The deck is tight. The TAM is real. The story’s strong. So… why are checks still slow? Welcome to 2025: fundraising is happening, but it’s weird out there.

The market isn’t dead, but it’s cautious. According to Crunchbase, global VC funding fell 30% in Q2 2025 compared to the same period last year. In consumer specifically, funding is down 38%, and rounds are taking 60% longer to close. Founders aren’t sure whether to raise or wait. VCs are taking more meetings but writing fewer checks. LPs are slower to commit. Everyone is looking at each other wondering who will move first.

At Sandbox Studios, we’re still seeing at least 40 celebrity brands raising capital per month. But the flow has changed. Brands that don’t need to raise are holding off. And those with the means to bootstrap are doing just that. 

The celebrity angle adds another layer: many A-listers can tap a network of rich acquaintances to bridge early capital gaps. 

But what happens after the initial launch hype fades? What’s really getting funded now?

What Is Getting Funded?

Here’s a snapshot of what early-stage fundraising looks like right now:

Khloud Popcorn by Khloe initially went out to raise $10M and ended up closing an oversubscribed $12M round in April, backed by Serena Ventures, WME, and Shrug Capital. The round caught headlines across both the business and celebrity press — a rare crossover moment that underscored how powerful the right celebrity founder, timing, and positioning can be.

In a quarter where consumer raises are down nearly 40%, Khloud’s momentum illustrates the playbook Sandbox Studios has long believed in: culturally resonant brands with real traction, smart capital, and focused execution can still raise — and win.
While it’s definitely rarer than it used to be, some brands are still closing oversubscribed rounds — especially those with clear traction, tight capital strategy, and operational excellence.
According to PitchBook, the median pre-money valuation for early-stage consumer startups that raised in H1 2025 was $22 million — down from $35 million in 2022, but up slightly from late 2023. Meanwhile, only 18% of consumer brands raised more than they did in their previous rounds.

A few recent oversubscribed round examples from the Sandbox Studios portfolio:
  • Superfiliate, the fastest growing affiliate, influencer, and referral platform for ecommerce merchants, raised a $2M strategic growth round led by Happy Stack in June. The raise amount ($2m) was less money raised than their previous round, intentionally so: founders Andy Cloyd and Anders Bill prioritized profitability and only raised what was needed. With 400% YoY growth and 2,500+ active brand users, it was a smart, proactive fundraising strategy that reflected current market discipline.
  • Sarelly Sarelly, the breakout Mexican beauty brand, closed a $3M round led by Latin America’s top consumer venture firm Wollef in July. Sandbox Studios was the first institutional check into this forward thinking GenZ beauty brand in 2022 and has been helping shape the fundraising strategy alongside CEO Remi Martini. The result: an oversubscribed round which closed in under four weeks.

These examples share three key themes: clarity, discipline, and proof. And right now, that’s what moves capital.

Investor sentiment is shifting accordingly. As one GP at a $500M consumer fund recently told us, “I’m not looking for perfect stories. I’m looking for smart founders with a grasp on margin and momentum. That’s it.”

What’s Not Getting Funded (and Why)

Unfortunately, not every raise is finding traction. These are the top three reasons founders are struggling to secure capital right now:

  1. Valuations Too High
    Investors are exceptionally price sensitive. Institutional VCs are armed with data, comps, and a conservative mood. When a brand prices itself ahead of traction, it kills momentum — the exact thing fundraising depends on. According to CB Insights, over 70% of venture-backed startups fail within 5 years. VCs are looking for reasons to say no, and an inflated valuation is an easy one.
  2. Stalled Revenue
    Consumer behavior has softened. McKinsey reports that discretionary spending is down 9.5% year-over-year in North America, and 63% of Gen Z consumers say they are cutting back on non-essential items. Many brands are seeing flat or declining topline revenue, which makes any raise harder. Founders often start raising mid-decline, thinking they’ll close fast. But when they don’t, the stalled revenue becomes a negative feedback loop that tanks momentum.
  3. Lack of Focus on Fundraising
    Fundraising is a full-time job. Yet many founders try to raise while running the day-to-day. That results in sub-par decks, poorly created financial models, and drawn-out timelines. In this market, it’s crucial to show up polished and tight. According to DocSend, successful decks in 2025 average 18 slides, and investors spend just 2.4m on average per deck. Indefinite fundraising timelines signal weakness, not flexibility.

Why This Matters for LPs (and Why We’re Leaning In Now)

This isn’t just a founder story — it’s a fund opportunity. The current market dynamics are exactly what creates advantage for disciplined investors. Sandbox Studios is in market, deploying capital from Fund II with conviction while others sit on the sidelines. That means we’re seeing deals earlier, securing stronger terms, and entering cap tables with cleaner ownership at realistic valuations.

Because we specialize in celebrity-founded brands, we’ve built a sourcing moat few other firms can replicate — and we’re activating it now, not waiting for signals that will come too late.

This moment rewards funds that are:

  • Thesis-driven
  • Actively deploying
  • Backing companies with cultural momentum and business fundamentals

That’s Sandbox Studios.

As one institutional LP told us on a recent diligence call: “You’re not chasing trends — you’re building with discipline. That’s what wins in a reset.”

Founder Takeaways

  • You don’t need to raise like it’s 2021. Raise what you need, at the price that reflects the moment.
  • Focus beats FOMO. Hit your internal milestones before going to market.
  • Run a tight process. Set a timeline. Get your deck and financial model right. Be prepared to follow up like a pro.

The bar hasn’t disappeared — it’s just been raised. Great businesses with real traction, margin clarity, and founder focus are still getting funded. The rest are being filtered out.

And while most funds are sitting on dry powder, waiting for signals, we’re not. Sandbox Studios is actively deploying into this market — not cautiously testing the waters, but backing conviction-led opportunities with speed and clarity. That gives us better access, stronger terms, and a front-row seat to the next wave of breakout celebrity-led brands.

If you’re navigating this environment and want a partner who understands the moment — and is already making moves — let’s talk. We’re writing checks with intention, and we’re doing it now.

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