An Intro Guide to Raising a Seed Round

This week we feature advice for raising a Seed round, data on how VCs make decisions, and when to just send the deck.

???? Raising a Seed Round 101

Lenny's Newsletter features a comprehensive guide to raising a Seed round, based on Terrence Rohan and Jack Altman's observations across 1,000 Seed fundraises, plus input from successful founders. Key points:

• Evaluating if VC funding is right for your business
• Pre-fundraise expectations and preparation
• Optimal fundraising amounts and strategies
• Selecting investors and negotiating terms

STV Take

The guide offers valuable insights, especially on dilution and runway planning. Raising enough for 24-36 months of runway with a 25% buffer is crucial. Founders should aim for Series A milestones, not quick follow-on rounds. As discussed in Episode 40 of the VC Minute, a small Seed with hopes of a quick Series A is rarely effective and is a negative signal to a VC.

?? How VCs Make Decisions

Chris Tottman, Partner at Notion Capital, shared insights from a National Bureau of Economic Research working paper surveying 885 institutional investors across 681 firms. The study covers key aspects of a VC's job:

• Deal sourcing
• Investment selection
• LP relationships

STV Take

While the data is over a decade old, it remains relevant. The emphasis on team (47% of respondents' top criterion) has likely increased. As software development becomes easier, a founding team's unique insights and network are more critical than ever. Articulating why you're the right team to build a massive business around a particular problem is crucial.

?? Asking for a VC

SpringTime's Rich Maloy posed questions on LinkedIn about cold email campaigns:

1. Have founders successfully received investment from cold emails?
2. Why do some founders not include their deck in initial outreach?

Rich argues that not including the deck is a missed opportunity, especially considering the potential for follow-ups using tools like Docsend.

STV Take

The LinkedIn community provided interesting insights:

• Some avoid attaching decks to bypass spam filters
• Investment brokers often send these emails, not founders themselves

Founders, remember: You should lead your fundraising efforts. Seed investors typically pass automatically if an investment broker is involved.

Happy fundraising!