Seed Funding: How to Raise Venture Capital - Startups 101

Seed Funding: How to Raise Venture Capital - Startups 101

(00:00:00) Introduction to Seed Funding and the Speaker's Experience

  • Raising capital is challenging and many companies do not succeed in it.
  • The speaker is the CEO of Slidebean, a platform used by startups for creating pitch decks.
  • Failed to raise capital for the first company in 2011 and had to shut it down.
  • For Slidebean, successfully raised a seed round of $800,000 allowing growth to a team of 25 and reaching profitability.
  • 142 investors were pitched to secure the seed funding.

(00:00:00) Traction Requirements for Fundraising

  • Successful fundraising often comes after a company has gained traction.
  • Investors rarely back companies without users or a complete founding team, especially tech startups without a CTO.
  • In tech hubs like Silicon Valley and New York, startups typically show significant revenue growth or a large, engaged user base to attract investors.
  • The speaker advises bootstrapping as a means to initially fund and grow a company.

(00:00:00) Alternative Funding Sources and Bootstrapping

  • The speaker's company, Slidebean, bootstrapped by consulting part-time and living frugally.
  • Startup accelerators, such as Startup Chile and 500 Startups, are highlighted as key resources that provide capital, support, and validation.
  • Government grants and programs offer funding without taking equity, helping startups launch their products.

(00:00:00) The Pitch Deck

  • Startups should stick to the expected pitch deck structure, keeping it simple and no longer than 15 slides.
  • Pitch decks serve as an introduction, and in-depth tech or revenue details are saved for follow-up meetings.
  • Sharing the deck should be done with a link; NDAs are discouraged, and secrecy around a pitch deck is frowned upon.

(00:00:00) Finding Investors and Raising Capital

  • Pitching to a large number of investors is often necessary – approximately 100 for every $500,000 intended to be raised.
  • Networking through LinkedIn, warm introductions, and attending startup events are crucial for connecting with VCs and angel investors who seek high-growth, high-scale companies.
  • Slidebean's FounderHub connects founders with angels and accelerators, and cold emails are considered a last resort.
  • Keeping meticulous records of investor contacts and conversations is advisable.

(00:00:00) Investor Meetings and Follow-ups

  • Investor meetings typically involve a brief pitch and a Q&A session.
  • Feedback from investors should be used constructively, whether it's positive, indicative of being too early, or outright negative.
  • Regular updates to interested investors are important to maintain engagement and possibly secure investment at a later stage.

(00:00:00) Success in Raising Seed Funding

  • Achieving seed capital is a significant success.
  • Having a lead investor often makes it easier to attract additional investors.
  • For seed rounds in the US, convertible notes or SAFEs are common and preferred over equity rounds.

Additional Offers from the Speaker

  • The speaker offers further information on the differences between SAFEs, convertible notes, and equity rounds upon request.
  • Viewers are invited to comment, subscribe to the channel, and stay tuned for future content.

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