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If you've got a strong track record and connections then you can raise money with just an idea, but in reality most founders don't have that so the only way they can prove their ability is via their actions and these days that tends to mean at least building something to prove what you're capable of.

BTW. Andy Bechtolsheim invested in Google three years after they'd started working on it (as part of their Phd), they'd already launched a public version (google.stanford.edu) with real users by the time he invested. Justin Kan had been working on Kiko for a year before YC invested. Alexis & Steve had been working on MyMobileMenu for a year before they pitched it to YC and PG convinced them to pivot.

It's easy to romanticizes away the slog of work that goes in before a startup raises money, but many successful founders had years of work before they raised seed funding.

Thank you for this.

I don’t think anyone is disagreeing that a lot of work needs to go into a concept before it can be funded, but Andy still took a lot more risk than the average VC or angel in backing Larry and Sergey when he did.

I believe Google was already in the millions of searches territory by that point. What made Andy a risk taker in that case wasn't the traction (which would still be significant in todays terms with a vastly larger internet population) but rather that search was seen as a dead space. It would have been the equivalent of investing in podcasting in 2013, a space considered played out and dominated by existing players with no significant upside.

There was also the minor point that Larry and Sergey were just a couple of PhD students with no business and no clear path to revenue. Still a gutsy move which many of the current crop of angels and VC would pass on.

> Still a gutsy move which many of the current crop of angels and VC would pass on.

And some of them did and were brave enough to write it up:

https://www.bvp.com/portfolio/anti-portfolio

LOL- kudos on the guts to admit it. Their portfolio only has a few recognizable names but their anti-portfolio is Silicon Valley- HP, Google, Facebook, Tesla

The set of requirements to raise a seed round changes as the set of requirements to launch, test and validate an idea changes.

Money from seed rounds in the past would be usually spent in infrastructure and distribution. With cloud providers and app stores that part of equation got changed, so some ideas (not all) can be validated on the cheap. (I believe even one of your examples, Google, existed as a proof of concept product called Backrub, working on Stanford network, before the incorporation event took place).

Another point is that investors judge the pitch by the quality of other pitches they heard this day/week/month/year. If you browse AngelList, there are companies raising seed rounds with a functional team, a built-out product, traction and a plan to scale. If someone comes right after them and tries to raise a similar round with nothing but a Powerpoint deck, they will be (even subconsciously) compared against the others.

>Andy Bechtolsheim was a seed investor in Google -- he gave them a check based solely on their idea and who they were.

Institutional seed rounds used to not exist (or barely). Thus angels investing to get the company to the A round was aptly called Seed.

But now, there are many Seed VC funds around and the size of the round has grown. (and so has the size of the A round) You may recall articles in the past 18 months proclaiming that the Seed round is the new A round.

In such an environment, what used to be called the Seed Round can perhaps be called the Angel round. Many startups with credibility (YC, repeat founders, researchers, etc.) may be able to skip the Angel round and go to the Seed round with favorable terms.

> especially now that it's so easy to get that initial traction

It's gotten much cheaper to get traction. In some consumer markets, it is basically cost-free; all it takes is a motivated technical entrepreneur with a couple months of savings.

I agree that it's cheaper, but "a couple months of savings" != "cost-free".

You can't have very meaningful traction until you release an actual product. Most significant products (e.g. Dropbox) will take one person at least 6-12 months to develop, followed by 3+ months before there are charts showing traction.

a) You raise money after having invested a year of work on your own dime.

b) You raise money based on your connections/pedigree ("reputation").

I kinda disagree, but it depends on the product/market. You can't pre-sell a nuclear fusion reactor before it's built (I'll bundle that with my swampland in Florida!) but there are ways to generate meaningful traction through list-building, pre-launch sales, commitments, etc. for SaaS apps that you could use to raise money. And frankly, that's what an entrepreneur should be doing in the first place to validate that you should be building that product for the target audience in the first place or that there is a market for your product. And you can always strip down your MVP to it's absolute core to get it out the door faster so you don't spend 6 months building it.

I think you're wrong on the 6-12 months.

Not boasting, but simply stating fact, that on my own, I've written:

- A system for managing employee leave and sickness with google apps integration in 2 months

- A credit control application for one of my clients in 3 weeks, automatic emails, dunning letters, cash-flow forecasting

- A purchase order system that would automatically raise invoices in their accountancy system in 3-4 weeks

- An entire search system a la booking.com in 4 weeks, with named location search, geo location, tags, categories, blah, blah, blah. Basically the heart of any listing style startup.

