Seed Round Explained: A Step-by-Step Guide to Securing Startup Funding

Oct 7

Key Takeaways

A seed round is the first institutional financing stage. It funds a startup, usually pre-revenue or early-revenue, to prove viability, reach product-market fit, and build a repeatable customer-acquisition model.
Seed capital is a bridge, not permanent runway. Plan for roughly 18 to 24 months to hire, refine the product, and collect the evidence needed for a Series A.
Pre-seed backs the founder, seed looks for early traction, and Series A scales a model that already works. Raising Series A before those seed milestones are met usually fails for lack of operational maturity.
Do not start the raise until real de-risking evidence exists. For B2B, that means a qualified pipeline, repeatable wins, and retention or expansion signals. For B2C, it means organic growth, engagement, low churn, and early unit economics.
Seed investors expect lifetime value of at least 3 times customer acquisition cost, with B2C payback trending under 6 months. Broken unit economics cannot be fixed by raising more money.
An MVP is the smallest version that delivers core value and produces learning, not a feature-complete product. Early proof that users want it is stronger leverage than a polished narrative.
Angel checks often run from $10,000 to $100,000 via a simple equity round, SAFE, or convertible note. Micro-VCs typically write from the low six figures to about $1 million and often target roughly 5% to 10% ownership.
Accelerators such as Y Combinator, Techstars, and 500 Global commonly offer about $100,000 to $150,000 for roughly 5% to 10% equity. The larger value is the signal and the investor network.
Equity crowdfunding can validate demand and build a customer base, but it needs marketing and securities compliance. Published issuer fees in this guide include 7.9% on Wefunder, 8.5% on StartEngine, and about 4.9% on Netcapital.
A seed deck is usually 10 to 12 slides covering problem, solution, market, team, business model, and the ask. Frame the market as TAM, SAM, and SOM, and never claim there is no competition.
U.S. venture investors generally expect a Delaware C-Corp, assigned intellectual property, current registered-agent filings, and counsel before outside capital is taken.
The SAFE is the usual seed instrument: it is not debt, and it converts in a future priced round. Know the valuation cap, discount, and pro rata rights. Convertible notes add interest and a maturity date.
Post-money valuation makes dilution explicit. A $10 million pre-money valuation plus $2 million invested is a $12 million post-money valuation, so the new investor owns 16.7%. An option pool created before a priced round dilutes founders first.
Treat fundraising like a sales pipeline: track every investor conversation, follow up consistently, and use each no to tighten the pitch. After the wire, the work is burn discipline, customer focus, and the milestones promised in the raise.

The journey from a kitchen-table concept to a high-growth company is rarely a straight line. For founders, the transition from personal savings and friends and family support to institutional backing represents the most critical pivot in a business’s lifecycle. This is the realm of the seed round: a pivotal milestone that shifts a venture from an unproven idea into a structured, scalable business.

Raising seed capital is not merely an administrative hurdle or a quest for a bank transfer; it is a fundamental transformation of your company’s DNA. To succeed, you must treat the fundraising process with the same operational rigor as product development or sales. This guide serves as your operating manual for navigating the early-stage ecosystem, managing investor relationships, and ultimately securing the funding required to transform your vision into reality.

What is a Seed Round? Defining the First Major Growth Milestone

A seed round is the first institutional stage of financing for a startup. It is the capital injected into a business to prove its viability. At this juncture, the company is typically pre-revenue or in the very early stages of revenue generation. The primary goal of the seed round is to reach "product-market fit" and establish a repeatable model for customer acquisition.

Seed vs. Pre-Seed vs. Series A: Understanding the Funding Spectrum

The funding landscape is defined by the level of risk the investor is willing to shoulder. Pre-seed funding usually comes from the founders themselves or angel investors who prioritize the person over the product. Seed funding marks the formal entry of institutional players who look for early signals of market traction. Series A, by contrast, is about scaling an existing, proven engine. Understanding this spectrum is vital: if you seek Series A capital before your seed round is complete, you will likely be rejected for lack of operational maturity.

The Core Purpose of Seed Capital: Transitioning from MVP to Scalable Business

Seed capital is the fuel that allows you to move beyond the Minimum Viable Product (MVP). It is meant to buy you time (typically 18 to 24 months) to build a team, refine your core product, and gather the data points necessary to justify a much larger Series A raise. It is not intended to last forever; it is a bridge to your next milestone.

