Anatomy of a Seed Round During Covid-19

For managing chemistry, the extent of our interaction with most of the investors is they are on our investor mailing list. Besides that, we ask them when we need help with something.

As a founder/company, doesn't really matter to me if a person invests $5k vs $50k if they are just engaged and helpful. For example someone who really understand sales and can teach you, can be more valuable than a random angel investor who don't have any particular skills other making intros to their network.

However, you don't usually want to raise the whole round from $5k investors since it can be a lot of work, no-one has a bigger stake, you add a lot of names on the cap table and its going to be hassle each time you do additional financing.

Take small checks. People writing small checks is something that's very common in Silicon Valley. I love having a bunch of founder/operator investors to tap in to when we need help. You can see from the image above, we raised over $700k from intros that originated with a small $5k check. If we hadn't taken that small check, we likely would not have connected with many of those other investors.

SAFEs make it easy these days to add someone to the round (for any amount). The issue becomes time management (is it really worth hours of calls, responding to questions over email, etc) trying to close such a small check.

There's a secondary issue of wrangling each investor in subsequent rounds or an acquisition (which that can just gets kicked down the road). Some investors provide value beyond their money, mostly with their connections to other investors, connections to potential customers, and skills in certain areas, or just generally someone you can call for advice.

One thing I've learned having gone thru this process: it's common for angel investors to write small checks, though not common knowledge. I always thought you needed to write a $25-50k check to be able to invest in a startup. It's common for people in the industry to invest smaller amounts like $5k-$10k, sometimes even less than $5k. I've even now started doing it myself.

The steady stream of product improvements tells me they are still very focused on product development.