Who Are The Best-Fit Startups for the TinySeed SaaS Accelerator?
If you’re interested in applying to TinySeed, you know you’re up against some stiff competition. How can you increase your chances of being accepted?
TinySeed receives several hundred applications in each application round, and narrowing down to a cohort of 15-20 startups is an incredibly difficult task.
The best way to increase your chances of a successful application is to know what makes a best fit startup for our accelerator. 💪
So, what are we looking for?
Read on for the questions we ask ourselves for each application that comes in:
→ Does your startup have revenue?
What do you do if your startup doesn’t have revenue?
If someone applies to TinySeed without revenue, it’s usually because they’re looking for funding to help them develop and launch their idea.
We recommend building your MVP (minimum viable product) and launching so you can test your hypothesis and see if you’re building something that customers want.
MicroConf (our community for SaaS founders) is a great resource to help you launch and grow your business — and once you’ve achieved a bit of traction, you’d be ready to apply for TinySeed.
TinySeed is not an idea-stage incubator. Startups who are the best fit for TinySeed’s accelerator program have launched their product and are seeing some amount of traction.
It doesn’t have to be much — our minimum to submit an application is $500 in monthly recurring revenue (MRR), and our average is $7,000 MRR — but it needs to be enough that the startup has proven they have some amount of product-market-fit and is looking to scale.
→ Are you eager to learn?
What if you feel too busy to do information gathering?
To start, just applying to TinySeed is a great sign that you’re interested in growing both your knowledge and your company.
Sometimes, founders feel like they’re spending all their time putting out fires and don’t have enough time for information gathering. If your business is consuming your every waking hour (say, on endless support messages, managing your tech team, trying to write the next feature, etc.), there are levers you can pull to give yourself more time:
- Reduce your time on support requests by adding better knowledge base features, hiring a support rep, or utilizing a better support system framework.
- Spend less time on development and more on marketing. Founders can get into a trap trying to develop their way out of issues that could (and probably should) be fixed with marketing. Instead of trying to build every feature a potential customer asks for, what if you focused on best-fit customers instead? Reduce the size and scope of your startup (and improve your positioning) so you can get by with less features and work with better-fit customers.
By giving yourself more space in your day, you’ll also put yourself in the best place for the information firehose of TinySeed’s accelerator program.
We’re lucky to be in a space with so much information and education to consume. From MicroConf to Indie Hackers to Hacker News to Reddit Startups, there are so many places for an ambitious startup founder to learn from others.
Founders who are information sponges will be able to react faster to problems, have an easier time hiring (by knowing just enough about different areas of the business), and in general be able to be more flexible and efficient while growing their startups.
This is why we do video interviews with our best fit startups. We want to get to know the founder(s) and understand their ambition.
That’s not to say we want founders to know everything! “I don’t know” is a perfectly acceptable answer to our questions, but “I don’t know, but I’ll find out,” is even better.
We like to know what the founder has put in place for the business so far, but what else are you excited for? What are you thinking about trying in the next six months? What are you acting on right now that’s moving your business forward? What do you want to learn and apply?
Founders who are ambitious and eager to learn get the most out of TinySeed as we throw a lot of information at the founder around all aspects of their business: onboarding, pricing, sales, funnels, hiring, M&A, SEO, content marketing, and more.
A founder who is eager to learn as much as possible (in balance with growing their business) will get the most out of our program.
→ Are you ambitious?
What if you’re aiming to exit early?
This is perfectly valid, and an excellent way to build personal wealth when bootstrapping! But venture capital may not be the right path for you. We’re happy to chat with you about your options and growth potential during the interview stage, so feel free to send in an application and make a note about this in your description.
TinySeed fills the gap between bootstrapping and venture capital, and therefore we do not need to push our founders towards “unicorn or bust” outcomes. But we're not a charity, and a fund like ours needs to provide our investors with a 3-5x return. If we don't, our investors will invest their money elsewhere and we won't be able to back founders in the future.
So what does this mean for the types of outcomes we're hoping for?
Let's start on the top end. There's no reason a TinySeed company cannot become a billion dollar company that rings the bell at Nasdaq. Even when founders start out with modest goals, sometimes the opportunity is larger than they thought, or founder ambition grows as their company does. We see this all the time.
However, that's not the kind of outcome we're planning for, nor the only kind of outcome we would consider a runaway, home-run type success. An outcome in the $50-100M range is usually considered a miss for a traditional VC. It most likely won't even make the mainstream tech press (more info on that here), but for us, our investors (and our founders!) this would be a massive win.
