Questions

I've found a lucrative e-commerce niche. I'm gaining traction in my proof of concept stage.

We've raised close to $1M in seed capital. We've done things right...and done things wrong...so take this with a grain of salt.

Your question was about SEED capital. One answer I saw (from Brian) was thoughtful, however, he's talking more about early stage capital (repeatable sales, profitability, etc). The reality is, many startups find that they can't get to this stage without seed capital to get started.

One answer: As soon as you have a prototype, and thoughtful feedback from customers. Being able to show an investor (literally) the vision for your product -- and, at the same time, that you've done due diligence with customers in the form of customer development. If you've done these two things, then you might be ready to talk to *seed* investors. Might you give up more equity at this stage than if you're profitable? Sure. But again -- but if seed capital is what you *need* to get to that stage, then this is the time to attract it.

And once you're at this point -- have *as many* conversations with potential seed investors as possible. It may take 10 no's to get to 1 "yes -- and even then, you want to make sure the investor is the right one for you.

Another answer:

Don't go after seed capital at all. Bootstrap the company, and skip this stage altogether. Fund the company with customer revenue. Keep in mind, when you take on investors, you have a very real responsibility to them. Instead of "no boss", you might have ten. Although, who are we kidding -- even bootstrapping founders still have multiple bosses (employees, customers, etc).

I hope this helps.


Answered 9 years ago

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