The #1 Problem with seed round investing? 🌱 #20VC with Floodgate Founding Partner Mike Maples Jr. Link in bio. — #HarryStebbings #Business #businesstips #businessadvice #entrepreneur #ceo #startup #founder #entrepreneurship #investor #investing #venturecapital #venture #vc #SeedInvesting

I think a lot of people have forgotten what a seed round even is. To me, the purpose of a seed round is you have an insight about the future and you have a massive risk that you're hoping to take out. The ideal seed round is one which provides slightly more than the minimum viable amount of money and time to take out that risk. And the reason is that that's the riskiest time in the company and it's also the most expensive time to use capital because you never get more diluted than you do in the seed round. But here's the problem. What happens more often is people raise $4 million and they just go do a bunch of stuff. They just don't have a clear line of sight. What you want to be able to say is, I need to establish that my insight is true. And if I establish that my insight is true, now I've done more than any single thing I can do to take risk out of this. But what's happening now is people are raising $4 million because that's what it takes to dilute 20%. That's just stupid. The one thing you never get back as a founder is your time. And if you raise $4 million, you know, you're three years in, you're doing seed extensions. If the insight was wrong, you're much better off knowing that within a year.