How long is seed funding supposed to last?

QUESTION:

I’m talking to angels about raising a seed round. How long should a seed round typically last? Six months? A year? What do investors expect?

ANSWER:

Naomi Kokubo

Naomi Kokubo

by Naomi Kokubo, Cofounder of LavaMind

Instead of thinking of this in terms of time, you may want to break your business plan up into milestones. Ideally, the seed round should take you to a milestone whereupon you can raise your next round of funding.

For example, you may raise $250,000 to acquire a certain number of users, or launch an iPhone app, or close key distribution deals. The time and resources it will take to reach your next milestones will determine the amount of money you need to raise in your angel round.

I hope this helps!

ADDITIONAL ANSWER:

Ethan Stone

Ethan Stone

by Ethan Stone, Stone Business Law

This is a great answer. It’s also worth bearing in mind that seed money doesn’t have to lead to another round of financing. Depending on your business plan and success in implementing it, it could also lead to sufficient revenue to fund growth. This site is mostly focused on companies that really need several rounds of equity financing to get off the ground, but it’s always worth thinking about whether your business really fits that mold. This post by Bryce Roberts (http://bryce.vc/post/1670747638/dog-poop-bags-can-smell-like-success) is worth reading. If your business plan calls for organic growth, of course, you should make that very clear to potential seed investors.

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