seed round - ReadWriteWeb http://www.readwriteweb.com/feeds/tag/seed round en Copyright 2012 Richard MacManus readwriteweb@gmail.com Tue, 14 Feb 2012 15:30:00 -0800 http://www.sixapart.com/movabletype/?v=4.35-en http://blogs.law.harvard.edu/tech/rss 13 Seed Funding Options For Entrepreneurs One of the most difficult parts of starting a startup for any entrepreneur is finding that small bit of seed capital to get things going. As evidenced by small seed funds like Y Combinator, a little can go a long way for startup entrepreneurs, but raising that chunk of change to get started can be tricky. Luckily, there are a number of different roads you can take to get from concept to Series A. Below is a list of 13 seed funding options for startup entrepreneurs.

]]> This list is a mix of old, borrowed, new, and blue:

  1. Bootstrap from revenues. You will exit for an EBITDA multiple. Forget about crazy high multiples unless you have that magic formula that really can create high growth + low costs on almost zero capital -- but if you really have that you won't need/want to exit. Don't worry about what anybody thinks other than users and customers. No, this does not have to mean enterprise products; consumer ad-supported works fine as well -- just ask the founder of Plenty Of Fish.
  2. Self-fund on credit cards and a second mortgage. You are brave, maybe brilliant, and maybe stupid. Just don't expect any VC to give you more than words to recognize your courage. And also remember: it will take more capital than you think. Self-funding is not bootstrapping, it is just using your money and not somebody else's money.
  3. Do consulting on the side to self-fund. This is less risky than using credit cards. One partner works for a Big Old Dinosaur on contract for $20k per month and splits it 50/50 with the other partner, who builds the company which is shared 50/50 between the two. It gets a little more complex with more than two people.
  4. Rase funds from friends and family. This can augment any of the above options. Richard Branson (a man who knows a thing or two about starting companies) can help with formalizing the relationship to avoid emotional damage.
  5. Already a successful entrepreneur? Self-fund from cash via your last exit. VCs will be beating down your door to co-invest. Your choice...
  6. Go from concept directly to $3m Series A. Wait, you did say your name was Marc Andreessen, right? No? Oh, sorry.
  7. Use angels as a bridge to Series A. This is the perceived traditional route. If the angels know the VCs that is fine, but if not, then the VCs may cram down the angels, and that's tough on you and those early investors that you've built a great relationship with. This works best if VCs tell you early, "We like the space/concept/you, develop it a bit and we'll be interested. MyFavoriteAngel can help you get there."
  8. Use angels to augment bootstrapping. You have a to show a really clear path to profitability that is not dependent on VC funding.
  9. Use angels as a bridge to a flip. Angels who know the target acquirers can make this a sweet deal for all.
  10. Spray and pray models. A fund or incubator that puts tiny sums into lots and lots of ventures in hope of finding one star in the bag (see this post). Sounds a tad random to me.
  11. Seek out founder-only evergreen seed funds. These are slightly more formalized versions of angel networks that aren't managing other people's money (i.e. LP=GP). Exits get re-invested into the fund, so there is no fixed time horizon for exit. There should be more of these.
  12. Get a convertible loan from a VC to develop your concept to a level where Series A is appropriate. Charles River Ventures led the way with their CRV Quick Start program. More of these would be great.
  13. Check out one of the paid links when you search for "seed funding" on Google. Not.

The good news: I planned my usual 11-point list and had to go to 13 (well 12, if you leave out that last one -- which you shouldn't). The bad news: none of these options are easy. But then, you already knew that, right?

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http://www.readwriteweb.com/archives/13_seed_funding_options_for_entrepreneurs.php http://www.readwriteweb.com/archives/13_seed_funding_options_for_entrepreneurs.php Trends Wed, 16 Apr 2008 00:05:09 -0800 Bernard Lunn
Guide to Seed Fund Incubators (Y Combinator Clones) They say imitation the most sincere form of flattery. If that's true, then Paul Graham must be about to drown from all the praise. His Y Combinator project, which has funded nearly 60 startups since 2005 and has arguably inspired a new emphasis on smaller scale investments at traditional venture capital firms, has collected a cadre of imitators. Lots of them, from all over the world. While Graham may not like it, there are a large number of start up incubators following the model he created with Y Combinator and handing out microinvestments in web startups in return for a small stake.

]]> If you're a startup founder looking for a bit of seed funding to let you quit your day job and finish your web app or service, our guide to seed fund incubators will help you figure out where to apply. (Be sure to also read this great account of what it's actually like at one of these programs.)

Name: Y Combinator
Location: Cambridge, MA and Bay Area, CA
Investment: $5,000 + $5,000 per founder (i.e., $15,000 for two founders, $20,000 for three)
Stake Taken: 2-10% (usually about 6%)
Companies funded: Too many to list (about 58), but many you've heard of, like Reddit, Scribd, and Xobni (Wikipedia has a full list)
Next application deadline: April 2

Name: TechStars
Location: Boulder, CO
Investment: $5,000 per founder, up to $15,000 (3 founders)
Stake Taken: 5%
Companies funded: 9 so far, including Villij, and Intense Debate
Next application deadline: March 31

Name: SeedCamp
Location: London, UK
Investment: 50,000€ (about US$74,000)
Stake Taken: 10%
Companies funded: 6 so far, including Tablefinder
Next application deadline: August 12

Name: YEurope
Location: Vienna, Austria
Investment: 5,000€ per founder, up to 15,000€ (3 founders)
Stake Taken: 2-10%
Companies funded: Soup.io
Next application deadline: None

Name: Summer@Highland
Location: Lexington, MA
Investment: $7,500 for individuals or $15,000 for teams (split evenly)
Stake Taken: ?
Companies funded: 8
Next application deadline: Not yet announced

Name: LaunchBox
Location: Washington, DC
Investment: Between $15,000 and $30,000
Stake Taken: 4-8%
Companies funded: None yet
Next application deadline: March 14

Name: DreamIt Ventures
Location: Philadelphia, PA
Investment: Between $10,000 and $30,000
Stake Taken: 4-8%
Companies funded: None yet
Next application deadline: March 12

Name: Bootup Labs
Location: Vancouver, BC, Canada
Investment: ?
Stake Taken: ?
Companies funded: None yet
Next application deadline: None / not yet launched

Name: Bootphase
Location: Atlanta, GA
Investment: ?
Stake Taken: ?
Companies funded: None
Next application deadline: None / Not yet launched

See also: Charles River Ventures' QuickStart loan program, in which seed round startups receive a loan of up to $250,000 against a future Series A venture round (which CRV has the option to participate in). And see the annual Google Summer of Code program, in which stipends are awarded to students working on open source projects.

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http://www.readwriteweb.com/archives/guide_to_seed_fund_incubators.php http://www.readwriteweb.com/archives/guide_to_seed_fund_incubators.php Trends Mon, 04 Feb 2008 11:43:48 -0800 Josh Catone