What It Takes To Raise A Seed Round In Today's Market
We asked four top early-stage investors what it really takes to raise in today’s market. Here’s what they said.
DEAR STAGE 2: We're in the early stages of building our company and looking to raise our first institutional round. The fundraising landscape seems to be shifting constantly. What does it take to raise a successful Seed round in today's market? ~EARLY-STAGE ENTREPRENEUR
DEAR EARLY-STAGE ENTREPRENEUR: A few months ago, I shared insights on what it takes to raise a successful Series B and received a TON of follow-up questions. So, I’m turning this into a series—starting today with raising a seed round. Next up, we’ll cover how to raise a Series A, including key metrics investors look for and how to navigate the evolving fundraising market.
So, what does it take to raise a seed round?
At the seed stage, investors place the greatest emphasis on the founders, the founding team, and early market signals. To help you navigate this landscape, I reached out to investors from pre-seed and seed-focused firms to make sure to get the perspective of both existing and new investors at this stage.
Read on to hear from:
Chelsea Zhang, Principal at Equal Ventures
Brian Devaney, Partner at Underscore VC
Chris Smith, Managing Partner at Playfair
Cassie Young, General Partner at Primary Venture Partners
1. Founder Characteristics
At the seed stage, when there's limited data to analyze, investors are primarily betting on the founders and the market opportunity. The founders' qualities and capabilities often outweigh all other factors.
The investors I spoke with consistently highlighted several key characteristics they look for in seed-stage founders:
Founder-Market Fit: An authentic connection to and deep understanding of the problem being solved. They need to be able to answer “Why you? Why will this team win?”
Execution Ability: Demonstrated capacity to build in ambiguous conditions
Learning Agility: Obsessive curiosity and rapid adaptation to new information
Selling Ability: Not just to customers, but also to investors and potential employees
"Amazing founders are eating, sleeping and breathing their business opportunity; they are OBSESSED," explains Cassie from Primary Venture Partners, underscoring how true passion translates into relentless execution.
Founders must also be able to make that obsession contagious for others. "Can they sell? Yes, I mean customers, but I'm also referring to their ability to sell stock to investors (through their vision-setting and storytelling) as well as their ability to sell employees on coming to work there," says Cassie. "If I am not leaning in with curiosity and excitement with a founder within the first 10 minutes of the first meeting, there's no chance the deal will advance."
There’s also a component of connection that you can’t underestimate. We say that Seed is a date, not a marriage, so it's extremely important there's a stylistic fit between the founder and investor, given they could be working together for 10+ years. Each investor has their "type" and that will vary by partner even within the same firm.
2. Market and Product Dynamics
Beyond founder qualities, investors assess the market opportunity and product positioning with scrutiny.
Key factors they evaluate include:
Severe Pain Point: Solutions addressing critical "need-to-have" problems rather than "nice-to-have" features. Several investors noted that a key signal they look for is how customers have attempted to solve this problem in the past.
Limited Alternatives: Your solution should stand out in the market.
Emotional Response: Customer reactions that indicate genuine excitement.
Market Size: Opportunities large enough to build venture-scale businesses.
"Are the alternatives today for solving the problem lacking? Will there be many others with a similar approach to the problem? Do current or potential customers have an emotional reaction to this problem being solved?" - These are the questions Brian from Underscore VC is asking, highlighting their focus on unique solutions that generate strong customer reactions.
3. Momentum and Velocity
Perhaps the most consistent theme across all investors was the importance of momentum—clear signs that the business is gaining traction at an accelerating pace, but that’s not just a revenue metric and in fact, is more often demonstrated in other areas. This manifests as:
Increasing customer acquisition velocity
Rapid product development progress
Growing market interest and engagement
Team expansion with quality hires
"We also think a lot about the idea of velocity - we want to see the founders moving intentionally, at pace, to deliver results. It's both a quantitative thing - revenue signed, key hires made, tech milestones met - and a qualitative one - the feeling that the founders are unstoppable in their mission," states Chris from Playfair Capital.
4. Non-Standard Metrics and Signals
Beyond traditional metrics, investors are looking at several unique indicators that provide deeper insights into a company's potential. A few interesting ones to highlight:
Customer Conversation Volume: Frequency and quality of founder-customer interactions
Development Velocity: Code commits and product iteration speed
Sales Pipeline Quality: Not just size, but the qualification of opportunities
Product Utilization: How deeply and frequently customers engage with the product
"Velocity of market feedback/market pull - whether that's the number of deals you're closing or the number of leads you're generating," Chelsea from Equal Ventures tried to identify a key metric that can demonstrate a company's momentum.
5. Performance Benchmarks
While metrics matter less at the seed stage than at later stages, investors do have some general benchmarks they consider when evaluating opportunities:
Revenue (ARR): Typically $100K-$300K for companies with products in market for 9-12 months. And for companies already generating revenue, a clear path to $1M+ within 12-18 months.
Customer Utilization: Early evidence of product stickiness and expansion within accounts. In the absence of retention data, product usage becomes critical.
PRO TIP: download our template here to get started tracking Leading Indicators of Retention
Burn Efficiency: Capital-efficient growth matters. While burn ratio will be variable in the early days, line of sight to <2 within the first year is a great signal of efficiency.
Series A Readiness: Progress toward metrics needed for the next round (which looks like $1.5M-$2M ARR for a Series A today and evidence of successful customer adoption).
Most investors acknowledge that these benchmarks are highly contextual based on factors like industry, product complexity, and market maturity.
Until next week!