Seed versus early stage

rVibe logoDefinitions on the status of companies change pretty regularly and early on there seems to be some confusion around what is seed and what is early stage.   Here’s my take:

Seed stage:  When a company has just formed, has the beginnings (or even early complete) business plan, an incomplete team and is developing a prototype of a product.  They have a solid idea of the market and customers, but have not begun to fully access it. They probably don’t have a full team, they probably have not really started to market their product.   They have raised some money – enough to do all of the above.  They’ve been doing all this long enough (btw – a month is not long enough) to show some resiliency and some maturity.

To exit seed stage, the company should have a functioning prototype (maybe a beta version of the software) that is starting to be vetted by real customers, they might even have a customer or two (depending on market) and the business plan is getting more solid.  They may have revenue (ideally they do), but may not.

Early stage: When a company has a beta version of the product that is starting to be picked up by customers and the company is positioned to begin growing revenue. The team may not be complete, but the strategy is beginning to mature. The company may have some revenue, but more likely is positioned to quickly grow revenue with proper support.  Marketing is underway, but has not reached a critical mass.

To exit early stage, the company (depending on market environment), most metrics will point to revenue – typically in the $5m/annual range.

So –  based on that definition (which I think is pretty reasonable), rVibe is just exiting seed stage.  We’ve had strong support and good, solid seed investment, and now we’re in a position to really start growing. It’s just a question of the capital and support to go to the next level.

Posted on January 15, 2008 in Funding, Life in a startup

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