Seed Funding Boom in Raising a Series A

There has never been a better time to be an entrepreneur (in US, Malta ….not everywhere!)

The current free flowing seed stage capital is giving lots of founders a false sense of confidence when going into their Series A. The result is a lot of busted rounds, limiting these companies’ potential.

The good news is that startups don’t have to fall into the Series A trap. There are a lot of opportunities to capitalize on these same trends and use them to your advantage

“The Blessing of a Skinned Knee.” The book was full of contrarian wisdom. While most new parents’ natural instincts are to improve their child’s life by removing obstacles, eliminating every potential source of pain, and helping them avoid adversity, the author of the book cautioned against overprotecting your child. Specifically, her thesis was that grit and resilience are extremely important life skills, and that it is important for people to learn how to overcome adversity (like a skinned knee) at a young age.

The way that seed funding is all about your idea and team, Series A is all about the numbers. We weren’t tracking cohorts or anything at all. I didn’t know about LTV or CAC, or how to answer questions about the economics of scale. We walked into an interrogation that we weren’t prepared for.”

Loan-To-Value Ratio – LTV Ratio

Customer Acquisition Cost

Series A investors are always looking to catch a company before they run an official process, as it’s almost always in their best interest to pre-empt a competitive funding situation. That means that they’re aggressive in trying to get early meetings. As first-time founders see their inboxes fill with email from VCs, they often assume that the volume and intensity of VC interest will translate into an easy funding round — and often (mistakenly) decide to start a fundraising process too soon.

There’s nothing like numbers to fuck up a good story.

http://firstround.com/review/what-the-seed-funding-boom-means-for-raising-a-series-a/

Seed stage boom

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s