Earlier this month, veteran techie and Minnesota transplant Rob Walling announced his latest pursuit: TinySeed.
Positioned as “the next generation startup accelerator,” TinySeed will provide founders with financial, social, and peer-driven capital under a cohort model.
Designed for “people who haven’t raised money yet, and don’t wish to ever raise venture capital (i.e. institutional money),” it’s targeting a class of companies and entrepreneurs who self-fund their pursuits, sometimes known as “bootstrapping.”
When did the idea formulate and what was the aha?
I had the idea originally about seven years ago, I have it written down right here in my notebook it says “YC for bootstrappers”!
But the timing wasn’t right for me personally…I hadn’t even started Drip yet, really hadn’t developed a name in the industry, or the network…or the capital. I continued to see the need within the Microconf community and through my podcast and hearing from many others who didn’t need that much money, but they needed some.
I getting serious about my angel investing in 2014. The more angel checks I wrote, the more I realized that I didn’t want to write them at the $10 million dollar valuations for these Silicon Valley companies that didn’t have much traction.
I was really interested in $10k-$20k checks for companies doing $10k+ MRR and thinking that these companies just need to get to a few million dollars in valuation to do well as an angel. I think of them as these founders who basically bootstrap and might raise just one round.
How many angel investments have you made and where?
I’ve done 12 total. My first was actually back in 2011 – WP Engine – which liquidated and pays for all the others – It was a nice one that I was fortunate to get into. Carthook, Leadfuse and Churnbuster are two other examples that were at 5k-$10k MRR when I invested and are now in the high six figures/low seven figures.
Will all your angel investing activity be through TinySeed going forward?
I think I will continue to do separate angel investments when the opportunity knocks because there are good companies that won’t fit the TinySeed thesis.
Are any of your investments to date in Minnesota companies?
How did you meet and know Einer Vollset your partner on TinySeed?
He has been at Microconf for a number of years – 5+ now and also in a mastermind group I’m involved with. We’re both interested in this concept called “fundstrapping” whereby companies raise one angel round but are explicit about not wanting to raise more money. Einer is a YC alumni, a developer himself, and has Private Equity connections so he expressed an interest in bringing it into reality together for companies $1m-$10m in revenues.
How do you intend to differ from some of the known names like Y Combinator, Techstars, or 500 Startups that also target early-stage/bootstrapped startups?
We want to entertain software ideas that are ‘base hits’ as I call them, with the potential for $1m to $20m ARR. The mentorship and cohort/community aspect will involve a weekly remote call, weekly individualized office hours, and subject matter experts involved. We’ll also incorporate quarterly meetups.
How about the capital investment and terms?
I think it will be $100k-$140k investment depending on team size. An upfront amount followed by stipend distribution over the course of a year. The goal is to give the founders sufficient capital to live on so they can go all-in on their dreams for a sustained period of time. I do not yet know the note or terms, we’re not settled on that yet.
What is your geographic scope?
It will definitely be focused on North America for the first round, though there is definitely an international need and opportunity.
How many companies/startups are you seeking for the inaugural cohort?
I would anticipate that we’ll have hundreds of applicants and select around 10
What stands out to you?
At least one technical cofounder with some traction – maybe daily active users, or even launch lists/pre-sales.
How does TinySeed relate to Minnesota tech?
Well I’ve already had a number of local founders reach out to me and I think it would be great to have some Minnesota companies involved. And obviously since I live here I think there’s a tie, plus we’ll have at least one of our quarterly get togethers here.