On the other end of the scale, what types of outcomes are not ambitious enough to make sense for us? That's a trickier question, because we know that founders sometimes have the mindset of “once I can get a few million I'm selling and retiring!"
But as the business grows, their ambitions grow. "Why would I sell now, pay half in taxes, and have to work for the acquirer for 2 years when I could keep going and sell for 5-10x in a couple of years?" This is not an uncommon mindset shift.
That being said, we have turned down founders who seemed determined to sell as soon as possible. Given how we value our companies at the time of investment ($1-3M), the math doesn't work if every founder sells for 1-2x that valuation. Keep in mind that we back very early stage companies, some of which will fail. For the fund to return 3-5x as mentioned above, we need outcomes of at least that multiple.
→ Is your startup bootstrapped, or hasn’t raised too much capital to date? (Bonus: clean cap table.)
What should you do if you have a messy cap table?
Look into restructuring your cap table, which can be messy but in the end, put your company in a better place to accept investment. Check out this article for an overview of what messy cap tables look like and what you can do to correct it.
What if you’ve raised a significant amount of money already?
Talk to us! This doesn’t disqualify you; it just means we need to dig in more to make sure that investment from TinySeed makes sense for everyone involved. Send in your application and we’ll chat with you about prior investments on the interview stage.
TinySeed takes equity in the startups we invest in; a process that gives us the ability to set unique terms that allow us to fund companies that don’t necessarily want to become unicorns.
That said, the investment may trigger conversion on previous money raised via convertible notes or SAFEs — an event which may not be advantageous or a good idea for the founders and their previous investors.
We ask about previous investments so we can chat about this during the interview stage to make sure that you understand what taking our investment could mean and the effects it could have with your prior investors. We’ve had a few situations where we would have invested in a business but the founders had to turn it down due conflicts, so want to be upfront about this possibility.
→ How many founders does the company have?
If you’re applying to TinySeed with 4+ founders:
Take a look at your internal decision making process and make sure there are clear responsibilities and key areas for each founder, as a lot of overlap can significantly slow the growth and flexibility of your company.
A company with a lot of founders can work if everyone is clear about everyone’s responsibilities.
Apply for TinySeed anyways; we’ll ask you more questions about your team in the interview stage.
We love solo-founders — in fact, we dug into the solo- vs. founding team debate and found that solo founders have no downsides (and in fact, a lot of upsides.)
That said, we’re wary about businesses with too many founders (meaning, four or more.) As a solo founder can be more nimble (as they’re the only decision maker), teams with 4+ founders often have a harder time making decisions and acting fast due to the number of voices in the room.
Please note that this isn’t a disqualifier if you have a large team (please apply!) but we will ask questions about your company and how your decision making process works to make sure that your founding team can make the most out of the TinySeed growth education.
→ Is there platform risk?
Tips for applying to TinySeed with significant platform risk:
What’s your plan? Are you able to expand beyond your current platform? Do you know what you’ll do if you’re suddenly re-ranked?
Have a ready answer as we’ll be asking you these questions in the interview stage!
We love to invest in companies utilizing other platforms (like Wordpress plugins or Shopify apps) but these companies need to have a plan for some worst case scenarios:
What if the platform ceases to operate?
What if the platform changes its algorithm causing a huge disruption in traffic?
What if the platform develops a feature that renders the company obsolete?
This also is not a disqualifier! But it is something we’ll dig into in the interview stage to make sure that there’s a plan in case of black swan events.
→ Last but not least: Are there any red flags?
The following items tend to give us significant pause when evaluating applications:
Low revenue + no growth. If you don’t have a lot of revenue and haven’t grown in the last six months, then you should work on improving product-market fit before applying to TinySeed.
Low information answers. If your answers to our questions around your current focus, your plans for the future, or other long-form questions are a short line or two, then we generally don’t have enough information to move you along in the process. (We should be clear that we don’t want essays, but we need to get enough information to answer the question in full.)
When in doubt: Apply!
A "no" isn't forever
Tony and Francois of CloudForecast applied to TinySeed multiple times before being accepted to our Spring 2021 batch. Listen to their story here.
Since we keep our batches small, we turn away the majority of our applicants. But the vast majority of our rejections are not “No” — they’re “Not now.”
Companies who reapply to TinySeed after being rejected, with growth between applications, significantly increase their chance of making it into TinySeed.
Our next application round will open on February 12, 2024. If you’re not on our email list, join here to be notified of application dates and other important TinySeed news.
