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Seed Round

Definition

A seed round is an early-stage fundraise — typically the first priced equity round — in which a startup raises capital to validate its business concept, build a product, and reach initial traction. Seed rounds are usually smaller than a Series A and may be raised in multiple tranches from angel investors, accelerators, and early-stage venture funds.

Context

In Ep. 1, Karl Rectanus describes raising LearnPlatform's seed round "over a couple of tranches," beginning with approximately $350,000 raised at the ASU GSV conference in 2014 from investors including Kaplan and Techstars. Karl applied his Fail Test framework to the fundraise: if he couldn't raise $250,000 at the conference, he would not start the company. The seed round led to LearnPlatform's participation in the Kaplan Techstars Accelerator. Karl later notes that through LearnPlatform's entire lifecycle, the company "only raised $6 million in total venture and seed funding" — relatively light capital for its level of business.

  • Private Equity — later-stage capital that targets established businesses
  • Growth Equity — growth capital for companies past the seed stage
  • Fail Test — Karl's framework for making the seed-stage go/no-go decision