Seed Money vs. Venture Capital: Navigating the Early-Stage Ecosystem

While the terms are often used interchangeably, there is a distinct difference in philosophy. Seed money is often about believing in a vision. Venture capital (VC) is about calculating the potential for a massive exit. Understanding this distinction helps you tailor your pitch. Angels invest with their hearts and portfolios; institutional VCs invest with power-law models and internal committees.

Assessing Readiness: When Should You Start Raising?

Founders often make the mistake of raising too early. Fundraising is a full-time job that siphons energy away from your product. You should only initiate a raise when you have enough de-risking evidence to compel a sophisticated investor to act. For B2B startups, that evidence might include a clear pipeline of qualified prospects, a few repeatable customer wins, strong retention or expansion signals, and proof that the product solves an urgent business problem. For B2C startups, it could mean strong organic growth, high user engagement, low churn, repeat purchase behavior, and early unit economics that suggest the model can scale. In both cases, seed investors want to see that the biggest unknowns are already being reduced by real traction, not just a compelling narrative.

Beyond the Business Idea: Identifying Product-Market Fit (PMF)

Product-market fit is the holy grail. It means you are in a good market with a product that can satisfy that market. At the seed stage, you do not need to have captured the entire market, but you do need to demonstrate that your product is solving a real, painful problem for a clearly defined group of users. Investors will look for concrete signals such as strong retention, repeated usage, a clear sense of urgency among customers, and evidence that users are willing to pay for the product.

Customer Signals and Traction Metrics: Moving from "Maybe" to "Yes"

Investors look for signals. These could be user growth rates, engagement depth, or letters of intent from enterprise customers. If you are a B2B startup, pipeline velocity is key, with seed investors often looking for a healthy number of qualified opportunities, steady month-over-month growth in pipeline, and early proof of conversion from leads to meetings and meetings to proposals.

If you are B2C, cost-per-acquisition (CAC) versus lifetime value (LTV) is the metric that matters most, with investors commonly expecting LTV to be at least 3x CAC, a payback period that is trending toward under 6 months, and retention or repeat usage that supports durable unit economics. These signals transform your startup from a hypothetical to a must-watch entity.

Evaluating Your Unit Economics: CAC, LTV, and Growth Potential

Even at an early stage, you must show you understand the math of your business. Your CAC (the cost to acquire a customer) must be significantly lower than the projected LTV (the total revenue that customer brings over time), preferably by at least 3x. For example, if it costs $100 to acquire a customer and that customer generates $350 in profit over time, the unit economics are healthy; but if it costs $200 to acquire a customer and the customer only generates $150 in value, the business is losing money on every sale. If your unit economics are fundamentally broken, no amount of seed capital will save the business.

The Minimum Viable Product (MVP) and Initial Market Validation

Your MVP should be the smallest version of your product that delivers core value. It is not a feature-complete application; it is a learning tool. For example, if you want to test demand for a new scheduling app, you might launch a simple landing page with a waitlist or a manual concierge service that books appointments for early users. By launching an MVP and gathering early user feedback, you validate that people actually want what you are building. This validation is the strongest leverage you have when sitting across from an investor.

The Investor Landscape: Identifying Your Future Partners

Not all capital is created equal. The right investor brings more than funding; they also provide mentorship, credibility, and access to a professional network.

Business Angels and Angel Rounds: The First Believers

Angel investors are typically high-net-worth individuals who invest their own capital. They are often the first to take a chance on an unproven founder. Typical angel checks may range from $10,000 to $100,000, often structured as a simple equity round, SAFE, or convertible note. Because they are investing personal funds, their decision-making process is often faster, though the checks are usually smaller. In return, they typically expect clear progress on product development, customer traction, and regular updates from the startup.

Micro-VCs and Boutique Venture Capital Firms

Micro-VCs act as a bridge between angel investors and massive venture capital firms. They typically write seed checks in the low six figures to around $1 million, manage funds that are often in the single-digit millions to low tens of millions, and usually expect to own a meaningful early stake in the company, often roughly 5% to 10%. They operate with institutional discipline but focus on very early-stage opportunities. They are excellent partners because they understand the unique challenges of the seed phase and often offer more hands-on support than larger funds. For example, a seed-stage startup might use a micro-VC to secure its first institutional check, get introductions to early customers and follow-on investors, and work closely with the fund’s team on pricing, hiring, and fundraising strategy.

