HOW TO RAISE AN AI SEED ROUND (2026 WORKING)
In 2026 seed founders are a commodity, and seed rounds are raised off credentials. HYPMS dropout, YC, previous founder, etc. This is enough. You also need an idea that's plausible and isn't totally stupid to VCs. Combine that with some early traction and a decent demo and you should be able to raise. You should aim for 2-4 weeks to close your round. Longer than that, something is off and you need to rethink.
Is my idea fundable? First, contrary to popular belief, you actually DO need an answer to the question "how do you plan to make money?" It can be some pie-in-the-sky hand-wavy shit about 5, 10 years in the future; it can be as stupid as "lol we will launch a token", but your idea DOES NEED TO MAKE MONEY EVENTUALLY. So if you think otherwise, get that misconception out of your head. It was invented by losers who can't fundraise.
Second, your idea needs to be able to become a unicorn. If your company doesn't have a clear path to becoming valued $1B+, it generally isn't fundable and you should think about different financing instruments because you are in the wrong asset class. This is what people mean when they say "you are not venture scale".
Third, your idea must be LEGIBLE TO VCs. Notice "TO VCs" is part of the all caps. That's because even if your idea is totally correct, if you can't make it understandable for investors, THEY WILL NOT INVEST. As the founder of the company it's your responsibility to communicate why your company will succeed to outsiders who don't understand anything.
Getting Intros. Getting warm intros to investors is annoying but honestly not that hard. If you are a first-time founder and an outsider, my advice is to just move to SF and slum it as a little networking demon until you ingratiate yourself with enough founder friends that they can help you out with some intros. A founder who can't get some intros themselves is probably ngmi, and that mechanism is largely why this exists.
Fundraising Mode. You are either building the company or you are fundraising. Never both. When you are fundraising, prepare to get zero actual work done on the company. I say that because to fundraise well, you should be back to back for 6+ hours per day with investor calls: angels, VCs, friends of VCs, people who can intro you to VCs, etc. This is why I say that fundraising is a distraction. But half-assing fundraising will just mean that your round drags on forever and either never closes or closes at terrible terms.
Pitch Collateral. In the big 26 having a deck is mostly optional for Seed. We raised our seed without making a deck. We just wrote a Notion one-pager paired with a video of the product. Having a deck will make things easier because most investors invest based on vibes and decks are the industry standard form factor for packaging your company's vibes. But making a deck is also honestly a waste of time and chances are investors will chuck it into an agent anyways. You will need a deck for Series A.
Pitching. My advice is to go in there and focus on answering your investors' questions before rushing to get through your spiel. Of course you will still have to walk through the opportunity and why it will be a unicorn etc whatever but try to not say too much until you have an idea what they are looking for. Instead you should tailor the pitch for each investor. Most investors, especially for Seed, have what's effectively a rubric/checklist, like the ones teachers used to grade your essays back in high school. Your goal is to basically figure out what's on that rubric and check all the boxes as efficiently as possible. You want to avoid saying more than necessary because it just creates opportunities for random obstacles or blockers to spawn.
Getting Negged. Fundraising feels like shit because it is literally the VCs' job to neg you and make you feel like your idea sucks and you suck. This is because successful negging arms them with a rationale for a lower valuation, and the valuation is the price tag VCs pay for a chunk of your cap table. So don't take any of the unsolicited feedback or annoying questions personally--it's unfortunately just part of the game. The silver lining is that each time you get negged, you'll be prepared if you're ever asked the same again in the future.
Party Round. Your first checks are the hardest. We follow the practice of raising a party round of angels and F&F. This gives you a decent BATNA when pitching: "look we are going to build the company with or without you so do you wanna invest or not". It also gives you practice to refine your pitch at lower stakes before you move onto your most important conversations.
Multiple term sheets. Say it with me: AT LEAST TWO TERM SHEETS. Say this out loud and repeat it to yourself every day. AT LEAST TWO TERM SHEETS. If you do not have AT LEAST TWO TERM SHEETS you *will* get cucked. This is like having only one job offer. You will not be able to negotiate it and your round will clear below market value, whether that means a shitty valuation or giving up board seats or warrants or annoying side letters or whatever.
So you need to have AT LEAST TWO TERM SHEETS in hand simultaneously to support a bidding process and walk them both up until you clear at fair terms. This sounds mean, but sadly it's your responsibility as the founder to run a proper process even if that means shopping around a little. Once you have your first term sheet, the clock starts ticking and you need to get as many other term sheets as possible, as quickly as possible.
Postmoney YC SAFE. Everyone has a different style, but for Seed we like to insist on raising on postmoney YC SAFE only and no other weird terms except a minimal side letter. That means no board seats, no warrants, no weird shit. YC SAFE with valuation cap (post money) is the industry standard and it's reasonable to insist on it. Raising on YC SAFE saves everyone time and precludes weird shit that can cuck you later. A lot of first time founders don't realize this, but you can just ask to delete terms out of your side letter. You can just say "no I am not going to sign this. Please take it out" and get a lot of annoying terms to disappear. This only works if you have TWO TERMS SHEETS though.
Furthermore, in our experience the best VCs are the ones most comfortable with just investing on a YC SAFE. This is because they have enough trust in their investing experience/process, and enough mutual trust with their founders, that they don't need to mess around with weird terms to try to prevent founders from rugging them. In our opinion, Seed boils down to investing in people, and if a founder is going to rug it's ngmi anyways.
Vibes. Taking any meaningful amount of money from an investor is like getting in bed with them. Actually it’s more like getting married. DO NOT ACCEPT SEED FUNDING FROM INVESTORS YOU GET A BAD VIBE FROM. IT WILL RUIN YOUR COMPANY. The best investors will help you when you need help, and otherwise leave you the fuck alone. Good investors trust you and are basically chill. While we are lucky to work with excellent investors, we've also seen many companies get torpedoed by shortsighted, shitty, immoral, or just annoying investors.
Reference Checks. Your investors will ask for references from you. Similarly, you should ask your investors for 2-3 founder references. Do this for all your investors you get to the term sheet stage with. These references are great for making friends with other founders even if you do not end up taking the term sheet. You also might be able to convert them as customers. In terms of actually checking the references, obviously all the references you get are going to be positive reviews. So all the signal you get is from *how cracked* the reference founders are.
Dilution. Don't think in terms of valuation, that's for investors. Valuation is the price tag. Instead you should think in terms of "dilution and $ raised" because these are the two things that actually affect your company's trajectory. For example, between “6 at 45” and "7 at 50" which one is better? It’s less obvious than $6M for 13% dilution vs $7M for 14%. In general aim for 10-20% dilution at seed and avoid exceeding 25% dilution.
Closing. Say it with me: DEAL ISN'T CLOSED UNTIL THE WIRE CLEARS. Closing is usually a miserable slog, but the upside is that while it's a grind, it's straightforward. Expect to spend 1-2 weeks in "due diligence". Imo it's lowkey made up for Seed, but we have to do the song and dance for the LPs. Retain well-known corporate counsel and loop your counsel in with the counterparty counsel in a big Reply All party. Watch that thread like a hawk to make sure shit isn't going off the rails. It's common for either side's counsel to waste everyone's time raising concerns that are not realistically going to materialize. When this happens, sort it out "at the business level" by calling your counterparty and telling them why the objection is not real and to tell off their lawyers so we can get the deal done and move on with our lives.
The Hard Part. Nothing feels better than seeing the wire in your Mercury account. Unfortunately, everything up till now was the easy part. The hard part is actually building the company. Good luck.