Can I go straight to an A round without going through a seed?

Ben Narasin / November, 2017

Description

Ben Narasin, Partner at Canvas Ventures explains the rare cases in which you can jump the seed round and raise a series A round.

Video transcript:

Can I go straight to an A round without going through a seed?

You know, I’ve seen this happen a couple of times. I was a seed investor for 8 years and there were instances where my first investment, about 10% of the time, was made it series A, because that series A was effectively just a massive seed. It’s very very rare, I mean you either have to have really compelling traction or a concept and idea and a technology and a team that is so world-class that people are willing to take that bigger bet. It happens, it just does not happen very often.

Now, having said that, with very, very few exceptions, like say Tony Fadell that came out of Apple, he just went to A. His history as such was that he was going to get funding no matter what, but they’re not a lot of those people out there. What usually happens when things go super straight to A, the entrepreneurs go out to raise their seed and the dynamics of the market evolve such that they end up in a position to do an A because on a number of a couple of things.

One is competitive bidding, more than one firm wants to win and the way to do that is to push up the amount of capital. Two, it could be a situation where in order to realize the business, which is extraordinarily exciting to the investor, actually need more money to be more effective and the investor might proactively want to do that. So even if you have the opportunity to skip seed and go straight to A, I don’t think it is a bad exercise to take it out as a seed or an “avocados seed”, two to three million dollars, but in that instance you would want to make sure you go to world-class venture firm’s and we hope you come see canvas and talk to us about what you’re doing and then see how it evolves. Better for it to be the other side of the table bringing you up because then you have the safety net. You haven’t failed if you went out to raise a million dollars and you raise a million dollars. If you go out to raise six, and the reality is that you can only raise one, a very awkward situation. Better let the market take you up then for the market to take you down.

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QUICK INFO

  • Ben Narasin
  • November, 2017
  • 2:06
  • Funding

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