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Naive question: Is there a technical definition that differentiates a Seed round from Series A? I used to think - Seed round was raised from friends and famil
by dude_abides 14y ago
Naive question: Is there a technical definition that differentiates a Seed round from Series A?
I used to think
- Seed round was raised from friends and family - but this one has tonnes of institutional investors.
- Seed rounds typically raise <1mm at <10mm valuation - but this one raised 6mm+ (at maybe 50-60mm valuation?)
- Seed rounds happen before the business is well defined - also not true in this case.
So why is this called a seed round and not a Series A?
- danielpal 14y agoIt's probably a seed round and not an A round from the terms the round was raised. Typically an A round comes with different terms like boards seats, lead investors, pro-rata right etc. Also A rounds are always priced rounds with stock issued. Seeds are normally not priced and instead debt (convertible note) is issued.
- dude_abides 14y agoI believe board seats and lead investor/pro-rata rights are just negotiation terms and not a must for a Series A. Your other point is a good one. If there was no valuation and only convertible notes were issues, then I understand why this would not be a Series A.
- zaius 14y agoNot naive. The terms are in the midst of change. Hence the "quotes" in the article title. Now that convertible notes are the dominant form of financing seed rounds, I usually see money raised with debt as seed, and money raised by issuing stock referred to as the A round.