Ask HN: Not Going Past Seed Round

https://news.ycombinator.com/item?id=8049288

by maresca • 12 years ago

1 1 12 years ago

news.ycombinator.com

There's a well-defined flow of investments in startups: Seed, Series A, B, C, IPO etc. Most early stage investors (seed stage) like seeing companies go on to raise more money in a Series A or get bought.

Are there any seed stage investors out there that would invest in a company that plans on going profitable straight from seed funding without selling or getting acquired? Are there any good examples of startups that have done this?

hashtag• 12 years ago

I can't answer your direct question as I'm not an investor but seed investments are often convertible notes that do not convert to equity with further funding. Essentially they become low interest loans at that point. Investors would obviously prefer to have equity in the company and equity at a seed stage level might place pre-mature valuation on the company that is often disadvantageous.

If you expect to be profitable and do not wish to raise, venture debt or other means of capitals might make more sense. Alternatively being profitable does not mean you shouldn't raise. Raising capital helps with bringing on board investors and mentors you otherwise lack access to, capital to accelerate growth, etc.

Unless you expect insane growth and profit without the need of new capital, chances are anyone investing would want the company to scale up quite large.

Again, as a disclaimer, I am not an investor but this is just what I understand being in the startup game for some time.

Ask HN: Not Going Past Seed Round

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