Seed Rounds and Python | Day 1

I’ve made a pact with myself that I’ll start reading more often. There are plenty of stuff that I find really interesting. But, I’m unable to make time to learn more about them. It gradually dawned on me that I’m simply procrastinating. That’s why I’ve decide to read an article or a post on a subject everyday as reading books seems like a monumental task at present.

How is Seed Funding Raised?

I cames across this link with tons of resources for every step in the process of starting up, from finding a co-founder to raisng capital. In it, I found an article by Geoff Ralston, the President of Y Combinator on how seed-round funding is raised. This was a long post but I thoroughly enjoyed reading it. So, I’ll share some of my key takeaways with you.

Startups are frequently associated with fast growth and scalability. They look for unique and feasible solutions to a problem and the goal is to get paid for it. But, a lot of capital is required to facilitate that growth. You need to pay your employees handsomely, do sales and market your product. Raising such large amounts of capital on your own is almost impossible and that’s why founders reach out to investors.

There are many rounds of funding such as the seed round, series A, series B etc. The main differences I’ve noticed between a seed round and a series A is the amount that is invested and the equity that the investors receive. In an ideal scenario, the seed funding should last you all the way until you become profitable, but that rarely occurs. So, the next best goal is to raise as much as required to:

1. pay your employees for the next 12 - 18 months
2. reach profitability

However, there is a tradeoff to consider during fundrasing. At the cost of gaining capital, your shares get diluted and you’re answerable to those that invest in your startup.

There are many methods through which funds are raised too. The one I found particularly interesting is called a convertible debt. The investor loans you a certain amount of money and based on the effective valuation of the startup, a cap value is set and the investor is able to receive stocks at a discounted price at a later time. This is really attractive for investors as it provides them an opportunity to increase their profit margins. I probably didn’t understand this as well as I’d have liked to so I’ll read up more on it some other time.

One weird thing about startups is valuation. It’s really funny because they are valuated based on intangible values such as the idea’s potential and the founders’ reputation. And the crazier part is that usually, investors are the ones who examine your startup and assign an arbitrary value. So, it depends on how hot you are on the market too! A startup’s valuation is not a good inidcator of its chances of survival. That’s why funding becomes a necessity.

Two of the most common types of investors are angels and VC’s. But at the early stages, angel investors are preferred as they invest money out of their own pockets and hence it’s more convenient to reach an agreement. The best way to get noticed by investors is by showcasing your products on Demo Days and through warm introductions. When pitching, it really helps to keep your deck concise and compelling. As a student, that reminds me of the advice I got while creating a resume!

My First Fullstack Task

Recently, I’ve been assigned to my first fullstack task during my internship. For the backend, we rely on Flask, which is a framework based on Python. Most of the pressing front end related tasks have been taken care of and Hirday felt that now’s a good time for me to start working on the backend too. So, he suggested that I begin learning how to use Flask.

For the past few days, I’ve been learning Python to get a grasp on the fundamentals before I move on to a framework. The Net Ninja has been my go to guy for fun YouTube tutorials. Luckily, he had one for Python too.

I didn’t dive in too deep into the theoretical aspect of the language as it’s probably not required for now. But, I noticed that it was surprisingly easy to pick up. It’s probably because of my knowledge in JavaScript and Python reads almost exactly as English!

Python is a general purpose language. So, it has many use cases apart from the ones in web development. Now, I can explore them too when I’m free.

I’ll be trying Flask out today by following a short tutorial. After that, hopefully by the evening, I can start working on some of the backend related tasks at work.