The TinySeed Accelerator Program

+ What are TinySeed’s investments terms?

TinySeed is a 1-year, remote accelerator that funds 15-20 SaaS companies at once. Those companies go through our accelerator program as a batch.

Our terms are based on those Rand Fishkin used to raise funding for his company SparkToro:

• TinySeed invests $120k-$220k per company for 10-12% equity.
• Founders can take funds out as salary, or invest them into marketing, design, contractors, and anything else to grow.
• Founder's salaries are capped at $250,000 / year.
• As the business generates profit, the founder can choose to increase his/her salary up to the cap. Any additional funds they take out of the business are considered dividends.
• This allows the founder to reinvest profit in the company as long as they like. In this scenario, TinySeed does not take revenue or profit from your company, only dividends that you decide to pull out at timing that works for the business.
• Dividends are split pro-rata based on percentage ownership.
• If the company sells, TinySeed receives the greater of our initial investment back (minus any dividends paid to date), or our pro-rata share of the proceeds based on ownership.
• If you decide to raise additional venture capital, our equity converts to the same class of stock as your new investors, and we retain a right to participate in your future financing round at whatever valuation that happens at.
  

In addition, we provide extensive mentorship and guidance through mastermind calls with other startups in your cohort, and office hour calls with mentors.

Our roster of mentors is diverse and second-to-none - look here for a full list.

+ Why did you choose these terms?

Our terms are modeled after those that Rand Fishkin (founder of Moz) used to raise funding for his most recent startup, SparkToro.

TinySeed co-founder Rob Walling is an angel investor in SparkToro, so had first-hand access to the terms, but Rand also published them online.

If a founder of Rand’s caliber (who was disgruntled with venture capital) came up with these terms for his own startup, they should, by definition, be founder-friendly.

In addition:

• Our structure enables founders and investors to share in the winnings of a profitable business, increasing the odds of survival, and removing much of the risks of VC's "homerun or nothing" mentality.
• Maintaining flexibility on when you re-invest in your business vs. pay out dividends keeps control of the business in the hands of founders, where we believe it belongs.
• TinySeed's terms mean you won't face the same pressures to sell your business if growth slows -- it is always up to you when and whether to pursue higher growth vs. stronger profits.
• This model, unlike most venture-focused accelerators, allows companies to deliver investment returns even if they stay relatively small by venture capital standards.
  

+ Why do you take equity and not revenue- or profit-sharing?

Our goal was to find a model that provides capital to founders that VCs won’t typically back, but do it in a way that gives those founders maximum optionality to raise future rounds if they decide to, and doesn't draw money out of their company at the wrong time.

After investing an enormous amount of time working through options, we decided that TinySeed should take an equity stake in the businesses we back, but we will not ask for a fixed profit or revenue share that begins at a specific time.

This is risky for us, but we believe it’s the right decision for founders because it allows them to take money out of their company (as dividends), only when they decide to do so. Profit sharing models force you to take money out of your company on a fixed schedule (example: 24 months after receiving the funding). Starting on a pre-specified date you are required to begin paying x% of your monthly revenue or y% of your profit to the investor.

If these payouts start at a bad time for the company (example: when the company is still growing quickly and needs the cash) they have real potential to dampen growth or put the company's well-being in danger. This is the main reason we’ve decided to leave the timing up to the founder.

In addition:

• We only want to get paid when the founder is also getting paid (hopefully handsomely).
• We want to be in the founder's corner for the long-term, rather than making an investment that feels more like a loan.
  

Our approach aligns investors and founders, is clear and straightforward, and allows us to be in your corner for the long term.

+ What kinds of companies do you invest in?

We focus on SaaS companies that have the potential to become 7- or 8-figure businesses.

We accept applications from any stage, but we've found that a couple thousand dollars in monthly revenue is a sign that a founding team has been able to push their business forward. Traction is one of many factors we use when evaluating startups.

We don't have a top-end limit for revenue, and we have funded and helped accelerate the growth for startups doing upwards of seven-figures in annual recurring revenue.

If you're not sure if you qualify for TinySeed, send an application anyways; it's fairly short and it makes it possible for us to have a discussion with you at the interview stage.

+ Do you fund non-U.S. companies/founders?

