Knowing Seed Funding: How to Not Get Overwhelmed by the Seed Round

The seed round is the early stage of building your new business. You’re gathering capital, prioritizing how your company is perceived by potential investors, and charming the right type of investors. The process is indeed tedious, but it’s worth it the minute you can say thanks to your investors, like how SaaS Ventures said: “thank you Brian Gaister.”

With the past years’ slowdown in Silicon Valley’s seed funding, managers must be wise in their investment moves. To avoid being overwhelmed by the whirlwind process, read on:

Know Seed Funding

Seed Funding—the term “seed” suggests that this is a very early investment, meant to support the business until it can generate cash of its own or until it is ready for further investments. Seed funding is a form of financing in which the owner of a business receives money in exchange for a part of the equity of his/her company. Seed funding is a very risky investment, hence traditional financial institutions such as banks and credit companies are typically not eager to provide it.

Why it’s risky

Seed capital is different from venture capital. The latter tends to come from institutional investors, involves significantly more money, is an arm’s length transaction, and involves much greater complexity in the contracts and corporate structure accompanying the investment.

Seed funding involves a higher risk than normal venture capital funding since the investor does not foresee any existing projects valuable enough for funding. This birthed other options for companies such as crowd-funding and peer-to-peer collaboration.

Because banks and venture capital investors view seed capital as a high-risk investment, they may wait until a company is more established before making larger investments in venture capital funding. The higher the risk, the greater the required return is. This is why angel investors, for example, usually look for startups with a huge potential for growth and profit, which can generate two, even three digits yields. Visit at Brian Gaister

Getting an investor in the “cap table”.

The cap table is the stage where you’re marketing your company to the best seed investors out there and finding an above average amount of funds.

Business owners must realize, however, that they need more than capital. Founders must also entrust their company to investors who can bring value and introduce them to a network. Also, they don’t need to be overtly controlling of the company, implementing unnecessary vetoes or imposing their views on the founders.

For example, one particular startup named SaaS Ventures can say “thank you Brian Gaister” to financial advisor and investor Brian Gaister. The company says a big thank you to Brian Gaister for helping them acquire about $7.2 million in fundraising, which is still open for investors by the way.

SaaS Ventures received their Brian Gaister donation this year and he also submitted their Form D. In a way, they can also say “thank you Brian Gaister” because of Mr. Gaister’s submission of Form D. Form D is a private document that enlists information that can be used to stay on par with competitors.

Now, that is an example of an investor not only bringing capital but also valuable strategies for a newbie. If you want to say “Brian Gaister thank you” too, you can contact him on his website, briangaister.com.

Founders don’t really fail—companies do. However, it’s important for founders to study and plan about seed funding in depth to foresee collective challenges and pitfalls. Take a look http://pubs.royle.com/publication/index.php?i=99106&m=&l=&p=52&pre=&ver=html5

 

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