Startup Accelerators and Incubators: Y Combinator and the Power of Networks

Accelerators such as Y Combinator, Techstars, and 500 Global provide a structured environment, often including a small investment in exchange for equity, and an intensive curriculum to prepare startups for their seed round. Typical terms founders might encounter include around $100,000 to $150,000 in funding for roughly 5% to 10% equity, though the exact amount and stake vary by program. Beyond the cash, the primary benefit of an accelerator is the signal of validation and the immediate access to a massive network of alumni and potential investors.

Equity Crowdfunding: Tapping into the Power of the Community

Equity crowdfunding platforms allow businesses to raise capital from a large pool of smaller investors. This can be a great way to validate market interest while simultaneously building a community of brand evangelists. However, it requires significant marketing effort and legal preparation to remain compliant with securities regulations.

Popular equity crowdfunding platforms include:

Wefunder: Best for startups with an engaged customer or founder community that can help generate early momentum. It supports relatively low minimum investments and charges issuers 7.9% of funds raised for successful Regulation Crowdfunding campaigns. [1] [2]
Republic: Most appropriate for startups seeking a curated investment audience and strong campaign visibility. Its selection process and offering economics can be more deal-specific, making it a better fit for companies with compelling traction and polished positioning.
StartEngine: Well suited to larger public-facing campaigns or startups interested in potential secondary-market exposure, although liquidity is not guaranteed. Its published issuer commission is 8.5% of equity capital raised. [3]
Netcapital: A cost-conscious option for straightforward seed raises; its published portal fee is approximately 4.9% of successfully raised capital and is charged to the company rather than investors. [4]

The best platform depends on your startup’s existing audience, fundraising target, campaign budget, security terms, and ability to market the offering. Founders should compare current fees and requirements and obtain securities-law advice before launching.

Crafting Your Fundraising Narrative: The Founder Story

Investors buy into your vision before they buy into your metrics. Your ability to tell a compelling story (the Founder Story) is what distinguishes a "nice to have" business from a "must-have" investment.

Selling the Vision: Why Investor Trust is Built on Narrative

Your narrative should bridge the gap between where the world is today and where it will be because of your product. Why you? Why now? For example, if you spent years inside the problem you are solving, you can explain that you saw the pain firsthand, tried the existing workarounds, and built the product because the market had finally reached an inflection point. If you cannot articulate the "why," an investor will struggle to justify the risk. Your story should be coherent, passionate, and rooted in the reality of the market.

Addressing Market Need: Proving the Problem Exists

You are not selling a solution; you are selling a cure to a specific, painful problem. Use data to show how many people suffer from this problem and how much they are currently paying in inefficiency costs or lost time. A massive market need, backed by clear evidence, is the bedrock of a successful pitch. For example, in a seed pitch, you might frame the opportunity with TAM, SAM, and SOM: the TAM is the full population experiencing the problem, the SAM is the segment you can realistically serve first, and the SOM is the share you can capture in the near term. That structure shows not just that the market is large, but that it is reachable. Also highlight the market's growth rate; investors love companies tackling large, rapidly expanding markets.

Competitive Intelligence: Positioning Your Business Model for Success

Never claim you have "no competition." It signals a lack of market awareness and can make investors question whether you truly understand the landscape, the risks, or the pressure to differentiate. Instead, acknowledge competitors honestly, explain what your product does differently, and focus on the specific customer pain points, execution advantages, or insights that make your approach compelling (without implying you are unassailable). Whether you are using a new distribution model, proprietary technology, or a better user experience, articulate your "moat" clearly.

The Essential Fundraising Toolkit

Fundraising is a sales process: startup founders need to identify prospects, track every conversation, and follow up consistently. To run it effectively, you need a toolkit that keeps you organized and professional.

The Pitch Deck: Balancing Data with Compelling Storytelling

Your pitch deck is your visual brochure. It should be concise, typically 10 to 12 slides, and cover the problem, the solution, the market size, the team, the business model, and the ask. Keep the design clean and the data focused on your strongest metrics. Think of it as a movie trailer: its job is to build credibility and spark enough interest to earn a second meeting and deeper discussion. Avoid going too far down the technological rabbit hole.

