Amount

How much should you raise in your Seed round?

This question came up frequently in my discussions with our first investor (and advisor). Is it more beneficial to raise as much as possible to focus on building your team and business, rather than constantly being in fundraising mode? Or is it better to raise less, pushing yourself and your team to achieve milestones more quickly—potentially putting you in a stronger position for your next round?

I don't have a definitive stance on this. I used to believe that having a long runway was ideal. Devoting all your time and energy to shaping your team and business early on is incredibly valuable. Fundraising can become a full-time job, especially during early rounds, preventing you from dedicating enough time to building an A-Team and securing your first customers. It can also be emotionally draining, leaving you with less energy and clarity for the many daily decisions you face.

However, a shorter runway has its advantages. It forces you to make quick, decisive choices and invest wisely in what truly matters—like a functioning product, even if it's not perfect at first. It also pushes you to be transparent with potential hires and attract people who embrace the challenge. There’s no one-size-fits-all answer. The right approach depends on your business nature, product complexity, and capital availability in your region and target market.

During our first two years, we secured several hundred thousand from an angel investor. The goal was clear: this investment would fund our Air Travel Marketplace's MVP development. Given our lack of entrepreneurial track record, securing this initial investment and the involvement of this known airline figure was a significant success (I'm trying to stay humble, but I'm genuinely proud of this). While it helped us build a prototype, we should have reached the stage of capturing our first real bookings with that amount. But we didn’t. More on this in a future chapter.

Our first proper term sheet, signed with the US-based hedge fund in 2017, was for over two million dollars—peanuts for them but a fortune for us. At the time, this was also a decent seed round for a Berlin-based startup. My assumption was that they wanted to test our ability as a founding team to execute, with plans to invest much more once we delivered on our promise. I'll never know if that was truly their intention. Still, getting that term sheet signed remains one of the highlights of my journey—though the disappointment of not materializing the deal was equally intense (talk about an emotional roller coaster).

After pivoting to a business-to-business model in 2018, we secured an investment of a similar amount within a year. This amount seemed right at the time. However, it wasn't enough to establish ourselves, given the technical and commercial complexity of our endeavor. For perspective, our closest competitor raised more than €50m to build essentially the same thing (there is clearly some room for improvement in my pitching skills). And it certainly wasn't enough to survive the two-year Covid-19 crisis, when the travel industry ground to a halt.

Key Takeaway #18

When choosing between large or small funding rounds, consider your desired company structure. Do you want a lean team of versatile individuals working under pressure, or a larger, more traditional organization with diverse profiles? Your funding choice will significantly shape your early-stage company culture.