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Oct 10 |
Why a seed round can make better sense than an A round |
We recommend you this read from VentureBeat "When seed funding is better than Series A".
We could have written exactly the same this since this is precisely why we created the internet lab. A few quotes here
...So why do entrepreneurs think they need so much money right out of the gate? Some seem to be attempting to finance their way to profitability, but more often than not they think they need to ask for several million to get the attention of VCs. It’s become a bit of an urban legend: VCs won’t take an entrepreneur seriously if they ask for less than $5 million. That tall tale belongs in the archives with the one about how alligators live in the sewer system...
...By securing only as much capital as they initially need in a form of a seed round, entrepreneurs do themselves a big favor. First, assuming they take the seed funding as a bridge round which will convert into an eventual A round, they suffer no dilution. Second, they ensure themselves a much better valuation when they do eventually secure an A round because they have reduced one or more key risks during the seed period. Third, with this small amount of money, the entrepreneurs can get more insight and information on whether their idea is worth investing their own valuable time in before they have to make the multi-year commitment that comes with larger investments.

Posted by ouriel ohayon
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