If you’re a newly minted entrepreneur who’s ready to raise capital, you probably have a long list of questions that center around one thing: how to get seed funding.
Navigating the world of venture capital can be daunting—especially for first-time founders. The good news is startup funding has increased significantly over the last decade. According to Crunchbase, fewer than 3,200 companies received seed funding from 2006 through 2010. Today, that number is closer to 23,000, and seed funding reached $7 billion in 2023.
That still begs the question, how do you get seed funding? Where do you start? Are there any shortcuts?
In this blog, we’ll break down the basics of raising seed capital and how attending a conference like Venture Atlanta can be a boon for seed funding opportunities.
What Is Seed Capital?
In simplest terms, seed capital is money raised for early-stage (or seed-stage) startups.
Seed funding is important because it specifically covers initial startup costs and is designed to get the business up and running. According to BIP Ventures, a good rule of thumb to remember when raising is that your seed round should provide 12-18 months of cash to run and grow your startup. The average seed round in the first quarter of 2023 was $3.6 million.
Seed capital rounds often follow pre-seed rounds and are the precursor to Series A. In addition to funding startup costs, seed capital can also help entrepreneurs attract more funding opportunities later on.
Who Invests in Seed Stage Companies?
Seed capital is typically raised in smaller amounts, often from friends, family, or acquaintances. However, it can come from venture capitalists and angel investors as well. Here’s a look at some of the most common seed capital sources:
Venture Capitalists
Certain Venture Capitalists (VCs) will provide seed funding for startups but only if they see significant growth opportunities. VCs tend to be more risk averse than, say, angel investors, and therefore tend to be more discerning with seed capital.
Angel Investors
Angel investors are individuals who invest in startups using their own funds in exchange for equity. They can be anyone from privately wealthy people to corporate investors who provide capital, and often mentorship, to new entrepreneurs.
These investors earned their name as the figurative angels of the investment world because they often fund unproven (and therefore riskier) ventures. They are a “saving grace” for early-stage entrepreneurs who can’t secure more traditional venture capital or bank loans.
Friends, Family, and Acquaintances
When raising seed funding, many entrepreneurs turn to friends, family, and acquaintances who know them, trust them, and believe in their vision. There are often fewer hoops to jump through when raising capital from friends and family than traditional funding avenues, making it faster and easier for startups to get seed funding.
How to Get Seed Funding
Here are three key strategies to help you secure seed funding.
1. Perfect Your Pitch
Your pitch is the first impression you'll make on potential investors. You’ve got to get it right. Here are some tips to help you perfect your pitch:
- Tell a Compelling Story: Investors are not just buying into a product; they are buying into a vision. Make sure your pitch tells a compelling story about your startup, the problem you're solving, and your product market fit.
- Understand Your Financials: Be prepared to discuss your financial projections, business model, and growth strategy in detail. Investors want a clear plan of how you’ll use funds and achieve profitability.
- Practice, Practice, Practice: Rehearse your pitch multiple times and seek feedback from mentors, peers, and other entrepreneurs. The more you practice, the more confident and polished you will be when presenting to investors. The most important things to exude are energy, passion, and authenticity.
2. Build a Strong Network
Building relationships with the right people can open doors and create opportunities that might not be available otherwise. Here are some ways to build a strong network:
- Join Entrepreneurial Communities: Become an active member of startup and entrepreneurial communities. Platforms like LinkedIn, AngelList, and local startup hubs can connect you with like-minded individuals and potential investors.
- Seek Out Mentors: Find experienced entrepreneurs and investors who can offer guidance, support, and introductions to key players in the industry.
- Leverage Existing Connections: Use your existing network to make connections with potential investors. Personal introductions can carry a lot of weight and increase your chances of getting a meeting.
3. Attend a Venture Capital Conference
There is no better place for seed-stage companies to connect than at conferences like Venture Atlanta, the largest Venture Capital conference in the Southeast. Each year, hundreds of founders and investors from across the country come together to meet, connect, and build relationships with each other.
If you’re ready to get on stage at Venture Atlanta, apply to pitch here. Looking to network with investors? Register to attend here.
The State of Pre-Seed & Seed Stage Funding in Atlanta
Venture Atlanta recently kicked off the 2024 conference season by hosting the State of Startup Investing in Atlanta event at Invesco HQ. Here are some of the insights gathered from our expert panelists:
- Atlanta's startup ecosystem is evolving, particularly in traditional industries. Investors are now more willing to spend in those businesses.
- Since 2022, investment activity has increased, with a focus on alternative funding sources and diversifying capital spending.
- Sectors like infrastructure and Generative AI are seeing significant growth, with funds such as Sydney Holness's prioritizing AI research.
- To grow Atlanta's venture capital scene, we need to attract investments by showing successful exits are possible in Atlanta, integrating higher education to align student startup ideas with market needs, and nurturing and retaining local talent.
