article thumbnail

The Silliness Of Recapping Seed Rounds

Feld Thoughts

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. The product gets a lot better.

article thumbnail

How to Start a Startup

www.paulgraham.com

During the Internet Bubble there were a number of startups founded by business people who then wentlooking for hackers to create their product for them. In nearly every failed startup, the real problem was that customersdidnt want the product. Probably because the product wasa dog, or never seemed likely to be done, or both.

Startup 105
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

How to Fund a Startup

www.paulgraham.com

It wasnt because they werent accredited investors that I didntask my parents for seed money, though. When we were starting Viaweb,I didnt know about the concept of an accredited investor, anddidnt stop to think about the value of investors connections.The reason I didnt take money from my parents was that I didntwant them to lose it.

article thumbnail

To Follow On or Not to Follow On

This is going to be BIG.

Reality is that venture is a bunch of individual stories, individual assessments of teams, unique products, and a whole lot of stars lining up for particular companies for success to happen. If you're doing seed deals, how often does a down round in a seed deal even happen? Down from what?