one point five, then one... raising a seed round in tranches

on our weekly gtm webinar a founder walked us through his situation, and i've been chewing on it since.

he sells software to boards. paying customers, a finished product, strong feedback. he's done almost everything himself.

earlier this year he tried to hand off the marketing.

"i spent a good probably $20 grand earlier this year or more on a marketing firm that was doing cold outreach"

cold outreach and video. it didn't work. the channel that has worked for him is linkedin, him personally, one conversation at a time.

now he's thinking about the raise, and here's his plan.

"i was thinking one tranche at $1.5 million and then another million after just so that i'm not going out and. asking for 2.5"

i understand the instinct. two point five sounds big when you've been bootstrapping. one point five feels like something you can defend. and if things go well, the next million is waiting.

but raising a seed round in tranches reads differently from the other side of the table, and you should know both sides before you pick.

here's how a tranche works. the money gets committed, but it doesn't all arrive up front. you hit milestones, then you go back and pitch again to get the next part released. it shows up more in angel-led seed deals than in institutional venture.

for the founder, the upside is real. smaller first ask. a plan that feels easier to hit. less pressure to spend money you haven't figured out how to use yet.

the downside is real too. chris dixon wrote an essay years ago arguing tranches create bad incentives. think about it from the inside. you're building toward a milestone someone else set, and the moment you get close, you're raising again. instead of chasing the right thing for the company, you're chasing the thing that releases the next check.

it's like a contractor who only gets paid after each room. sounds fair. but watch what happens. the rooms that are easy to show off get finished first, and the plumbing behind the walls waits.

but this founder's tranche question is covering a bigger one.

what makes an investor nervous about him isn't the size of the ask. it's that he hasn't yet proved a marketing motion that works without him. the product is there. the customers are there. what's missing is evidence that a dollar going into growth comes back as a customer, without him personally writing every message.

if he proves that, the size of the round stops being scary. if he doesn't, tranching just spreads the same question over two meetings.

and his market has a lovely quirk he pointed out himself. board members sit on more than one board. one great customer can carry you into several more. that's a network effect hiding inside a niche, and it's the kind of thing you want to show in numbers before you walk in.

so my read is simple. before you decide how to slice the round, prove the motion. even a small, repeatable one. a steady number of conversations every week that turn into demos, and demos that turn into customers, without you writing every message... that's a story an investor can repeat.

long term, the way you raise teaches investors how to think about you. a founder who walks in with a working engine gets asked how much he needs. a founder who walks in hoping gets asked to come back with traction.

if you're in the middle of this, run your plan through the fundraising checklist before you pick a number.

so what would you need to prove this quarter... for the size of the round to stop mattering?