Question
With government programs and founders bootstrapping, we are pretty sustainable and only need a short term bridge loan to get us through the year. We are however, looking to raise seed money to help us accelerate growth. A VC that we are in discussions with stated they do a minimum of $400,000 in seed round. Our cashflow projection does not require that amount of money at this point, even in the worst case scenario. Should we do a smaller deal instead of going for that round, which would dilute us significantly at this stage of our startup. Or should we raise enough money for the next 2 years?
Answer
Have you thought about everything you need. I know the answer is always: yes. But I would take a little time and go over the numbers to make sure that what you need is covered. Play "what if". What if the sales cycle ends up being longer than expected. What if new technology comes along. What if we get too much business and have to expand rapidly. What if you have to redo the business process to make sure it scales. What if the "product" requires modifications in order to sell... and so on.
Once you have that best / worst case scenario, then calculate the cost of money whether interest or equity. Like anything, you want to go for the best value proposition.
