seed

Definition

The first real money a startup receives from external investors, typically ranging from $500K to $2M, given in exchange for equity to entrepreneurs brave (or delusional) enough to think their idea will change the world. This is the stage where your pitch deck matters more than your product, and your co-founder's LinkedIn connections matter more than your revenue. Named 'seed' because most of these investments will never grow into anything, much like actual seeds.

Example Usage

We just closed our seed round of $1.5M from three angel investors who loved our AI-powered dog walking app.

Source: Venture capital industry terminology

Related Terms

Intermediate

TAM/SAM/SOM

Total Addressable Market, Serviceable Addressable Market, and Serviceable Obtainable Market—three increasingly pessimistic estimates of how much money you might theoretically make. The trilogy of optimism, realism, and 'if everything goes perfectly.'

🚀 Startup / VC

Advanced

full ratchet

The most aggressive anti-dilution protection where early investors' conversion price adjusts to match a down round price, regardless of how small the down round is. Financial punishment for daring to need more money.

🚀 Startup / VC

Advanced

anti-dilution provisions

Protective clauses that let early investors maintain their ownership percentage when future rounds price lower, punishing founders for failing to maintain perpetual hockey stick growth. Comes in weighted-average and full-ratchet flavors of pain.

🚀 Startup / VC

Intermediate

ARR

Annual Recurring Revenue -- the amount of subscription money a company expects to collect over a year, assuming nobody cancels, which they will. It's the startup metric most likely to appear in fundraising decks and least likely to match reality.

🚀 Startup / VC

Advanced

control premium

The additional value investors pay for governance rights and control provisions beyond pure economics, willing to pay higher prices for board seats and veto powers. The surcharge for not trusting founders to run the company they founded.

🚀 Startup / VC

Intermediate

strategic investor

A corporate entity investing for business reasons beyond pure financial returns, bringing industry expertise and potential partnerships along with capital. Either your best ally or a Trojan horse gathering intelligence for a future competitive assault.

🚀 Startup / VC

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