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Burn Rate for a Seed Financing

Q: What is the typical and expected burn rate of the funds raised from a seed round before proceeding with the Series A round? I know this time-frame will vary from case to case, obviously, but with a typical internet start-up, is there an average or expected burn rate of the seed round funds before achieving the milestones needed to raise VC financing? 6 months, 12 months, 18 months?

A: (Brad) 12 months is a typical target.  You want to give yourself enough time to make real progress and still have time to pull together a financing.  You should plan to have to spend six months to raise your Series A round, which gives you six months of heads down work and six months of work + fundraising.

May 28th, 2007 by     Categories: Operating Plan    
  • the silver bullet

    Hi. A couple of non-zero probability hypotheticals for you:
    The plot: `Joe´ has a real-deal technology that’s a `magic-bullet´ with Midas touch qualities with anticipated >>$B potential…bare with we, I know it sounds far-fetched, but let’s allow for such a possibility anyhow. Joe wants to raise seed but not too much, just the minimum necessary to reach the next milestone (+ runaway) and increase valuation with a power law-like function. My question: given that this `thing´ is highly-likely to go ballistic and investor fears a possibility of doing a MONA (Miss-Out On the Next Apple), have you ever heard of a case of an investor simply seeding with no questions asked and zero demands for a seat at the discussion table, i.e., just a seat and no guarantees of even a guarantee of getting future options?
    Kindly
    Seb