Financial Projections and Go-to-Market Strategy

While seed-stage projections are inherently speculative, they must be grounded in logical assumptions. Investors want to see that you understand your cost structure and that you have a clear plan for reaching your first thousand (or ten thousand) customers. For example, your projections should spell out assumptions for customer acquisition cost (CAC), conversion rates, payback period, burn rate, and runway so investors can evaluate whether the plan is realistic.

Legal Foundations: Intellectual Property, Incorporation, and Stripe Atlas

Before taking a dollar, ensure your legal foundation is airtight. This includes intellectual property assignment agreements and proper corporate incorporation. U.S. venture investors commonly prefer Delaware C-Corps because Delaware’s corporate law is well-established, its courts are experienced in handling business disputes, and the structure is familiar for venture financing and equity issuance.

Using tools like Stripe Atlas or similar services can make this process more straightforward, helping ensure you are set up correctly in a jurisdiction like Delaware, which is the standard for U.S.-based venture capital. Founders should consult counsel when forming the company, issuing equity, assigning intellectual property, or before taking outside investment, since those steps can have lasting legal and tax consequences.

Establishing a Delaware Registered Agent and Business Compliance

A Delaware C-Corp is the preferred legal entity for startups seeking venture capital because investors scrutinize entity formation, registered agent status, and corporate records during seed-round due diligence. A standardized framework gives investors confidence that the company is structured in a way they understand, while an active registered agent helps ensure state filings stay current and compliance issues do not surface as legal debt during the diligence phase of the raise.

Understanding Deal Structures: SAFEs, Convertible Notes, and Priced Rounds

The way you structure your investment dictates your future dilution. Understanding the mechanics of these documents is non-negotiable, and you should always review them with startup counsel before accepting seed funding.

Simple Agreement for Future Equity (SAFE): The Modern Startup Standard

The SAFE is now the industry standard for seed rounds. It is not debt; it is a contractual right to receive equity in a future priced round. Key terms founders should understand include the valuation cap, which sets the maximum company valuation used to price the SAFE; the discount, which gives investors a reduced price in the future round; and pro rata rights, which allow investors to maintain their ownership percentage in later financings. It is simple, fast, and minimizes legal fees. For most founders, a post-money SAFE is the most straightforward way to raise capital.

Convertible Notes: Debt That Turns into Equity

Convertible notes are debt instruments that convert into equity upon the occurrence of a specific event, usually a Series A round. For example, if a startup raises a priced Series A round, a convertible note might convert into preferred shares at the Series A price, often with a discount or valuation cap that gives the noteholder additional equity for the early risk they took. They carry an interest rate and a maturity date, which can add complexity compared to a SAFE. While still used, they are increasingly being replaced by the simplicity of the SAFE.

Valuation Caps and Discount Rates: Protecting Early Investors

Valuation caps and discount rates are the mechanisms that reward early investors for taking on the risk of the seed round. A valuation cap limits the price at which the investor’s money converts into equity, while a discount rate gives them a percentage off the price paid by later-stage investors. For example, if a later round prices shares at $1.00 each, a 20% discount lets the early investor convert at $0.80 per share, and a $5 million valuation cap could lower the conversion price even further if it implies a per-share price below $0.80.

Pre-Money vs. Post-Money Valuation: Calculating Your Equity Distribution

Understanding the difference between pre-money and post-money valuations is critical. For example, if a company has a $10 million pre-money valuation and an investor puts in $2 million, the post-money valuation is $12 million, so the investor owns 16.7% of the company ($2 million ÷ $12 million) and the founder owns 83.3% immediately after the investment. A post-money valuation clarifies exactly how much of the company you are selling, removing the ambiguity of future option pool shifts. Always be clear about which methodology is being used to avoid dilution surprises.

Priced Rounds and the Equity Pool: Preparing for Dilution

A priced round involves setting a formal share price for the company. This is more complex and expensive than using SAFEs or notes. You must also account for an "option pool" (i.e., shares set aside for future employees), which is typically expected by investors to be part of the pre-money valuation. For example, if the company has 100 shares and founders own all 100, creating a 20-share option pool before the round means the founders now own 100 out of 120 shares, or 83.3%, instead of 100%; the extra 16.7% is dilution from the larger pool.

Summary: What is a Seed Round, and How to Secure Seed Funding from Investors

Securing seed funding is a transformative event that signals the graduation of your business from a experimental project to a structured, institutionalized startup. Throughout this guide, we have explored the nuances of identifying product-market fit, building a compelling narrative, and navigating the complexities of deal structures like the SAFE.

