Understand seed round dynamics in Silicon Valley

Almost all these guides are written from the viewpoint of investors. Here's a brief one from the viewpoint of the person seeking funding.

You are selling a product to a single customer (or small group of them). That product is an investor story that can sell for hundreds of thousands or even millions of dollars if you tell it ably enough, so it's worth putting in the time in to tell it well.

If necessary, you can even write a little toy website, and entice people to sign up for it, in the service of that story. If you can get yourself to believe in the story, you will be all the more persuasive in convincing that key customer.

But never forget that your primary focus is that customer—your investor. Learn their interests, learn to speak their language (perhaps by reading posts like the parent), learn how to flatter their sense of self until they feel like a genius visionary for finding you.

Startup investing is a luxury lifestyle product for the very rich. The art of selling that product well is pretending that the transaction is something different than what it is.

This is a good articulation of the modern view of SV captial, but it is somewhat problematic.

In a nutshell, 'Round A' is now a form of scaling money. Early, but essentially: you need to build a product that the market really loves, before you get any substantial money.

It would seem that VC is really de-risked themselves, obviously to their advantage. This is somewhat the natural equilibrium in a world where it's easy to start some kind of companies with little effort.

However, there are always going to be a lot of initiatives that require some capital to make it work. This is of course, very dangerous territory for VC to play in (i.e. before Product-Market-Fit) but then, they do have 'Venture' in their titles.

It's to the point wherein we could start to consider Round B and later firms merely a slightly different form of Private Equity.

Is anything really that important going to be 'productised' for $500K-1M i.e. on seed money?

And really, it's interesting in that, if a company does actually have good product market fit ... traditional VC terms might seem a little expensive.

“Ten years ago, the Seed round was a single event, and companies ended up raising a few hundred thousand dollars from angel investors”

Well.. 10 years ago there was no “seed” rounds. Airbnb raised a $600k series A right before demo day in ‘09. That round got rebranded as a seed round later.

Nobody involved in venture capital has incentive to tell the truth.

In a clear majority of cases, a startup closing its doors after two years is not considered a failure by the VC fund. The startup successfully spent the money the VC firm was contractually obligated to invest, may have employed the VC's choices of officers for a significant period (providing them income and experience), maybe purchased a great deal of tech from suppliers the VC officers are themselves invested in, and may have left valuable assets that could be snapped up at auction.

The biggest problem a VC firm has is the five billion dollars of others' money they have to "place" in only 30/60/90 days. What happens after placement is much less their problem. They know most of their placements will be duds, but they and the actual investors knew that up front. Once the money is "placed", though, much of it can be siphoned off for the benefit of the VCs' cronies or one or other non-dud. Maybe, after collapse, a non-dud or non-startup can buy up assets of a dud for pennies on the dollar, and extract something usable, like patents or equipment. Sure, the investor lost that money, but somebody got it, and somebody ended up with what the money bought. Just not, often, the founders.

None of this is good for most people who do a startup, unless they happen to be chosen as a non-dud. The chosen duds are valuable for money laundering, which few startup principals really meant to sign up to be. Although some did.

The thing that confuses me is, how can you have great metrics (needed for Seed rounds) without already having product market fit? If you have great metrics, then are you not already a scaleup just waiting for some money to do the scaling? Then you don't need to experiment anymore because you already know what makes your metrics work?

The dynamic is very simple. It's called plutocracy, and it's as old as the Roman Empire. If you're my friend or I know you, you get funding, your business model or your metrics are not relevant. That's the excuse to exclude the other 99% and in this case you and your project.

I stopped reading at the first use of emojis. It may be harsh, but I am not a 3-year-old. I don’t need a picture book, so I am clearly not the target audience.