Yes! In fact, we started our TinySeed Europe program specifically for that reason. If you're in the GMT to GMT + 3 time zone range, that program is for you. Companies in the TinySeed Europe program will not need to re-incorporate in the US.

If you're applying for the Americas program, you can live anywhere, but we recommend that your company is either formed as, or converted to a US entity. If you're not incorporated in the US yet, there is no need to do so before submitting an application. We’ll chat about your options during the interview process.

While we may not be able to support incorporation in every country, we are doing what we can to support as many countries as possible. We are also planning on launching a new program for the APAC region within the next year.

+ How is TinySeed different from other accelerator programs?

TinySeed is a remote accelerator focused on SaaS, and companies are mentored for a full year. Most other programs – think YC, TechStars – run for three months and founders have to relocate to a specific location. But there are thousands (if not tens of thousands) of bootstrappers who aren't able to relocate due to family or other personal obligations.

In addition, accelerators focus on demo day – the day at the end of the program where the companies pitch their progress in an attempt to raise a seed or Series A. Since bootstrappers tend to be capital efficient, a founding team can live off that same low six-figure investment for an entire year if they can participate remotely, without the necessity (but the option) of raising more capital at the end of the 12 months.

Another difference is that companies don’t need to sell for TinySeed to work. We’ve designed the model to work with dividend payouts so founders can retain ownership of their company for the long-term.

This also means they can grow at a healthier pace and don’t need to force growth to raise their next funding round. We like to think of this as building a sane startup. That is, a startup that values people over results, has reasonable working hours, provides ample days away from the office, and generally doesn’t burn out the people involved.

Finally, we don't have a bias against single founders like most accelerators. The majority of successful $1m-$30m SaaS companies we know were started by founders working alone. This is another segment of the ecosystem that we’ll be focusing on.

+ Do TinySeed founders receive any perks or discounts?

We've partnered with a number of other businesses to provide discounts to TinySeed founders. We've listed a few of those partnerships here.

+ I don’t need the money, is TinySeed worth it just for the mentorship?

Short answer: yes.

Longer answer: when growing a startup you don’t need mentorship every day, but when you need it, it’s game changing to have access to successful founders who have been down the road you’re traveling.

There are no silver bullets in startups, but often a word of advice can keep you from making a bad hire, wasting time on a marketing approach, or save weeks of time exploring a dead-end pricing change.

That’s why we’ve gathered many of the world's best founders and subject-matter experts who provide guidance on topics ranging from copywriting to SEO, top of funnel marketing to CRO…and pretty much everything else you’ll face on the journey.

To date we have 27 successful mentors on board, including: Hiten Shah, Joanna Wiebe, Jason Fried, DHH, Laura Roeder, Steli Efti, Chris Savage, and Rob Walling.

In addition, you'll have access to our incredible personal network of entrepreneurs, many of our mentors' networks, TinySeed alumni companies, and of the other companies in your batch.

There’s another aspect to becoming a TinySeed company. The halo effect of the curiosity generated by the thousands of founders following the TinySeed story, having your company discussed or interviewed on podcasts, talked about from conference stages, and other serendipity that happens when you’re plucked from many hundreds of applicants.

There’s a definite stamp of approval from becoming a TinySeed company.

+ How is TinySeed’s mentorship program structured?

Connections to the right people at the right time can make the difference between success and failure. We have structured, remote office hours scheduled with a different mentor every other week, based upon founders’ most pressing needs.

As needed, we set up introductions and one-on-ones with specific mentors, connecting founders with the mentor who will help them the most with their specific challenges.

There will also be opportunities to meet our mentors in person at retreats and events scheduled throughout the year.

+ Why do you invest in batches?

From the beginning, we knew we wanted to fund in “batches.” That is, groups of 10-20 companies going through the program together.

Einar went through YC in 2009 and witnessed the benefits first-hand.

Rob has been a vocal proponent of mastermind groups for close to a decade, where you share your journey with other founders who are also slogging it out in the trenches.

Add to that the friendly competition it can spark, the lifelong relationships, and we believe it’s a superior approach to funding companies asynchronously. The founders we’ve spoken with agree, and are excited about the possibility of being part of a group of 10 or so companies all working towards similar goals.