David Beisel’s Perspective on Digital Change
Unusual Rounds of Early-Stage Funding & What to Know
As the VC seed market has institutionalized, especially over the past five years, there has emerged a prototypical seed round profile: $1M-$1.5M raised, the first non-friends-and-family capital, comprised of one to three institutional seed investors or larger VC funds, on a priced equity structure (though sometimes convertible note), with a valuation mechanism in place priced in the single digit millions.
While there has been much discussion about the variances on syndicate composition and structure, and of course pricing variance, but essentially the “deal” is becoming fairly standard for all parties. The standard seed round will buy the company 12 to 18 months of runway as it looks to prove out early-stage milestones to raise a Series A before running out of cash.
However, also occurring are a set of “seed” rounds which don’t look like the above, despite involving most of the same players. They’re common enough to become sub-categories in and of themselves, but they are just atypical enough that they’re not as commonly discussed.
The following is a list of somewhat unusual (or at least less common) seed-like rounds. Note that some institutional VC investors who invest at the seed stage may also make these investments: