Existential Risk In The Seed Stage
I just sent this out to Haystack companies which are at the seed stage. I tend to look at things through the lens of existential risk at this stage, which then inform the milestones (not all metrics-based) to reach as a guidepost. I wanted to share it with you all as its generic, but shows how I’m thinking about things today in mid-2015.
I view my job as a small investor with a small fund is to identify and help great founders & companies. If I had to boil down where I help most, it’s around getting ready for a proper seed or Series A round, depending on stage. I am here to help and plan out these things with you way ahead of time, so please consider me as a resource.
(For those of you who’ve already raised rounds with lead investors, please disregard — they will now focus on this for you, hopefully.)
However…I have noticed I’ve fallen out of communication with many of you at the seed stage, email is hard, folks are heads down building, etc. To me, one of the Top 3 functions as CEO is to make sure there’s enough money in the bank. In this scenario, it means the next round, and investment rounds usually come together because of (a) breakout growth or more likely (b) reaching fundamental PM fit, key metrics, and other foundational milestones. In my experience, this stuff takes many months to set up and get right, and it takes many months to develop a relationship with the next lead investor.
These are all places where I can help, and I’m writing to offer this to you all again. Ultimately, it won’t work for everyone, and that is OK, but please do keep in mind that if you’re in a position where your cash balance is going down and things need to happen faster, it’s usually hard for me to come up with a palatable solution in a short period of time.
We are in a frothy seed market. It is good to be a founder during a seed round, but the number of institutional Series A deals are about the same. That means, the bar is higher for everyone, and everyone (you and me) should be constantly concerned about future financing risk — even moreso given how easy it is to raise seed. The drop off is severe.
The Month Of May
I will be gone for a lot of May. I have two work trips and taking a family trip. I will be on email, but slow to respond around Memorial Day. Text/FB message me for emergencies during the month, please. I’ll do my best to get back to you quickly.