Everyone tells you that raising a seed round is the “easy” part. Go to a few networking events, polish up a pitch deck, and the money will just flow. They’re lying to you. I’m here to talk about the brutal, unspoken reality of seed funding and what it actually takes to get that first check.
I’ve seen it from every angle. As a founder, I raised money for my companies RemoteTeam, which was later acquired by Gusto, and MovieLaLa, which we sold to Gfycat. As an angel investor, I’ve written over 180 checks to companies you’ve probably heard of, like Anthropic, OpenAI, and Scale AI. I’ve seen thousands of pitches. I’ve said “no” way more than I’ve said “yes.” And I’ve seen brilliant founders with great ideas crash and burn because they believed the hype.
The Myth of the Easy Seed Round
Let me tell you a story. Early in my career, with my first startup, we had what I thought was a world-changing idea. We spent months building a beautiful product and a pitch deck that was a work of art. We were so sure of ourselves. We hit the fundraising trail, expecting a flood of interest. What we got was a flood of rejections. One investor told me flat out, “I like the idea, but I don’t believe you can pull it off.” It was a gut punch. We ran out of money and had to shut it down. It hurt. But it taught me the most important lesson of my career.
It’s not about the idea. It’s not about the deck. It’s not even about the market size, not really.
The secret that nobody talks about is this: Seed funding is a bet on the founder and the team. That’s it. That’s the whole game.
When I’m looking at a seed-stage company, I’m not just investing in a product. The product will change. The market will shift. The business model will probably get thrown out the window three times before you find what works. The only thing that remains constant is the team. I’m betting that you and your co-founders are the right people to navigate the inevitable chaos and come out on top.
Are You the Right Bet?
So, how do you convince an investor that you’re the right bet? It comes down to a few key things.
1. Show, Don’t Just Tell
Anyone can say they’re a great leader. Anyone can say they have a unique insight. I don’t care about what you say. I care about what you’ve done. Have you built something before? Even a small side project? Have you led a team? Have you demonstrated an obsession with the problem you’re trying to solve? I want to see a history of execution. I want to see that you’re a doer, not just a talker.
When the founders of a company I invested in, let's call them AcmeDB, came to me, they didn’t just have an idea for a new kind of database. They had already built a prototype that was being used by a handful of developers who loved it. They had a GitHub repository with active contributors. They had a small but passionate community. They had proof that they could build something people wanted. That’s what got my attention.
2. Be Unreasonably Obsessed
I want to see that you are completely, utterly, and unreasonably obsessed with the problem you’re solving. I want to know that you’ll be thinking about it in the shower, on your commute, and in your dreams. Why? Because startups are hard. Unbelievably hard. There will be a hundred moments when it would be easier to quit. The only thing that will get you through is a deep, burning passion for what you’re doing.
I remember meeting the founder of a company that was trying to revolutionize the logistics industry. He had spent the last two years working as a truck driver to understand the problem from the inside out. He knew the industry inside and out, the good, the bad, and the ugly. He had a level of insight that you just can’t get from reading a market research report. I invested in him because I knew he wouldn’t give up.
3. Know Your Numbers, But Don’t Be a Slave to Them
Yes, you need to know your market size, your customer acquisition cost, and your lifetime value. You need to have a financial model that makes sense. But at the seed stage, these are all just educated guesses. What’s more important to me is your thought process. How did you arrive at these numbers? What are the key assumptions you’re making? What are the biggest risks to your model?
I’m not looking for a perfect spreadsheet. I’m looking for a founder who has thought deeply about the business and understands the key drivers of success. I want to see that you’re a strategic thinker, not just a number cruncher.
The Nitty-Gritty: SAFEs, Convertible Notes, and Other Jargon
Alright, let’s get into the tactical stuff. You’re going to hear a lot of terms thrown around: SAFEs, convertible notes, priced rounds. It can be confusing, so let’s break it down.
SAFE (Simple Agreement for Future Equity): This is the most common instrument for seed funding these days. It’s a simple, founder-friendly agreement that allows you to take on investment without setting a valuation for your company. The investor gives you money now, and in return, they get the right to buy stock in your company at a later date, usually at a discount to the valuation of your next funding round. I’ve used SAFEs for many of my investments. They’re fast, they’re easy, and they let you get back to building your company.