The most important takeaway for any founder is that fundraising is not a distraction; it is a core business function. Treat your outreach with the rigor of a B2B sales pipeline. Build an Investor CRM, track your interactions, and manage your momentum. Do not let rejection deter you; fundraising is a game of probability. Every "no" provides data that can help you refine your pitch and strengthen your narrative for the next conversation.

As you look toward the day after the wire, remember that the funding is merely a tool. The real work of scaling your team, refining your product, and delivering on the promises made during your pitch, begins once the capital hits your account. Maintain your focus on the customer, stay disciplined with your burn rate, and use this injection of capital to hit the milestones that will pave the way for your next stage of growth. You are now a partner to your investors; leverage their networks, be transparent with your progress, and continue the relentless pursuit of your mission.

Frequently Asked Questions

What is a seed round?

A seed round is the first institutional financing stage for a startup. It is capital injected to prove the business is viable, usually while the company is pre-revenue or only beginning to generate revenue. The goal is to reach product-market fit and build a repeatable customer-acquisition model, typically over 18 to 24 months, so the company can later raise a Series A.

How is a seed round different from pre-seed and Series A?

Pre-seed usually comes from founders or angels who bet on the person more than the product. Seed is the formal entry of institutional investors looking for early traction signals. Series A is for scaling a model that already works. Raising Series A before the seed milestones are done usually fails because the company lacks operational maturity.

What is seed capital used for?

Seed capital is fuel to move past the minimum viable product. It buys time to hire a team, refine the core product, and collect the data needed to justify a larger Series A. It is a bridge to the next milestone, not permanent runway.

What is the difference between seed money and venture capital?

Seed money is often a bet on a vision. Venture capital is a calculation of the odds of a very large exit. Angels tend to invest personal capital with faster decisions and smaller checks. Institutional VCs invest against power-law return models and internal investment committees. The pitch should match that difference.

When should a founder start raising a seed round?

Start only when there is enough de-risking evidence to make a sophisticated investor act. Fundraising is a full-time job that pulls energy away from the product, so raising too early is a common mistake. For B2B, that evidence can include a qualified pipeline, repeatable customer wins, retention or expansion signals, and proof the product solves an urgent problem. For B2C, it can include organic growth, high engagement, low churn, repeat purchases, and early unit economics that can scale.

What traction do seed investors look for?

Seed investors want the biggest unknowns reduced by real traction, not only a narrative. Useful signals include user growth, engagement depth, and letters of intent from enterprise customers. In B2B, pipeline velocity matters: a healthy set of qualified opportunities, steady month-over-month pipeline growth, and early conversion from leads to meetings and meetings to proposals. In B2C, investors commonly look for lifetime value at least 3 times customer acquisition cost, payback trending under 6 months, and retention that supports durable unit economics.

What unit economics matter in a seed round?

Even at seed, customer acquisition cost should be significantly lower than projected lifetime value, preferably by at least 3 times. If it costs $100 to acquire a customer who generates $350 in profit over time, the unit economics are healthy. If it costs $200 to acquire a customer who generates only $150 in value, the business loses money on every sale, and more seed capital will not fix that.

What is an MVP in the context of a seed raise?

A minimum viable product is the smallest version of the product that delivers core value. It is a learning tool, not a feature-complete application. A scheduling app, for example, might start as a landing page with a waitlist or a manual concierge service. Early user feedback that people actually want the product is strong leverage in an investor meeting.

Who invests in a seed round?

Typical seed investors are business angels, micro-VCs and boutique venture firms, startup accelerators, and, in some cases, equity crowdfunding investors. The right investor adds mentorship, credibility, and network access, not only cash.

How much do angel investors usually invest in a seed or angel round?

Angel checks often range from $10,000 to $100,000 and are commonly structured as a simple equity round, a SAFE, or a convertible note. Angels invest their own money, so decisions can be faster than an institutional process, but the checks are smaller. They generally expect progress on product, customer traction, and regular updates.

What do micro-VCs invest at seed, and how much ownership do they want?

Micro-VCs typically write seed checks from the low six figures to about $1 million and manage funds often in the single-digit millions to the low tens of millions. They usually expect a meaningful early stake, often roughly 5% to 10%. They sit between angels and large venture firms and often help with pricing, hiring, customer introductions, and follow-on fundraising.

