Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

Is it bad to raise Seed financing from VCs?

I read somewhere that it is risky to raise capital from VCs at a Seed stage as most of them follow the prey and spray model. Meaning that if you don't have enough traction they will not reinvest and this will send negative signals to potential investors on your Series A. Look forward to everyone's comments. Thanks in advance.

7 Replies

Rod Abbamonte
0
0
Rod Abbamonte Advisor
Co Founder at STARTREK / @startupHunter / @startupWay / @CoFounderFound / @GOcapital / @startupClub / @lastminute
It's not bad but normally VC's are not prepared and have not expertise for a seed stage.
Steve King
0
0
Steve King Entrepreneur
COO, CTO, Netswitch Technology Management
It's not only bad, it's impossible. VCs don't do seed.
Thomas Duffy
0
0
Thomas Duffy Advisor
Telehealth365
what is your budget and how big is the market for your solution ?
Jim Jordan
0
0
Jim Jordan Entrepreneur
Investor / Board Member at Sparx Hockey

The answer is... "it depends" on the specific facts and circumstances. There are many true "seed funds" - andreessen horowitz, Kaepha Partners, Accompliceetc. They often invest $50k to $500k to prove out a concept. If they are happy, they will incrementally invest and help bring in new funding. If they are not, they won't....simply put... be careful who you get into bed with.

Alyssa Martina
0
0
Alyssa Martina Advisor
Founder and CEO, Memloom, a digital storytelling company; Brand & Nonprofit Storyteller; Tech & Media Entrepreneur
It's not impossible but often unlikely unless the entrepreneur has had several previously successful startups. There can be some downsides to it so proceed carefully. There's a reason why VCs wait until a later round to invest.
Joseph Wang
0
0
Joseph Wang Entrepreneur
Chief Science Officer at Bitquant Research Laboratories
This isn't usually an issue because most VC's just won't invest in seed stage projects because they are much too small. VC's need to minimize the amount of work they do for an investment, and the returns from something seed stage just doesn't justify the large amount of hand holding.

The problem is that VC's don't invest their own money. So if the project gets a 10% return, they are lucky if they get 1%, and for one percent, they just can't invest in something that requires a lot of effort. Angel investors invest their own money, which means they make money from the 10% return. Also angel investors are called "angel" because invariably they are in the game for reasons other than money (in my case, it's because I want to develop fintech).

If you just look at the money part, it makes no sense to do any seed funding at all, just like if you look solely at the economic numbers, making babies is not economically profitable, but someone needs to do it or else everything falls apart.

It is risky to invest from someone that claims to be a VC at the seed stage, because at that point you really worry about what their model is. I've seen seed stage investments get offered shockingly bad terms. In some situations, it turns out that the terms were really bad because the VC had no idea what they were doing. In other situations, it turned out that the VC did know exactly what they were doing, what they were doing was something rather nasty.

One thing that does impress me about a team is that I've seen situations were a group fresh out of college has enough common sense to know when to say no, and know that they are getting a raw deal.


Thomas Duffy
0
0
Thomas Duffy Advisor
Telehealth365
There are VC's that invest in start ups but they need to have proven their MVP and have revenue,solid stats and distribution. Usually seed is done with convertible debt
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?