How I Raised My Seed is an event centered on an open discussion of the most effective methods for raising a seed round. Each month, we invite two or three founders who have successfully raised seed funding within the past few months and foster an open discussion about what worked and what didn’t.
Speakers: Highnote co-founder and CEO Jordan Bradley Highnote is the easiest and most efficient way for audio creators and their teams to make comments, exchange ideas, and collect listener feedback on their audio. Elizabeth Burstein, co-founder and chief executive officer of Neura Health Neura Health is a virtual clinic for neurology.
They are a new venture-backed startup whose mission is to enhance the accessibility and quality of neurological care through increased convenience, improved outcomes, and decreased costs. Their product is a platform that connects patients to neurologists, with neurology-specific monitoring of symptoms and condition-specific diagnostic tests.
These include cognitive tests, psychomotor assessments, and standard evaluations. In addition to HIPAA-compliant text messaging and video visits, their platform offers a care concierge service to assist patients with a variety of needs. Charlie O’Donnell, Partner, Brooklyn Bridge Ventures, serves as moderator.
This event will take place physically at Betaworks Studios, but it will also be live-streamed for those who wish to participate virtually. Register below!
How do you raise seed capital?
Who’s who in seed financing – Seed funding typically comes from one of the following sources: Friends & family: Friends & family are the most common source of seed funding. Many founders of startups have friends or relatives who also own businesses or invest.
- In addition, many startups have former founders on their teams, who may have acquaintances seeking seed opportunities.
- Nevertheless, not all founders are connected.
- Fortunately, these founders have multiple other options for securing funding.
- Some angel investors favor working with startups.
- These individuals (who typically have a high net worth) are referred to as “angels.” Many angels advertise themselves, but there are also a few websites that connect people directly with angels (see the resource section below).
Incubators: Founders with an idea (but no product or service) can join an incubator. These are mentorship programs that provide a workspace, funding, networking, training, and resources for the success of startups. When joining an incubator, you can anticipate giving up a portion of your company.
- This is one of the best options for startups with rapid growth that require more than just funding.
- Accelerators: Unlike incubators, which focus on end-to-end growth, accelerators provide funding, mentorship, and product development in a short burst to growth-driven startups.
- The majority of accelerators attempt to condense decades of business experience into a few months.
Typically, you give up some equity and join multiple businesses that are all accelerating simultaneously. Traditional funding sources, such as private equity firms, prefer lower-risk investments. With high-risk, high-reward funding, venture capital firms thrive.
And they fund almost exclusively startups. Many startups, however, reserve venture capital for later seed rounds. Incubators, angels, and accelerators provide benefits (such as networking, business support, education, etc.) that venture capital firms do not (e.g., networking, business support, education).
However, startups with seasoned founders frequently utilize venture capital as a hands-off method of raising initial capital. Each of these funding mechanisms offers distinctive benefits. Friends and family are frequently the simplest source of quick funding.
How much time is required to raise a pre-seed round? – Fundraising for a pre-seed round can take between one week and six months. It varies from startup to startup, depending on the amount of capital required, the maturity of the company and product, and the persuasiveness of the pitch.
- It varies, of course, but in the past we’ve moved extremely quickly, such as from the first pitch meeting to the term sheet in only five days,” Burbidge says.
- On the other hand, it has also been the case that, depending on the circumstances, closing the investment round has taken up to six months.
- From start to finish, Hameed’s pre-seed round with approximately 15 angel investors took four months, but by the end, they were running out of money.
“It’s not that anyone took longer than necessary or dragged their feet; these things simply require time. With hindsight, I would have likely begun the process one month earlier.”
Can you pay yourself using seed capital?
Understanding founder compensation – First and foremost, founders are not employees but rather owners. When you work for someone else, be it a small business or a large corporation, your salary is determined by the market value. A market value salary is “the amount of money an employee should be paid for their position based on current market conditions.” This amount is determined by analyzing comparable positions within the same industry and region.
- Not applicable if you are the founder of your own business.
- Essentially, you work for yourself.
- You will not be able to pay yourself anything unless you generate revenue on the first day of business or raise a seed round.
- If you are fortunate enough to receive funding from friends and family, it should go directly into the business, not your personal account.
Suddenly, being a founder is not as cool as it once was. How do you receive compensation if there is no money? Simple. Your compensation consists of the equity you own and the hope of a large payout in the future (whether through an IPO or acquisition).
Corporate Programs – Corporate philanthropy is a significant source of funding for nonprofit organizations. Volunteer grant programs are the most prevalent, in which a company compensates its employees for time spent volunteering for a nonprofit. The best way to obtain startup grants from corporations for a nonprofit organization is to conduct research on corporations that may be interested in assisting you with your mission.
How much money is required to cultivate a seed?
Valuation – The valuation of your company will also be a factor in the amount of capital you are able to raise (and ultimately, how much you should be asking for). However, in early rounds, it is typically calculated backwards from the amount of money you believe you need (based on milestones and burn rate) and the lowest amount of equity you believe you can give away.
The valuation of an established business is relatively straightforward. It is calculated using verifiable metrics and assets, such as revenue, profits, and customers. However, it becomes more difficult to evaluate the value of a startup business. Startup valuations fluctuate and are based on a subjective combination of factors – as David S.
Rose puts it, “black magic, hard math, market dynamics, investor return calculations, and entrepreneurial hubris.” You can only arrive at a number that lies between the founder valuation (how much you believe your business is worth) and the market valuation by striking the proper balance between the two (how much your business is worth to investors when taking investment risks into evaluation). 
- The number of existing clients
- Total revenues
- Sales growth graph
- The business strategy
- The market segment
- The IP worth
- The kind of financier
- The going rate of comparable firms
- The rate of expansion of related sectors/industries
- Your group
You can calculate the value of your startup using a variety of different valuation techniques. Check out our ” guide for early-stage and pre-revenue startups to determine the potential value of your business. Consideration of the equity you wish to donate is an additional aspect of valuation.
