Raising a seed round 101

Seed fundraising is presented as one of the most high-stakes and confusing parts of a founder's job, and this guide, co-written by two seed investors who have been involved in over 1,000 seed rounds, aims to make it practical. It covers whether venture capital is the right path at all, what proof founders should have before raising, how much to raise and how to model runway, how seed rounds are typically composed, and how to run the process so investors feel urgency. It also addresses negotiating terms, managing dilution, recognizing a healthy fundraise, choosing investors, and deciding when to announce. The advice is drawn from interviews with founders of companies like Notion, Figma, Linear, and Instacart, making it a useful reference for founders and product leaders considering a raise.

01Key takeaways

• Only raise venture capital if you aim for a very large company, accept meaningful dilution, and can name concrete benefits outside capital would provide.
• Build conviction through customer research and a working prototype or early paying customers before approaching investors.
• Model a 24 to 36 month runway with a 25% buffer to size your raise rather than chasing the largest possible check.
• Compress your fundraise into a short window and let momentum from other prospects create urgency, without overstating commitments you do not have.
• Treat only a signed term sheet or SAFE as a real commitment, and keep your round open until funds actually wire.
• Vet investors by asking other founders who has been most helpful, and consider the relationship as a long-term partnership.

02Key sections

Whether to raise venture capital

Raising a seed round makes sense only if the founder wants to build a very large company, accepts giving up roughly 10% to 20% equity, and sees concrete benefits from outside capital. Delaying or skipping a raise can teach more disciplined money-making.

Proof required before raising

Investors expect founders to be fully committed, to have done deep customer research, and to show some expression of their thesis through a prototype, early customers, or a clear memo. Conviction in the opportunity is described as the most predictive factor.

How much to raise and round composition

A common guideline is a 24 to 36 month runway with a 25% buffer, and typical seed rounds run $2M to $4M at around 15% dilution. Rounds usually combine a lead check from a seed fund or multi-stage firm with angels and smaller funds.

Running the process and creating momentum

Founders should compress their fundraise into a two to three week window, research investors, prepare polished materials, and seek warm introductions. Driving the process, never revealing names of other investors, and treating only signed term sheets or SAFEs as commitments help maintain leverage.

Terms, dilution, and choosing investors

The key terms at seed are post-money valuation and board composition, with SAFEs being the most common instrument. Founders are advised to vet investors by talking to other founders and to choose partners the way they would choose a hire they can never fire.

03From the post

“Q: I’m a founder and I’m planning to raise a seed round. What do I need to understand to raise a great round? Fundraising is arguably the most heartbreaking, confusing, and high-stakes part of a founder’s job. You have to learn how to do it from scratch, stay positive in spite of incessant rejection, and if you don’t get it right, your company dies. Then you have to do it over and over and over again. Don’t get it right once? That’s right, your company dies. Considering how essential getting this right is for most founders, it surprised me that I’d never come across a great, in-depth, practical how-to guide on raising a seed round—especially one written by people who’ve been through it hundreds of times. So I pulled in two of my favorite co-investors to write one: Terrence Rohan and Jack Altman. Terrence and Jack have been involved with over 1,000 seed rounds, and are my go-to people whenever I need fundraising advice. Below, you’ll learn: 1. Should my company raise venture capital at all? 2. What do I…”

04Frameworks mentioned

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.