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Anatomy of Seed

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An inside look at a $1M seed round. Props to Daniel Odio of Appmakr for working with me on this.

Check out the full map at and join the Quora fun at

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Anatomy of Seed

  1. Anatomy of SeedAn inside look into a $1M seed round. Brendan  Baker   @brendanbaker  
  2. Ringleader Collaborator Support Daily Schooling AngelList8000  startups  reviewed  with   Daniel  Odio  AngelList,  hundreds  of   Co-­‐founder  of  Appmakr.  conversaCons  with  founders   Official Supportabout  their  fundraising,  daily  schooling  from  Nivi  and  Naval,  engineering  and  business  at  Cambridge  and  Oxford.     Appmakr  lets  anyone  launch  e:         their  own  iPhone  app  with  no  t:  @brendanbaker         Marc  Ventresca,  Oxford  Economic  w:   coding.  Over  5,000  apps  have   sociologist,  expert  in  new  market  q:­‐Baker   been  built,  with  55M  total  user   formaCon:  hLp://   sessions.   Anatomy  of  Seed            Brendan  Baker  
  3. We wanted to see what afundraising process looks like fora startup and get an inside look at how the industry is changing. Anatomy  of  Seed            Brendan  Baker  
  4. So  we  analyzed  500+  emails  from   Appmakr’s  first  raise  to  map  the  path  they  took  through  investor  networks  to   raise  $1M.   The result? !Thoughts for startups and investors. Anatomy  of  Seed            Brendan  Baker  
  5. We tracked all kinds of stuff:The  key  actors:   RejecCon   Funding  Seed  Funds   Angels   VCs   Intros   InsCtuConal  Actor  
  6. This  is  what  it  a  seed  round  looks  like.  See for yourself:! Anatomy  of  Seed            Brendan  Baker  
  7. It wasn’t easy. 173 Actors 55 VCs 55 Angels 28 Seed Funds Results 27 Middlemen 5 Corporate130 Rejections 2 Institutions14 Commitments 1 Angel Group Anatomy  of  Seed            Brendan  Baker  
  8. How do they all stack up? Anatomy  of  Seed            Brendan  Baker  
  9. Angels v Seed Fundsv VCs Anatomy  of  Seed            Brendan  Baker  
  10. Seed funds give big.Appmakr raised an average of $6.9K per potential investor, but not all were equal*: 15 Dollars per contact (‘000 USD) 12.3K 10 5 6.4K 5.5K 0 Seed  Funds   Angels   VCs   *  Ridiculously  small  sample  size.  Will  this  hold  with  more  cases?   Anatomy  of  Seed            Brendan  Baker  
  11. But seed funds also took forever to decide. VCs and angels were quicker to respond. VCs 20.4 days Angels 22.4 days Seed Funds 29.8 days0 10 20 30 Response Time (days) Anatomy  of  Seed            Brendan  Baker  
  12. Old Style v New Stylev Time Wasters Anatomy  of  Seed            Brendan  Baker  
  13. There were three clear paths in the data: Old  Style   New  Style   Time  Wasters   Anatomy  of  Seed            Brendan  Baker  
  14. Old Style The process was driven by aninfluential first actor, whose weight carried to help Appmakr getdownstream intros and investments.( It propagated through interpersonal networks, and was driven by dynamics within these networks. ) Anatomy  of  Seed            Brendan  Baker  
  15. How the Old Stylers invested1 Started with a supernode, in 3 There were more commitments from this case a well-connected downstream intros. angel. 2 Several commitments emerged from the first intros. Anatomy  of  Seed            Brendan  Baker  
  16. New Style The process was facilitated by a credible market intermediary. Investors made decisions efficiently, without making new intros. ( It played out more like an efficient market, where investors evaluated the good (i.e. startup) and bought or not. ) Anatomy  of  Seed            Brendan  Baker  
  17. How the New Stylers invested 3 There were few downstream intros and no downstream1 Started with an ecosystem intermediary. In this case it’s 2 Investors efficiently declined or committed. commitments. AngelList. Anatomy  of  Seed            Brendan  Baker  
  18. Time WastersThese intros just wasted Daniel’s time and energy. None of them amounted to anything. ( The trick is to identify the time wasters early. More on that later. ) Anatomy  of  Seed            Brendan  Baker  
  19. How the Time Wasters invested (or didn’t) 3 There’s one late commitment, but Daniel1 There are many new introductions, but at already knew him. most 3 at a time. 2 None of them led anywhere Anatomy  of  Seed            Brendan  Baker  
  20. QWhat if you can’t tell the Time Wasters from the Old Style?Should you use tools to try the new style? Anatomy  of  Seed            Brendan  Baker  
  21. i.e. New Style v [Old Style + Time Wasters] 13.8K 10 Dollars per contact (‘000 USD) 10.4K 5 3.4K 0 New  Style   Old  Style     (incl  Time  Wasters)  ATry the New Style (i.e. use tools). Appmakr found AngelList to be 3X more efficient than non-AngelList. Anatomy  of  Seed            Brendan  Baker  
