
Raising a seed round instead of a Series A - justin
https://www.atrium.co/blog/seed-stage-funding-startups/
======
staunch
These posts should come with a disclaimer: If you don't have a) significant
traction or b) "elite" connections, then it's unreasonable to expect to raise
a seed round in Silicon Valley at all.

The author has Yale and YC connections, among the most "elite" there are. It's
virtually certain he could not have raised funding without these connections.
If you don't have a similar background (i.e. 99.9% of people), then the advice
is more harmful than helpful.

From the Atrium Scale web site:

"The Scale Program is a 1:1 mentorship program that helps founders craft their
Series A pitch and _get exclusive intros to our network of investors and
partners._ "

The business model of organizations like YC and "Atrium Scale" is to sell
access to their "elite" networks.

They perpetuate Silicon Valley elitism for profit. They help a lucky few
chosen founders and damage the entire ecosystem for everyone else.

The best advice for anyone that is not a lucky member of these private clubs
is to just build a regular business and ignore Silicon Valley entirely. Once
you have significant traction, you can raise money with 100% certainty. Greed
is the ultimate motivator for most investors.

~~~
mrkurt
I think there's a lot of truth to what you're saying, and also a fair amount
of angst that's pointed the wrong direction. I've never worked with Atrium,
but yc was pretty much the ultimate leveling mechanism for founders with no
connections.

Yes they get you access to elite networks, but they _also_ level the playing
field so founders don't get exploited the way they used to.

And, they're obviously doing well because of it, but I don't think they're
perpetuating the elitism. If anything they've lit a fire under other investors
asses to get them to start making more objective decisions about funding.
There are a bunch of really good seed funds now that are really easy to get
ahold of.

~~~
jkarneges
+1 to joining an accelerator and having them parade you. That's how we were
able to raise.

Of course, getting into accelerators isn't easy either. As far as I can tell,
early stage fundraising for the non-elite is basically random (I consider
myself lucky).

------
grewergrfefg
> Sometimes an investor who hasn’t invested will offer to intro you to another
> investor.

> Don’t take it!

> The signal you are sending is bad; if you were a good investment, the first
> investor would have invested.

I just completed a $750k seed round and this is the only thing I don't agree
with. Some investors simply don't want to be in certain spaces, even if it is
a good investment. Would you invest in a car when you knew nothing about that
car or cars in general?

~~~
owens99
> The signal you are sending is bad; if you were a good investment, the first
> investor would have invested.

We did a $1.9M seed round and I completely agree with this.

------
rdlecler1
>With the cost of rolling out an MVP (minimum viable product) lowering every
year, many startups think you need a prototype in order to raise a seed round.

I might argue that it’s the opposite. We hit peak MVP, there is too much
competition, all the Low hanging fruit is gone, and we’re going to have to go
back to the days where we raised seed capital off of a business plan because
you can build much in today’s market as an MVP. The app days are gone.

~~~
cornellwright
Oh please. This is like the (apocryphal) saying everything that can be
invented has been invented [1]. It's easy to look backwards and in hindsight
say app MVPs were easy and obvious. For most ideas you should be able to
distill some quantum of utility into an MVP even now.

[1]
[https://en.wikipedia.org/wiki/Charles_Holland_Duell#Everythi...](https://en.wikipedia.org/wiki/Charles_Holland_Duell#Everything_that_can_be_invented_has_been_invented)

------
gnicholas
> _Commitments go both ways: don’t back out from investors — or feel guilty if
> investors back out from your seed round — after the following 4 steps have
> been completed_

This sentence does not make sense to me as written. Based on the first clause,
I assume it's supposed to mean that neither party can back out. But I just
don't see this meaning in the two clauses that follow. Is the first clause ("
_don 't back out from investors_") telling investors what to do, or telling
the founders what to do?

~~~
keithwhor
Telling founders what to do. Don't back out on a handshake deal, and if an
investor backs out on a handshake deal it's not your problem, but don't do
business with that person again.

~~~
zeckalpha
Curious how that lines up with the
[https://en.m.wikipedia.org/wiki/Robustness_principle](https://en.m.wikipedia.org/wiki/Robustness_principle)

------
justin
Hello HN! Atrium CEO Justin Kan here. Happy to answer any questions about the
article or help coach you through the process live in our next Atrium Scale
program.

~~~
gcgutier
Hey Justin,

Thanks for the article. I'm a co-founder in San Diego. We're being asked for
traction, when we have a team and a pretty good prototype out with beta users.

My question - it seems like we should be targeting pre-seed money, as the seed
guys seem to be acting like VCs for an A round. Is that normal for Silicon
Valley, or that specific to San Diego?

Thanks in advance.

