Anarghya Vardhana / November, 2017
What kind of traction should you have to raise a seed round?
Anarghya Vardhana, Senior Associate at Maveron explains what traction you have to show to investors when raising a seed round.
Nowadays there are multiple ways to get capital to grow your business. There is an angel round you can do there is crowdfunding you can do and there is friends and family. In seed, at least where we are seeing it, is when it’s the first time you get that institutional investor involved. You’re getting seed investors, you’re getting a couple of angels and a couple of strategic in there but there is probably a pillar of institutional investor that is involved in that investment.
What we also see is that people are raising multiple seeds or a bridge round. As an example, you are raising a million-dollar seed round in November, and you’re growing your company and its April. You’re not quite there to raise your Series A with the kinds of terms you want. Maybe you want your revenue to be higher or you want to hire some senior executives to on to your team before you go into that series A. In that instance, you may raise another seed. I’ve heard people call it seed one, seed two, or seed plus or pre-seed and seed. You can kind of call it whatever you want. The reality is of it is the type of ownership you want to give away, the traction of the company is not quite there to raise the Series A evaluation. Another thing we see in the seed space is that people are raising bigger seeds. I’ve seen one million dollar seeds to four million dollar seeds, people are raising a bigger seed, doing it quickly on convertible notes and doing more equity based series A type round later.