Weekly Roundup: The Seed Stage 🌱

Happy Friday, DVC! This week Australia passed a “right to disconnect” bill that gives workers the legal right to ignore messages from their employers outside business hours.

If you’re dreading having to respond with “haha nice” to your boss’ live Slack commentary on the Super Bowl ads this weekend… Quick PSA that if you leave right now, you can still catch the 40+ hour connecting flights to Sydney and enjoy the game in peace 🧘 

Welcome to DVC!

Welcome to the 10 new members who’ve signed up for DVC since last week! We’re happy to have you 👋 

Startup Discussion & Weekly Poll:

This week a DVC member submitted the following question:

Like most things in VC, the answer should be simple but somehow finds a way to be unnecessarily complicated. We’ll try to simplify below…

RegD vs RegCF vs RegA+:

As discussed last week, Reg D, RegCF, and RegA+ refer to specific legal categories of startup funding - each with its own list of regulatory requirements.

For example, for CODAworx (our recent Deal Review) to raise its current RegCF round, it had to 1) register the offering with the SEC, 2) file a Form C disclosure, 3) report its financials, 4) host the raise on an approved platform (Wefunder), and more.

In other words, “RegCF” is the mechanism for how it raises money.

“Pre-Seed Round” vs “Seed Round” vs “Series Round”:

Technically, these aren’t legal terms at all. Rather, they’re broad descriptions investors use to describe a startup’s:

1. Stage of life and risk level

2. Approximate valuation & funding amount raised

The most common stages are:

• Pre-Seed: Startup might just have an idea, no product, and no revenue (i.e. very high risk of failure). Avg. raises are $50k-$500k at $5M-$7M valuations.
  

• Seed: Startups might have a product, customers, and early revenue, but are still searching for viable business models (i.e. still high-risk). Avg. raises are $500k-$2M at $12M-$20M valuations.
  

• Series A: The first round of “institutional money” (from VC’s) where startups should have notable traction and revenue (i.e. risky, but ready to grow). Avg. raises are $2M-$15M at $30M+ valuations.
  

• Series B-E: Startups should have scalable business models and use new funds to grow revenue and market share. Amounts raised and valuations can get crazy here (looking at you, SoftBank…)

To use a half-baked analogy, think of it like calling students “Freshmen” (first year, younger, and theoretically less knowledgeable) vs “Seniors” (final year, older, and hopefully wiser).

The Major 🔑 To Remember:

Reg D/RegCF/RegA+ rounds are legal categories of funding, whereas the Pre-Seed → Seed → Series A (and beyond) terms are just general descriptions of the funding stage.

Startups can raise Reg D, RegCF, or RegA+ rounds at any point in their lifecycles, but you’ll mainly see the following use cases:

• Pre-Seed to Series A: Reg D and/or RegCF

• Series B and (beyond!): Reg D and/or RegA+

Time for a poll! Choose an answer below and see how you stack up next week!

Last Week's Results:

Last week we asked which type of deal we see most often here in DVC… and 100% of you correctly answered RegCF!

Side note: Typing “RegCF” 1,372 times in 2 weeks has confirmed to me that it’s an aggressively boring acronym… As Wefunder nicely corrected us, “Community Round” is a little cooler 😎 

Vote for New Deals:

Help select DVC's future deals! Please view the options, upvote your favorites, and suggest your own!

New companies suggested this week:

• Lil Bucks

DVC Deal Review Updates: