Start Up Seed Funding

Assuming you want to raise money and not just bootstrap (start small, and grow from your profits) then you need to raise enough money to reach the next milestone with enough cash to raise another round.

The early funding is expensive since it is high-risk and therefore means you need to give a lot of equity. Later rounds are raised after you reach different milestones (like a beta version, or after you generate income and the like) which means that there is less risk. Less risk means a better valuation.

You need to figure out how much money you need to reach different milestones, and write it down in a business plan. Once you do that, you will know how much money you need, where your web based start-up is going, and you will be able to show that to potential investors in order to get the funding you need.

Good luck

The amount all depends on what you will do with it. For a web startup, the seed stage is really the demo stage. That is usually on the founders nickel. So, if you have nothing right now, you need to build some sort of demo/alpha before raising any money. No Angel or VC will give you the time of day with just some power point slides.

Once you have the demo/alpha done (again, on your nickel), then you need to have a plan to take you to beta/customer feedback (or whatever you call it). Since this is a web deal, the amount of money to get to that point is typically $100-$250k (since you are still really working on your nickel but now need to hire graphic designers and a developer, etc). With that $250k, you should be able to have a beta that customers can look at and use.

Next comes 1st revenue/Rev 1.0. The faster you get to the that, the less money you will need. Probably another $250-$500k or so, depending on the application. I can't stress this enough. Get to cash flow positive as soon as possible will be your best bet. If you get traction, then scaling will be the next big chuck.

Scaling can cost a lot. Maybe $1M to $5M or more. Scaling is when you start to work on additional features, hired developers as well as marketing, etc. This is when you have a viable business that needs to start to grow. Proving that it's viable and scaleable is the key

Should be easy to determine:

F=N-H

F...funding you need
N...money you need till you reach ramen profitability
H...money you have (savings...)

N might be a bit difficult to calculate, it's the sum of initial costs + monthly costs (including your costs of living) - the expected income.

Less than F is too little. More than F probably doesn't hurt, unless the investors want a too large share of the company.

Seed funding should be as much needed to get the company off the ground, the product started, but also should be the "bare minimum" needed. Equipment, rent, bills would fall under this. Tally that up and calculate how much you will need for a year or so. Living expenses, food, etc should not be tallied into this as most investors will expect you to bootstrap your own expenses until more money comes in. Unless you are extremely talented and convincing, not many people are willing to pay you to "live" while you try to come up with something. Start the company and build the product first with seed money, then you can get more money to pay yourself.

I'm in the same situation as you are. Below is a link that has some explanations that might be useful for you.

Startup Math

Good answers above. Shortest: Raise as little as possible.

Hi Everybody you mentioned the amount but you didn't mention the proper way to make the deal with VC should they own a share of the company and how much it should be ? and how they will effect future decisions like asking for more funds or what is the best exit strategy for them ???