Beware the Hole
Accelerators are plentiful. Seed stage funding, not so much, writes the founder of Canopi.me, which means a slow and agonizing death for many startups.
By Erin Flynn (Co-Founder, Canopi.me)
After twiddling my thumbs for quite some time, in other words reading blogs and drinking abnormal amounts of coffee, I was finally inspired to write about what has been weighing on my mind for quite some time now. Fundraising is hard. Period. Fundraising as a woman in a women-driven market is even harder. I’m not going to preach around the difficulties of how hard it is to fundraise. I’m pretty sure that boat has sailed. Instead, I’d like to preach on the problem that seems to be somewhat silent. This problem that is otherwise known as the “big ass HOLE.”
It’s never been trendier than to be a part of an accelerator. And with multiple accelerators across the country, tech startups are now able to get off the ground with validation and an initial seed funding along with the mentorship or support often provided. That being said and having seen this first hand, my company and myself have continuously run into the same issue. There is a gaping hole between accelerators and early stage firms. In fact it’s not just a gaping hole, it’s a big ass HOLE. It’s a hole so big that many startups are left to drop off or sink without even realizing what just happened.
There is currently an over abundance of early stage firms itching to help your company scale. After all, why wouldn’t there be? The concept on the entrepreneur end of the deal should, for the most part, be proven out and an early stage firm has the ability to swoop right in to help you scale your business at a faster pace. Is there still a risk? Sure. Is there a heck of a lot less of risk than seed stage? Hells yea.
The harder part and the part that seems to be obnoxiously silent in the startup scene is the lack of seed stage funding. The lack of seed stage firms and angels willing to be ballsy enough to risk the first check. Nothing has the chance to be amazeballs without having any balls in the first place. We’ve seen this time after time in the Midwest. In order to fill the gap, entrepreneurs like myself, right out of accelerators, are tirelessly raising a seed round from those who won’t invest until you’re ready for a Series A, leaving most companies to die a slow and rather mentally painful death.
There is much more risk associated in a seed stage round, but like any smart investor or entrepreneur you learn ways to mitigate and minimize the risk based on what you should have already learned and tracked from your MVP. That being said, without seed stage funds to pull from, entrepreneurs are expected to go from step A to step D with no stepping-stone and just as much progress. This isn’t worthy of an angel but instead a miracle.
As an entrepreneur who has openly experienced this, I personally don’t have the answers. What I do know is that it’s time we start and open the conversation around this silent killer of startups. Fundraising is hard, as it should be. The hard is what makes it great, but dying because there isn’t enough opportunity. Well… that’s a problem worth discussing.
Women 2.0 readers: Have you experienced the chasm between accelerator and seed stage funding and what can be done about it?
About the guest blogger: Erin Flynn is a blogger, entrepreneur, and sweet tea addict that happens to be the co-founder of Canopi: the easiest place to discover and follow blogs. Just like you can create playlists with songs on Spotify, Canopi enables readers to create bloglists of their favorite blogs and subscribe to personalized bloglists created by other Canopi users. They company is actively raising a seed stage round.
Photo credit: TheeErin via Flickr.