Seed Founders Should Obsess Less About Their Valuation

Seed founders should obsess a little less on valuation.

I realize that's a bit odd for me to say, given how much time and effort we put in to educating early-stage founders on the venture market.

But the underlying reality beneath the charts is so damn messy.

Just take the last 60 days as an example. In that period, we've had:

• A repeat founder in cybersecurity raise a $12M seed round literally in the same week the company was incorporated.

• A startup with 5 different SAFE raises convert into a priced round exactly at the final valuation cap.

• A biotech company raise a "seed extension" that was actually larger than the original seed round.

It's all over the place!

I think the industry bubbles below paint a similar picture. Sure, there are significant distinctions between certain industries. But in general there is a messy middle of sectors (almost all building software) where deals are getting done a bit above or below the current medians.

So what should pre-seed founders looking to make the seed jump actually do?

1. Optimize for the right partner. If your gut says the smaller VC offering slightly worse terms will ultimately help your business more, take the deal.

2. Realize that a priced valuation sets the bar and the next round needs to clear it by a lot. Is it "good" that so much of VC is about expectations and optics? Probably not, but that's the game you're playing.

3. Play in default alive mode, always. Imagine this could be the last capital you ever raise - can your business survive on what you have now?

4. Minimize the urge for comparison. Outliers get headlines but no one tallys up the companies that didn't make it from the TechCrunch seed announcements (actually could be a fun project for someone out there).

Feels like the fundraising taps may just crank up a notch come September. Good luck out there!

#startups #founders #Seed #fundraising