And while I realize I'm a good programmer, I'm not a phenomenal programmer, I'm fairly lazy, I find it hard to focus on more than about 5 hours of actual programming unless I'm doing something really interesting.

And these are some off the top of my head examples. I've written loads of small startup sized apps that would be of the complexity that YC fund in much less than 12 weeks, let alone 12 months.

You're looking for an MVP with some traction, not a polished product. Reddit, for example, launched without the ability for users to create their own subreddits, and many would describe that as one of the key reasons of Reddit's growth. I believe they actually launched without commenting, but I can't find a source on that.

While today's startups have more expected of them, it's now easier than ever to write a web app, even SPAs that even 3 or 4 years ago would be too hard for individuals to write on their own.

> Reddit, for example, launched without the ability for users to create their own subreddits, and many would describe that as one of the key reasons of Reddit's growth. I believe they actually launched without commenting, but I can't find a source on that.

reddit launched with only voting and submitting of links (no self posts). Commenting, subreddit creation, self posts and all that was added years after launch.

(Source: I was there :) )

Not sure why you got downvoted. I think many makers balk at getting customers with an unpolished / unfinished product - "No one will pay for this. We need more features." is the sentiment I have heard often. While I am sure that a product like Stripe might take long to get to stage where people can start using it, in many cases, it is not so hard to create the MVP in 3 - 4 months that solves atleast one pain point for lots of users.

VWO, a bootstrapped A/B testing product, started getting paying customers with a very basic interface and reports[1], and today it is a ~$10M business.

[1]: https://www.youtube.com/watch?v=0YYNebfuvLc

I don't know, HN has changed or someone's stalking my comments. Or perhaps, despite my efforts not to, it sounds like boasting. I was just trying to share my experiences of writing YC-sized apps and the time it took me, and I know better programmers than me.

The thing about this is if you read about ycombinator it's all about getting a product out of the door within 3 months. And they don't expect you to have a product when you start. In a team of two they seem to say one person should be focusing on the business side, so that is one person getting a product out of the door AND get some growth in 3 months with some help from the other. They expect it themselves.

The key part you're ignoring is "Most significant products (e.g. Dropbox)"

There's no way you could clone Dropbox's first version in anything less than 6 months, and that assumes you're a great programmer.

It took the Dropbox team something like 18 months to publicly release, which was all paid for by funding. It required significant funding to build and to operate (freemium).

reddit was also created with funding and could not have existed without funding. It made no money.

I know the story of a lone developer creating a little app that takes off sounds good, but the reality is most significant projects take a good amount of time and money.

Not if what you want to build requires more than 0.5 to 1 developer years of work. There are a large family of problems that can only be tackled with 10+ developer years worth of work to get to a MVP.

Can you explain, step by step, the cheap, easy way to gain traction as a technical entrepreneur with a few months of savings? This sounds like an infomercial. I'm not sure what the cheap, easy route to gain traction would be unless it's "pay a spammer". If that is the predominant position in SV, it's good to know.

Bummed out that no one has answered this. Maybe it's just something investors say so that it's easy to discard people and startups that aren't already obvious winners; "oh, you don't have enough traction for how long you've been up. Getting traction is super easy these days so you must be dumb. Next!"

I just think we need a new term besides "seed" to differentiate it from the true seed investments.

I agree. I have been thinking about what to call an investment at the concept stage. The obvious one is “seed bed” (you need a seed bed before you can plant a seed). The other is something combining founder and investor as any investor at the concept stage is really more a founder than an investor - festor doesn’t have quite the ring I would like though :)

I've been hearing pre-seed rounds (where seed today is what was an A 5 years ago), called "Angel rounds"

Why not call it a "POC" (proof of concept) round, or "concept round", or "dice round"?

Concept round sounds really good. I am stealing it :)

Commenting a long while after the thread was active, but... there's no reason we couldn't rename other rounds too. The seed round could be the "traction round" and the Series A-Z rounds would be the "scale rounds". Before you have traction, you basically just have a concept, so you have a "concept round".

If you're the sort of person who has to get info from a website on how to raise a seed round, then you're probably not in a position to raise money based on just an idea or who you are.

What do you mean, get info? Do you think successful people just do stuff in the dark without any idea of what they're doing?

No, they usually know other successful people to ask. Those who don't have to "get info from a website".

Some people can have solid technical chops, a good idea and a working prototype and not know angels. Not everybody lives in Silicon Valley or some startup hubs. In fact, there is an essay from Paul Graham explaining why some of the best ideas come from outsiders [0].

[0] http://paulgraham.com/marginal.html

Someone who has the technical chops to build a prototype would be approaching an angel with a lot more than just an idea or who they are.