As the cost to build a software prototype has plummeted over the past 10 years, the number of tech startups has grown dramatically. Only, the number of active venture capitalists has actually shrunk, and it’s still super expensive to scale a business as growth requires serious cash (see 5 Hidden Challenges with SaaS). After putting together a working product, it’s often time to raise a seed round in the $300,000-$500,000 range (see Death to the $700k Seed Round).
Here are a few thoughts on what’s required to raise a seed round:
- Enough customers to prove product/market fit (often in the range of 10 to 50 paying customers)
- $10,000 or more in annual recurring revenue
- 3 reference customers that aren’t friendlies (e.g. customers that didn’t come from prior relationships)
- Strong alignment and rapport between the entrepreneurs and angel investors
Raising a seed round outside of the major startup regions…
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