  22. Thoughts for Startups and Investors ( From the analysis and Daniel’s experience.) Anatomy  of  Seed            Brendan  Baker  
  23. Startups 1Fundraising takes longer than you think. Be ready for the grind. Anatomy  of  Seed            Brendan  Baker  
  24. Startups 2There are periods of low investor activity. Avoid late summer and winter holidays. Anatomy  of  Seed            Brendan  Baker  
  25. Startups 3A large amount of your funds may come from a few people. These are your super nodes. Find them and support them. Anatomy  of  Seed            Brendan  Baker  
  26. Startups(however,) 4A large number of intros will lead nowhere and will waste your time. Don’t invest much in these interactions. ( Daniel’s Rule of 10: ‘If I don’t get >10 intros from someone, I’m not going to invest a lot of time.’ Use at your own peril! ) Anatomy  of  Seed            Brendan  Baker  
  27. Startups(Let’s take a quick pause…)How do you tell a super node from a time waster? Or aproductive investor from an unproductive one?1They’re willing and able to make a bunch of intros.2 Their eyes light up and they excitedly push a crumpled check into your hands3 You have a pre-existing relationship with them4You see phonein$3K and email less than $2K.)averaged $11.5K, them person. (In-person meetings Anatomy  of  Seed            Brendan  Baker  
  28. Startups It’s probably not about identifying themimmediately, so much as amplifying support for your super nodes and reducing the time and energy drain from your time wasters. (OK, back to the list…) Anatomy  of  Seed            Brendan  Baker  
  29. Startups 5With investors, there are leaders and followers. You’ll have higher conversion after getting a committed investor or two. Anatomy  of  Seed            Brendan  Baker  
  30. Startups 6 There are tools that can help. Use them when it makes sense.( ) AngelList, Techcrunch Disrupt, Venture Hacks, Founders’ Institute, Y Combinator,, University competitions, Angel Groups General Assembly, AngelPad, Bootup, i/o Ventures, Hackers and Founders, NYCSeed, Founder’s Den, Seedcamp, General Assembly, Founder’s Roundtable, VC open house days, 160 Vark, Sunfire, Meetup groups,,, 500 Startups,, LinkedIn groups,, Techstars, and many more. Anatomy  of  Seed            Brendan  Baker  
  31. Startups 7Information is becoming more publicStartups can now build more with lessGet used to being open about yourtraction and raise details. Anatomy  of  Seed            Brendan  Baker  
  32. Investors 1 The market for early stage capital isbecoming more efficient. How does that affect your own approach? Anatomy  of  Seed            Brendan  Baker  
  33. Investors 2Proprietary dealflow quantity and quality will decline as a driver of returns. Anatomy  of  Seed            Brendan  Baker  
  34. Investors 3Market intermediaries (i.e. new startup tools) are gaining importance. More will come. How can you exploit these? (e.g. Start Fund) Anatomy  of  Seed            Brendan  Baker  
  35. Investors 4Advisory will become more important than connective.( Old school: “we can make introductions for you.” New school: “we can help you understand how to scale to 3M users on X platform.” ) Anatomy  of  Seed            Brendan  Baker  
  36. Investors 5 Reputation is gold. It will continue to gain importance in the near term as information becomes more public. Anatomy  of  Seed            Brendan  Baker  
  37. Thanks Startups: for building kickass companies. Investors: for helping them get there. Daniel Odio: for access to his email and story. Marc Ventresca: for guidance and a deep understanding of market formation.@mingyeow, @naval, @michaelaiello, @cjwake for feedback on ideas and first drafts. * Anatomy  of  Seed            Brendan  Baker  
  38. * Anatomy  of  Seed            Brendan  Baker  
  39. * 1 This is only one data point.The next 10 startups we map will confirm or refute the first findings. Anatomy  of  Seed            Brendan  Baker  
  40. * 2 Is post-hoc email tracking accurate enough?I think so. Even if the meeting is by phone or in person, there is rarely a meeting that isn’t set up or followed up by email these days. Anatomy  of  Seed            Brendan  Baker  
  41. * 3 Definitions are imperfect.So is the mapping. Judgments had to be made about what is VC v seed fund, what were really intros, engagement start and end, etc. Anatomy  of  Seed            Brendan  Baker  
  42. * 4 What about existing networks?It would be fascinating to overlay this onto a map of existing relationships (ex: ‘investor X made 5 of 30 potential intros’). If anyone wants to do this, get in touch. Anatomy  of  Seed            Brendan  Baker  
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An inside look at a $1M seed round. Props to Daniel Odio of Appmakr for working with me on this. Check out the full map at and join the Quora fun at


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