How seed-strapping is killing endless funding rounds

For startup founders, there have historically been just two paths: bootstrapping or venture capital.

But a new hybrid model is emerging. Called seed-strapping, it’s where a startup raises a seed round and then bootstraps the rest of the way.

Seed-strapping is not just a survival tactic; it’s a deliberate strategy. It reflects a shift in the founder psyche, investor dynamics, and startup execution models.

The concept has been popular in the US and other markets recently. But after having had many conversations with founders and other VCs around Southeast Asia, I feel that markets in the region should benefit even more due to their unique characteristics.

Factory farming to founder frustration

The traditional VC model looked a lot like a manufacturing line — standardized, optimized, and designed to produce unicorns at scale.

It was based on what the public markets wanted, and it simplified growth into easily modeled metrics like total addressable market, customer acquisition cost, and lifetime value. The resources required to make this factory work were abundant: capital, ambitious VCs, ambitious entrepreneurs, and eager young talent.

But this model has started to crack.

Too often, it played out like satire from the TV show Silicon Valley — more sizzle than substance. Founders were encouraged to burn cash in pursuit of growth, even when unit economics were poor, and the incentive structure rewarded optics, not value creation.

The result? A bloated ecosystem, saturated with capital but starved of focus – and founders began to feel it.

Backlash

Today, many founders are disillusioned with the fundraising process. They spend months away from building products or closing deals, only to be ghosted by VCs who clearly haven’t even glanced at their deck.

When I talk to founders, I hear the same frustrations come up time and again. Fundraising – while necessary – is a major distraction from core business activities like product development and sales.

See also: Trade wars force rewrite of Southeast Asia’s VC playbook

In addition, VCs often come to meetings unprepared with irrelevant questions and boilerplate feedback, and when they do make a decision, the rejections can be generic. Even worse, there might be total silence after weeks of discussions.

Break in the pathway

Seed-strapping: just right?

The downsides of seed-strapping

A changing LP-GP dynamic

The era of optionality