Opportunities for Seed Stage Companies at Venture Atlanta
One of the main opportunities Venture Atlanta provides for seed-stage companies is Startup Showcase Live!
This pitch competition within the Venture Atlanta conference is exclusively for pre-seed and seed-stage companies. The top 10 applicants get to pitch on stage to Venture Atlanta’s audience of 1500+ investors, founders, corporations, and tech leaders. The top 4 then advance to Day 2 of the conference where they get to engage with a live Q&A with a panel of judges comprised of partner-level investors from firms across the country. This, in itself, is a great opportunity to gain valuable exposure. These judges then determine the overall winner who will earn a $500K investment prize!
Case Study: Enrichly’s Success at Venture Atlanta
We recently talked to Margo Jordan of Enrichly about her experience winning the Venture Atlanta 2023 Startup Showcase Live pitch competition. Here’s a summary of her journey and how winning the seed-stage pitch competition has impacted Enrichly.
From Concept to Digital Pivot
Enrichly’s inception was rooted in Margo Jordan’s personal experiences and her desire to address low self-esteem among youth. Initially launched as "Chicks with Class," a brick-and-mortar center in 2017, the company pivoted to a digital platform during the COVID-19 pandemic, evolving into Enrichly. This pivot allowed them to expand their reach and impact significantly.
Key Learnings and Community Support
Margo emphasizes trusting one's instincts and the importance of confidence and preparedness. The startup community, particularly Google for Startups and Goodie Nation, played a crucial role in Enrichly’s growth. Winning the pitch at Venture Atlanta not only provided funding but also expanded their network and visibility.
Impact and Future Plans
Winning the pitch competition allowed Enrichly to hire full-time staff, launch marketing campaigns, and onboard a new head of engineering. The investment also facilitated collaboration with Catalyst by Wellstar and opened doors in new markets like Florida. Looking ahead, Enrichly plans to scale its solution across more schools, explore AI integration, and establish itself as a premier platform for self-esteem development.
Here’s what Margo had to say herself:
“I applied to pitch at Venture Atlanta Conference last year and had no idea that the decision to take 30 minutes to complete the application would lead to me winning $500,000 to help me scale my company Enrichly. The relationships that I gained from attending are priceless, the experience was invaluable. This was by far one of the best decisions that I could've made as a founder.”
- Margo Jordan, Founder and CEO of Enrichly
How to Get Seed Stage Funding: Attend Venture Atlanta
If you’re a seed-stage company looking to get funding for your startup, apply to Venture Atlanta. The deadline to apply for Venture Atlanta 2024 is 8/2.
FAQs
How can startups secure seed funding?
Our biggest recommendations for startups looking to secure seed funding are to
- Perfect your pitch
- Build a strong network
- Attend a Venture Capital conference
If you’re securing funding by pitching to investors, remember to be very clear on the problem your business solves, your ideal customer profile (ICP), your financial models, differentiators, growth strategy, and business model.
What are the opportunities for seed-stage companies at Venture Atlanta?
There are tons of opportunities for seed-stage companies at Venture Atlanta.
Each year we hold the Startup Showcase Live, a pitch competition where pre-seed and seed stage companies can show off their business to hundreds of potential investors and compete to earn a $500K investment.
Beyond that, there are countless events and opportunities for seed-stage companies during the week of Venture Atlanta and throughout the year. Subscribe to our newsletter or follow us on social to stay up-to-date on all of the opportunities!
How does Startup Showcase Live work?
The window to apply to pitch at Venture Atlanta 2024 is May 9th through August 2nd. The top ~40 pre-seed and seed stage companies will be selected to participate in Venture Atlanta. We will hold a event in September that is exclusively for these companies to network with the Venture Atlanta board, committee members, and sponsors (many of whom are top investors!). At this event, we will reveal the top 10 companies that have been selected to pitch on stage at the Venture Atlanta conference. These companies will pitch on Day 1, and an audience vote will help determine who advances. The top 4 companies will then pitch on Day 2 to a panel of investor judges and then participate in a live Q&A. From there, the winner of Startup Showcase Live will be announced and awarded a $500K investment prize from the Startup Showcase Live Syndicate (Catalyst by Wellstar, Front Porch Ventures, Knoll Ventures, Las Olas Venture Capital, and TiE Atlanta Angels).
Who are the winners of the last seed stage pitch competitions?
Enrichly was the last company to win the seed stage pitch competition at Venture Atlanta 2023. Founded by Margo Jordan, this visionary k-12 education technology company is at the forefront of revolutionizing youth mental health and resilience in business. They’re committed to nurturing young minds and fostering emotional growth, placing them among the most influential players in educational technology.
You can read more about Margo Jordan’s journey from founding Enrichly to winning the Venture Atlanta seed stage pitch competition here.