Convertible Note: This is similar to a SAFE, but it’s technically a debt instrument. It has a maturity date and an interest rate. At the maturity date, if you haven’t raised a priced round, the investor can either demand their money back (with interest) or convert their debt into equity at a pre-agreed valuation cap. Convertible notes are less common now than they used to be, but you’ll still see them from time to time.
Priced Round: This is a more traditional equity financing where you set a valuation for your company and sell a certain number of shares to investors. Priced rounds are more complex and expensive to do than SAFEs or convertible notes, so they’re usually reserved for later-stage funding rounds.
My advice? For a seed round, stick with a SAFE. It’s the simplest, most founder-friendly option. Don’t overcomplicate things.
Building Your Fundraising Timeline
Fundraising is a full-time job. Don’t underestimate how long it will take. Here’s a realistic timeline:
Month 1: Preparation. This is when you get your house in order. Finalize your pitch deck, build your financial model, and create a target list of investors. Don’t just spray and pray. Do your research and find investors who have a track record of investing in your industry and stage.
Months 2-4: Pitching. This is the grind. You’ll be taking dozens of meetings, telling your story over and over again. You’ll get a lot of “no”s. Don’t get discouraged. Every “no” is a learning opportunity. Listen to the feedback, refine your pitch, and keep going.
Month 5: Term Sheets and Due Diligence. If you’ve done your job well, you’ll start to get term sheets. This is a non-binding agreement that outlines the basic terms of the investment. Once you’ve signed a term sheet, the investor will conduct due diligence, which is a fancy way of saying they’ll check to make sure you haven’t been lying to them.
Month 6: Closing. This is when the money hits your bank account. Congratulations, you’ve raised a seed round! Now the real work begins.
My Final, Unfiltered Advice
Forget the vanity metrics. Forget the TechCrunch headlines. Focus on building a real business that solves a real problem for real customers. If you do that, the funding will follow. It won’t be easy. There will be days when you want to quit. But if you’re the right founder, with the right team, and the right obsession, you’ll find a way to make it work.
I’ve bet on founders like you more than 200 times. I’ve seen what it takes. Now go out there and show me I’m right to bet on you.
The Common Traps That Sink Startups
I've seen too many promising companies go sideways because of unforced errors during their seed round. It's painful to watch. Here are some of the most common traps and how to avoid them.
1. The "Stealth Mode" Fallacy
So many founders are terrified that someone will steal their idea. They operate in "stealth mode," refusing to talk to customers or even other founders until they have a "perfect" product. This is a huge mistake. Ideas are cheap. Execution is everything. The feedback you get from talking to users early on is infinitely more valuable than protecting your precious idea. Get out of the building. Talk to people. Get feedback. The risk of building something nobody wants is far greater than the risk of someone stealing your idea.
2. Bad Co-founder Dynamics
This is a big one. Co-founder disputes are a leading cause of startup death. I've seen it happen time and time again. Before you even think about raising money, you need to have a serious, honest conversation with your co-founders about equity, roles, responsibilities, and what happens if one of you wants to leave. Get it all in writing. It might feel awkward, but it's a lot less awkward than having a legal battle down the road.
3. Taking "Dumb Money"
Not all money is created equal. It can be tempting to take a check from anyone who's willing to write one, but taking money from the wrong investor can be a disaster. A good investor will bring more than just capital to the table. They'll bring expertise, a network, and a willingness to roll up their sleeves and help you when things get tough. A bad investor will be a distraction at best and a liability at worst. Be selective about who you let on your cap table.
4. Premature Scaling
So you've raised a seed round. Congratulations. Now, don't go out and hire a huge team and rent a fancy office. That's the fastest way to burn through your cash and end up back where you started. Your seed round is about one thing and one thing only: finding product-market fit. It's about iterating, experimenting, and learning as quickly as possible. Stay lean. Stay focused. Don't scale until you've nailed it.
Frequently Asked Questions
How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 200+ startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.
What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.
Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.