Seed Round Economics

Seed investing became a distinct category because early stage companies had different risk profiles. A typical seed round was 500,000 to 2 million with no revenue. The bet was on the team. Seed investors understood something later. Stage investors didn't. The company's value in three years was unknowable. Trying to predict was futile. Seed investors focused on the team's ability to raise Series A. A seed investment was in a founder's ability to raise venture capital. If the team could raise Series A, the seed would appreciate 10 to 100 X. If they couldn't, it was worthless. Seed investors needed 15 to 20% ownership. Later stage investors wanted 3 to 5%.