What do accelerators such as Y Combinator typically offer?

Accelerators such as Y Combinator, Techstars, and 500 Global provide a structured program and a small investment in exchange for equity. Typical terms founders encounter are about $100,000 to $150,000 for roughly 5% to 10% equity, though the exact amount and stake vary by program. The larger benefit is the validation signal and access to alumni and investors.

What are common equity crowdfunding platforms for a seed raise?

Wefunder fits startups with an engaged customer or founder community and charges issuers 7.9% of funds raised on successful Regulation Crowdfunding campaigns. Republic suits companies that want a curated investor audience and strong campaign visibility. StartEngine fits larger public-facing campaigns and lists an issuer commission of 8.5% of equity capital raised; secondary-market liquidity is not guaranteed. Netcapital is a lower-cost option, with a published portal fee of about 4.9% of successfully raised capital charged to the company. Compare current fees, marketing requirements, and securities terms, and get securities-law advice before launching.

What should a seed pitch deck include?

A seed pitch deck is usually 10 to 12 slides covering the problem, solution, market size, team, business model, and the ask. Keep the design clean and the data focused on the strongest metrics. Its job is to earn a second meeting, not to explain every technical detail.

How should a founder frame market size in a seed pitch?

Use TAM, SAM, and SOM. TAM is the full population with the problem, SAM is the segment the company can serve first, and SOM is the near-term share it can capture. Also show the market growth rate. Never claim there is no competition; acknowledge alternatives and explain the specific pain, execution edge, or insight that differentiates the product.

What legal setup do U.S. seed investors usually expect?

U.S. venture investors commonly prefer a Delaware C-Corp because Delaware corporate law is well established, its courts handle business disputes regularly, and the structure is familiar for venture financing and equity issuance. Before taking capital, founders should have intellectual property assignment agreements and proper incorporation in place. Tools such as Stripe Atlas can simplify formation, but counsel should review formation, equity issuance, IP assignment, and any outside investment. An active Delaware registered agent and current filings reduce the chance that compliance issues appear as legal debt in diligence.

What is a SAFE?

A Simple Agreement for Future Equity is the common standard for seed rounds. It is not debt. It is a contractual right to receive equity in a future priced round. Key terms are the valuation cap, which sets the maximum valuation used to price the SAFE; the discount, which reduces the future round price for the investor; and pro rata rights, which let the investor maintain ownership in later financings. For most founders, a post-money SAFE is the most straightforward way to raise. Review every SAFE with startup counsel before accepting funds.

What is the difference between a SAFE and a convertible note?

A SAFE converts into equity in a future round and does not carry interest or a maturity date. A convertible note is debt that converts into equity, usually at a Series A, and it does carry an interest rate and a maturity date. Notes often include a discount or valuation cap so early investors receive more equity for taking earlier risk. Notes are still used, but many seed rounds now use SAFEs because they are simpler and cheaper to close.

What are a valuation cap and a discount rate?

Both reward early investors for seed-stage risk. A valuation cap limits the price at which their money converts into equity. A discount gives them a percentage off the price later investors pay. If a later round prices shares at $1.00, a 20% discount lets the early investor convert at $0.80. A $5 million valuation cap can lower the conversion price further if it implies a per-share price below $0.80.

What is the difference between pre-money and post-money valuation?

Pre-money valuation is the company value before the new investment. Post-money valuation is pre-money plus the new money. If a company is worth $10 million pre-money and an investor puts in $2 million, the post-money valuation is $12 million. That investor owns 16.7% ($2 million divided by $12 million), and existing owners hold 83.3% immediately after the round, before other dilution. A post-money valuation makes the ownership being sold clearer and reduces surprises from later option-pool changes. Always confirm which method is being used.

How does an option pool dilute founders in a priced round?

A priced round sets a formal share price and is more complex and expensive than a SAFE or note. Investors typically expect an employee option pool to be created inside the pre-money valuation. If founders own 100 shares and a 20-share option pool is created before the round, founders own 100 of 120 shares, or 83.3%, before the new investor’s shares are issued. That 16.7% is dilution from the larger pool.

How long should a seed round last?

Seed capital is meant to provide roughly 18 to 24 months of runway. Use that time to build the team, refine the product, and hit the milestones that support a Series A. After the wire, the work is disciplined burn, customer focus, transparent investor updates, and delivery on the promises made in the pitch.