Seed Funding?

Two posts related to seed funding caught my attention this week, so I thought I would capture something on the topic. I've played the roles of student, software engineer, hacker, and research scientist, and across all of those roles money has never entered the equation (funding from: self, company, clients, and government). With thoughts of scaling up my own projects, I have to start think about more substantial sources of cash other than savings.

Seed funding is about getting an idea off the ground. It's about market research and product development toward producing (understanding) something that has value or is realised as a dead end. The cash comes from you, friends, and family. If at the end of seed funding the product has value, one seeks additional rounds of funding from angel investors, or venture capital. The amount of cash thrown around for seed funding is in the order of $10K-$100K, and is obviously high risk. The level of risk means that anyone with business experience giving you money will seek a high rate of return, and bringing in outsiders likely requires careful consideration of value, monetisation, and exit strategy (business plan). Important, but not as important as building something people want to use.

Anyway, the first post I came across was on RWW titled 13 Seed Funding Options For Entrepreneurs. This was interesting because it forces you to think about the varied ways for acquiring seed funding. This is important because each choice is a trade-off, and blindly making a decision such as "self funded" or "bootstraped from consulting" without being informed is madness. More importantly, there are a lot of people out there (likely ex-entrepreneurs) that want to be involved in high-risk startup projects (even if it is merely advisory)!

The second post fits in well with the first titled How do we set the valuation for a seed round? Importantly, if one considers firstly that outsides want to be involved in a monetary sense, then the first step down the path of angel seed investment is a consideration of the results of the process. Although high-level, this post from VentureHacks sets up the appropriate nomenclature and focuses on the business concerns: what you give up and what you get in return.

I'm sure there is a wealth of such information out there, although I found these posts useful simply for their no-frills style. The average Google search is full of business spam and advertisement-bias. If one is considering the money problem, an excellent staring point is Graham's in depth How to Fund a Startup.