Guides · Capital raising mindset
How to Raise a Seed Round for Your Startup
Most founders pitch the wrong investors with numbers nobody believes. At Family Office Club we hear hundreds of pitches, and the same problems come up again and again. Many of them are easy to fix.
This guide covers what seed investors say they look for, how to show realistic numbers, and how to get in front of the right people. Many founders talk to a securities attorney before they take money from anyone.
- 1Build a team, not a solo act
- 2Screen for investors who fit
- 3Get a warm introduction
- 4Use realistic assumptions
- 5Show runway and prior investors
- 6Ask, and give them what they want
Step by step
Step 1. Build a team, not a solo act
Investors back people as much as ideas. One early stage group leader I sat with said they look at the team first. If you are a single founder, they suggested bringing in a co-founder. Another leader said they like companies with someone on the team who has raised capital and exited well for investors. If you cannot pay those people yet, keep them in your back pocket. Name them in your pitch and show they are ready to join once the money comes in.
Step 2. Screen for investors who fit
Do not send your deck to everyone. One club leader on our panel said they do not do solar, healthcare or biotech. They focus on high-tech, early stage startups, mostly seed stage. Sending them a biotech deck wastes both your time and theirs. Before you reach out, read what the investor or group has already funded. Then ask yourself if your company belongs on that list. If it does not, move on. A smaller list of true fits will serve you better than a long list of guesses.
Step 3. Get a warm introduction
Cold emails pile up. A better route is to study the investments a group has made and reach out to the founders they backed. Build a relationship there first. You can also look for someone in their LinkedIn network who can introduce you. One panelist said this puts you in front of the group ahead of the many people who are just sending emails and trying to get in. Ask for the introduction, then make it easy for the person to forward your information.
Step 4. Use realistic assumptions
Experienced investors question your projections right away. I have said many times that after 18 years running my club, I have never seen a company go from under 100k of EBITDA to 10 million in two years. I also remember a dog food pitch where the market numbers were so far off that even a teenager could see it. Build your forecast from what you can back up. Be genuine and authentic. If your numbers look silly, the investor will stop trusting the rest of your deck.
Step 5. Show runway and prior investors
Seed investors want to know you will not run out of cash mid-round. One group on our panel looks for companies with a runway of at least six months to a year without new funding. They also like founders who already have investors they can speak to, ideally ones who have been through some due diligence. Bring a clear runway number and a list of current backers who are willing to take calls. That shows the deal has already passed some scrutiny. Make it simple for the new investor to verify what you say.
Step 6. Ask, and give them what they want
Early on I learned a lesson. Do not give investors what you need. Give them what they want. A friend who was CFO of a blockchain company in oil and gas was running a seed round and asked if my investors liked angel investing. I did not assume they would say no. I put my own money in and asked who else wanted in. In about six weeks we raised a little over 600 thousand dollars for that seed round. Ask your network instead of deciding for them. Many founders talk to a securities attorney about how to offer the deal.
From my talks
"We primarily look for three things when we make investments. Number one, a large market, early in that market, and the team."
"In 18 years running my club, I've never seen someone go from less than 100k EBITDA to 10 million EBITDA in two years."
More from my talks
In the startup world everybody shows a magical pro forma, and in my experience they almost always look strong. Investors know this, so many of them check your forecast against a discounted cash flow model and mark down anything that looks rosy. Familiarity with the founder matters just as much. The only tech company we have invested in over 16 years was one where we knew the founder well and he had already exited the exact same fintech model from a bank. Bring a pro forma you can defend line by line, and show why you are the person to build it.
"Everybody shows, in a startup world, typically a magical pro forma. You have to be very careful with that and conduct your due diligence, because many times you're investing in a company at least on a discounted cash flow model."
"Well, what Jacob was saying is really true. The only tech company we've invested in over 16 years is because we knew the founder well and he had exited the exact same fintech model from a bank."
Mistakes to avoid
- Pitching a company to groups that have already said they do not invest in your sector.
- Presenting as a lone founder with no co-founder or named advisors who have raised money before.
- Showing a forecast that jumps from tiny revenue to millions in two years.
- Using market size math that does not add up, such as claiming a share of a market far larger than the one you described.
- Assuming your network will say no to a seed deal without ever asking them.
On the record
- In a span of six weeks we raised a little over 600 thousand dollars to be a major investor in one company's seed round.
- One investor group on our panel focuses on high-tech, early stage startups, mostly seed stage, and does not do solar, healthcare or biotech.
- A dog food pitch I once saw listed 800,000 people as the target, which implied an 80 million person market, and the numbers did not make sense.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Top 3 Insights on Structuring Investments - PODCAST - Family Offices & Family Office Club, Capital Raising Strategies: Expert Insights from Top Investor Club Leaders, Raise Capital Faster: The 6 Must-Have Assets for Serious Investors. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around offering documents, investor eligibility rules and seed round structuring. Do not use AI to write your own legal agreements.
Questions about this guide
What do seed investors look at first?
One early stage group on our panel said they look for a large market, being early in that market, and the team. They said the order of those can change, but those three come up every time.
How much runway should I have before I raise?
One group on our panel looks for companies that can make it at least six months to a year without funding. A clear runway number shows you are not raising out of desperation.
Can I raise a seed round with no team yet?
Early stage groups do look at startups with a strong opportunity. It helps to have key people lined up in your back pocket, ready to join once you raise. Many founders talk to a securities attorney about how to structure the offering.
Related questions
- How do I raise capital from Middle East investors?Start with a warm introduction from someone the investor already trusts.
- What is a pre-seed round and who invests in it?A pre-seed round is the earliest outside money a startup raises, often before it has real revenue.
- How do I value an early-stage company with no revenue?You value it on proof instead of earnings.
- How do I negotiate valuation with an early investor?Start with a valuation you can defend with traction and numbers, then expect the investor to push back.
Use the dilution calculator alongside this guide.