Here’s Y Combinator’s Guide to Seed Fundraising
There are so many questions involved when raising funds.
❓ How much should I raise?
The goal should be to raise as much money as needed to get to your next “fundable” milestone. If you can manage to give up as little as 10% of your company in your seed round, that is wonderful, but most rounds will require up to 20% dilution and you should try to avoid more than 25%.
❓ How many months of runway do I need?
12-18 months is considered a good default runway for most seed-stage startups. This gives your startup about 12-15 months to reach key milestones and another 3-6 months to raise your next round of funding.
❓ SAFE/Convertible Notes vs. Priced Round?
Convertible instruments can be a good option for founders who need capital and want to fundraise quickly, but also want to reach certain company milestones before doing a priced round. On the other hand, priced rounds are great for founders who are confident in what their company is worth, expect impressive growth, and need to raise a lot of capital.
The President of Y Combinator, Geoff Ralston, created an amazing guide that sheds a light on these topics. A must-read for anyone interested in raising funds.
It covers:
🔸 Financing Options
🔸 Convertible Debt, SAFE, & Equity
🔸 Valuation
🔸 Pitching
🔸 And even the documents you’ll need.
Fundraising is a necessary, and sometimes painful task most startups must periodically endure.
The full guide is inside our Sales & Investor Accelerator Club. Join us here!