It’s much more common today than a few years ago.
Today, most Series A-B-C-D firms want to buy every share they can in any round they lead — not split the round. Funds are larger, and with Series A funds in particular, they are also often investing a tiny bit later than they used to, and with commensurately larger checks.
In most of the investments I’ve done, in either the A or B round or both, the new investors try to buy out any earlier investors that are non-institutional and willing to sell.
That’s a big change from a few years ago.
The bottom line is any round these days that is bigger than say $6m or so, someone is probably going to want to buy out the earlier pre-seed investors if they can and the price and terms work out. Because whomever that investor is, in 2018/2019, most likely they want to deploy 20% or more capital than they can otherwise deploy into the round.
It also helps the A round valuations have gone up. If the A is at $20m pre and the seed investors invested at say $4m, there is a win-win here. The seed folks can 4x-5x their investment fairly quickly, and get cash right back out quickly.
