Seed capital is often the most expensive capital a startup raises. At this stage the investment is primarily on the merits of the team, idea, and the market opportunity. The company is in its infancy, often pre-product and with limited traction – making valuation a guessing game. Straight-up equity financing at this stage is a frustrating exercise where founders often feel shortchanged on valuation and fear excessive dilution.
Kstart believes founders deserve a much cleaner and efficient structure that takes into account the nascent stage of the business. Since valuation is an imprecise exercise at the seed stage, we offer capital in the form of a convertible equity instrument. We invest up to $500K in return for equity at a discount when raising Series A financing. By linking our investment to the next round of financing and valuation, we limit founder dilution at the seed stage. We also ensure the whole process is transparent, quick and easy to understand. Once a company is selected into the Kstart program, we are able to complete the investment in 2-3 weeks, provided the company is registered and all the terms and conditions in the term sheet are met.
This is what we call Fair Capital. You can click here to see the sample Kstart term sheet.