Raising Seed Capital Often Makes Sense for Startups



David Cummings on Startups

Seed capital is a small amount of money to help get a startup off the ground, often provided by  the three Fs — friends, family, and fools. Seed capital is almost always different from venture capital in that there’s less dilution, less control, no timelines on a return, and overall more passive of an investment. 99.9% of startups shouldn’t raise venture capital but seed capital does make sense for many startups.

Here are some thoughts on raising seed capital for a startup:

  • Focus on smart money where the investor can add expertise to the startup in addition to money
  • Asking for money is always better if you have an existing relationship as people like to invest in people they know, trust, and enjoy being around
  • Making measurable, objective progress in the form of customers, users, revenue, etc is the best way to earn a strong valuation
  • Think about the desired…

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