4 ms·

We definitely found this out the hard way. We tried to raise $750K for a seed round and were repeatedly told that our tech/team were great but that we didn't h

We definitely found this out the hard way. We tried to raise $750K for a seed round and were repeatedly told that our tech/team were great but that we didn't have enough traction. It's kinda hard watching people go on about the "bubble" when you're just out there trying to scrap it out and find something that works.

beat 12y ago
I'll probably be looking for seed later this year, so this makes me sad and despondent. I can probably bootstrap to traction, but it's really hard.
- hluska 12y ago
  Don't feel sad - this is just a set of numbers. While the big picture trend doesn't look very good, that graph still shows that hundreds of companies just like yours are closing deals. Keep the faith and keep working hard - fortunes are made during downturns...
trevelyan 12y ago
YC offers 20k+ for a few percent. Startup Chile is 40k with a co-investment of around 10k. That money is supposed to support the founders for a few months while they get the prototype out the door and build traction. In comparison, 750k is a metric ton of cash, and should be enough to support a founding team for several years. Not judging, but if you're positioning it as a seed round instead of Series A that may be part of the problem.
- jacquesm 12y ago
  > In comparison, 750k is a metric ton of cash, and should be enough to support a founding team for several years. Until you start hiring. Then you can burn through that kind of money surprisingly fast. Talent is (rightly!) expensive. So unless your co-founders and you have all the skills you need to see your product out the door you could very well need multiple 100 Ks to get going. If you're doing anything hardware related or that needs certification or a hundred other things that you could spend your money on then you might find this is not as much as it seemed at first. Not all start-ups are making simple web apps or mobile apps. Doing a seed round for $300K is not much easier than $750K and will give you only half the return on your time invested. At least at 750K you'll still be looking at a relatively abbreviated process rather than a full blown DD (which would burn up too large a chunk of the investment to make sense).
- ScottBurson 12y ago
  BTW, YC now invests $120k in most of their companies: http://blog.ycombinator.com/the-new-deal http://blog.ycombinator.com/the-new-deal
  - trevelyan 12y ago
    Wow. I didn't know they'd dropped the convertible round. The new arrangement is a great deal -- more than a $1.7 million valuation for each company accepted.
- Patrick_Devine 12y ago
  Given that we'd sunk about $300K of our own cash into the company, I don't think $750K was out of line for what we were doing, or for the VC firms we were talking to which tend to do much bigger deals. The bigger problem was we were doing something really technical that required a lot deeper pockets, and people were nervous to invest without seeing more traction. Which is reasonable; capital isn't flowing like champagne like a lot of people seem to believe.
  - trevelyan 12y ago
    I'm not trying to be critical. I've been following YC since it started and my impression is that it became popular largely because PG was the first guy willing to give developers rent money and a decent valuation on the basis of basically nothing. In contrast, what you are talking about isn't a seed round in the way that most people conceive of it. > capital isn't flowing like champagne like a lot of people seem to believe. Absolutely, and I don't think it really has since 2000 to be honest. There was a minor boom around 2004 for "user-generated content" and "social/video" sites, and then another for mobile apps after the app store launched. But the general trend has been towards low-value "seed" rounds for demonstrating traction, and then lots of financing for late-stage companies that would previously have already IPO'd. I hope you guys get the funding you need. I'm just not sure that your experience is relevant to a discussion on the availability of seed funding, that's all. What this conversation really highlights is the way no-one here even seems to even have the language to talk about what is reasonable in terms of expectations/traction for mid-stage startups that are more capital intensive.

beat 12y ago

I'll probably be looking for seed later this year, so this makes me sad and despondent. I can probably bootstrap to traction, but it's really hard.

hluska 12y ago
Don't feel sad - this is just a set of numbers. While the big picture trend doesn't look very good, that graph still shows that hundreds of companies just like yours are closing deals. Keep the faith and keep working hard - fortunes are made during downturns...

trevelyan 12y ago

YC offers 20k+ for a few percent. Startup Chile is 40k with a co-investment of around 10k. That money is supposed to support the founders for a few months while they get the prototype out the door and build traction. In comparison, 750k is a metric ton of cash, and should be enough to support a founding team for several years. Not judging, but if you're positioning it as a seed round instead of Series A that may be part of the problem.

jacquesm 12y ago
> In comparison, 750k is a metric ton of cash, and should be enough to support a founding team for several years. Until you start hiring. Then you can burn through that kind of money surprisingly fast. Talent is (rightly!) expensive. So unless your co-founders and you have all the skills you need to see your product out the door you could very well need multiple 100 Ks to get going. If you're doing anything hardware related or that needs certification or a hundred other things that you could spend your money on then you might find this is not as much as it seemed at first. Not all start-ups are making simple web apps or mobile apps. Doing a seed round for $300K is not much easier than $750K and will give you only half the return on your time invested. At least at 750K you'll still be looking at a relatively abbreviated process rather than a full blown DD (which would burn up too large a chunk of the investment to make sense).
ScottBurson 12y ago
BTW, YC now invests $120k in most of their companies: http://blog.ycombinator.com/the-new-deal http://blog.ycombinator.com/the-new-deal
- trevelyan 12y ago
  Wow. I didn't know they'd dropped the convertible round. The new arrangement is a great deal -- more than a $1.7 million valuation for each company accepted.
Patrick_Devine 12y ago
Given that we'd sunk about $300K of our own cash into the company, I don't think $750K was out of line for what we were doing, or for the VC firms we were talking to which tend to do much bigger deals. The bigger problem was we were doing something really technical that required a lot deeper pockets, and people were nervous to invest without seeing more traction. Which is reasonable; capital isn't flowing like champagne like a lot of people seem to believe.
- trevelyan 12y ago
  I'm not trying to be critical. I've been following YC since it started and my impression is that it became popular largely because PG was the first guy willing to give developers rent money and a decent valuation on the basis of basically nothing. In contrast, what you are talking about isn't a seed round in the way that most people conceive of it. > capital isn't flowing like champagne like a lot of people seem to believe. Absolutely, and I don't think it really has since 2000 to be honest. There was a minor boom around 2004 for "user-generated content" and "social/video" sites, and then another for mobile apps after the app store launched. But the general trend has been towards low-value "seed" rounds for demonstrating traction, and then lots of financing for late-stage companies that would previously have already IPO'd. I hope you guys get the funding you need. I'm just not sure that your experience is relevant to a discussion on the availability of seed funding, that's all. What this conversation really highlights is the way no-one here even seems to even have the language to talk about what is reasonable in terms of expectations/traction for mid-stage startups that are more capital intensive.