Questions

If Facebook were starting today, would it need to raise a seed round?

I believe most of their seed round in 2004 was spent on servers. Now services like AWS can be used for a fraction of the cost.

3answers

Why do you ask?

Are you trying to understand if you need/should seek startup capital for your venture?

Or are you trying to understand how companies are leveraging the cloud to dramatically reduce startup costs?

If it's the second, you're right re the capital requirements are lower. It's easier to start a business today than it has ever been. We have more access to resources and mentors than we've ever had, plus the costs to start a business keep falling due to cloud and crowdsourced technology.

Just look at the price of 1 GB of storage – 30 years ago it was $300,000, the year Facebook started it was $1 and today it’s <10 cents.

If it's the first, that's something only you and your team can decide.

There are *a lot* of opinions on when/if/how much, and a lot of resources and people you can chat with to help you come to the best decision. You can use these articles as a starting point:

Venture Capital, Angels or Bootstrap? via Gigaom
[http://gigaom.com/2008/06/15/venture-capital-angels-or-bootstrap/]

Should You Bootstrap Or Raise Money For Your Startup? via Forbes
[http://www.forbes.com/sites/stellafayman/2013/07/01/should-you-bootstrap-or-raise-money-for-your-startup/]

Why Bootstrapping Is Just As Over-Rated As Raising Venture Capital via TechCrunch
[http://techcrunch.com/2012/01/07/why-bootstrapping-over-rated/]

Why You Shouldn't Raise VC Money via Inc
[http://www.inc.com/mark-peter-davis/why-you-should-not-raise-venture-capital-money.html]

The amount of money a startup raises shouldn’t be the only metric of respect via Pando Daily [http://pandodaily.com/2013/05/30/the-amount-of-money-a-startup-raises-shouldnt-be-the-metric-of-respect/]

Best of luck!


Answered 6 years ago

I apologize ahead of time if this comes across grumpy, I'm genuinely hoping it helps you.

Why bother asking a hypothetical question to which no one can truly give you a helpful answer?

Clarity is building a community of people like myself who have significant experience and ability to help entrepreneurs build and grow their business.

No question about your own idea or business or struggle is a bad question but questions like this help no one.

From my perspective, it actually hurts the Clarity brand to let questions like this get posted because it wastes valuable time.

If you have a question about whether you should raise a seed round, ask it here, preferably with enough details to allow people like me to help you.

Otherwise, I'd suggest that questions like this are better served being posted on Quora or even Yahoo Answers.

We're here to help. Let us help you by giving you information you can use to actually help you succeed.


Answered 6 years ago

When facebook started, they were a 'closed' social network. An Invite only. You had to have a .EDU email address, and could only invite 10 of your friends. The Invite Only became an exclusive club and it grew quite quickly (virally). Then Facebook opened up.

Either way, you still need a seed round.

Traction is defined by Users or Revenue growth. In case of Facebook, users grew quickly and it is there where investors saw value. Facebook, Twitter, Foursquare and many others needed to raise money as their traction was defined by users and not $. Later on some of them where able to monetize users, finding that silver bullet.


Answered 6 years ago

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