~~~
justin
I would need a lot more context to answer this question properly. There's no
hard and fast rule for when a "pre-seed" becomes a "seed" or "A". These are
just labels. The biggest difference is whether you are raising a round of
SAFEs or a priced-round. The legal and business consequences of raising SAFEs
are more casual than a priced-round, where investors (regardless of location)
take things more seriously. Hope this helps and good luck on your company!

------
contingencies
See also another recent post on process and leverage in fundraising
[https://news.ycombinator.com/item?id=17013516](https://news.ycombinator.com/item?id=17013516)
and another previous experience
[https://news.ycombinator.com/item?id=7858317](https://news.ycombinator.com/item?id=7858317)

PS. We are currently raising Series A in China/HK @
[http://8-food.com/](http://8-food.com/)

------
aerosmile
Great article. I would just add that using a service like DocSend will give
you a great visibility into which slides your investors spend the most time
on, hence allowing you to fine-tune your messaging over time.

~~~
lpolovets
For what it's worth, many investors strongly dislike DocSend. It helps
founders track views but adds friction. Here's a good recent post from Mark
Suster on the subject: [https://bothsidesofthetable.com/i-know-everybody-told-
you-to...](https://bothsidesofthetable.com/i-know-everybody-told-you-to-send-
your-fund-raising-decks-as-a-link-d5b4409886af)

~~~
aerosmile
I really value Mark and love his writing, but this article seems a bit one-
sided. He's essentially telling founders that if they are not publicly sharing
their traction, acquisition channels, unit economics and market insights, that
they are doing it wrong. Couple of reasons why I disagree:

\- You lose control of your messaging from the PR point of view. Perhaps you
said in your deck you'll expand to XYZ by a certain date, and now that you're
6 months late and want to get some PR, why open up yourself to people putting
a negative spin on your story?

\- You expose yourself to risk of getting copied by well-funded startups
looking to pivot. Will you manage to win anyway? Perhaps. But if you could
choose, do you really want expose yourself to all that risk?

\- Last but not least, here's an investor essentially confirming that
investors cannot be trusted to keep your deck confidential. Just in case you
ever wondered...

For everyone who disagrees with these points, please share your deck in your
comments :)

~~~
joshu
These are dreadful reasons. The first is silly, for the second you shouldn't
share that stuff with investors without having a conversation, and the third
is a problem whatever the transmission system (unethical people aren't going
to be stopped that easily).

Especially since Docsend supposedly let you download PDFs if you log in.

I rarely open docsend docs and never on cold pitches. Using other tracking
links is an automatic fail. You already can imagine why.

I do like having the deck in my inbox so that when the pitch changes I can see
what they once did. Lots of founders will do multiple companies and abandon
failures early, and I want to be able to see what they pitched me on six
months ago.

I don't think you necessarily need to put all of that stuff in the deck (and
certainly not proprietary data) but you are effectively sending people a
shortened URL for your stuff that will die in a few weeks.

~~~
aerosmile
> you shouldn't share that stuff with investors without having a conversation

> I rarely open docsend docs and never on cold pitches

Therein lies the conundrum: we are both right and wrong, depending on the
context.

Scenario A: you just completed a hackathon and have no connections or existing
investors to help you reach other investors => in this case you should reduce
the barrier of distribution in any way possible.

Scenario B: you are running a seed funded startup and have enough traction to
raise the A round => you will be getting warm introductions, and investors
will be opening your links.

Most founders fall somewhere in between those two scenarios, starting at the
Scenario A at the beginning of their careers, and slowly making their way
towards the Scenario B. The nice thing about using DocSend is that it will
tell you exactly if you're ready for it => just look at the open rate of your
links.

> I do like having the deck in my inbox so that when the pitch changes I can
> see what they once did. Lots of founders will do multiple companies and
> abandon failures early, and I want to be able to see what they pitched me on
> six months ago.

This is what I meant with one-sided. Nobody disputes the value of that
information to the investor. From the founder's perspective, however, you get
this set of options:

1\. the slide deck you were pitching 1/2/3 years ago materialized exactly how
you predicted => congratulations, you're in Scenario B, and investors will be
reading your deck no matter how you present it to them.

2\. your old slide deck was overly optimistic, and you either underperformed,
pivoted, or abandoned your startup altogether. Do you really want everyone out
there to have this dirt on you?

~~~
joshu
You are deliberately misconstruing the things I said. One of those comments is
about the disposition of content of the deck, not whether to share it.

In the last para - “dirt” is inane. I know you pitched something but can’t
figure out what it was at all looks as bad as you pitched something and there
is still information. But neither look good. Instead you are increasing
friction in the hopes of redacting possible dirt years from now?

