Startups For the Rest of Us

Episode 812 | The 2025 State of TinySeed

December 23, 2025

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  • The TinySeed ecosystem, spanning from podcast listeners to investors, serves as a fractal representation of the broader bootstrapped B2B SaaS ecosystem. 
  • Despite initial doubts, TinySeed has successfully scaled to invest in over 210 B2B SaaS companies, raising nearly $60 million, largely from founders themselves, and has already returned Fund 1 investments. 
  • Vertical and orthogonal SaaS companies are significantly outperforming horizontal SaaS in the TinySeed portfolio, leading to a strategic tilt toward niche markets, while AI-first startups are prevalent but scrutinized for long-term maintainability. 

Segments

TinySeed Origin and Doubt
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(00:00:00)
  • Key Takeaway: Initial doubt surrounded whether bootstrappers would accept investment and if accredited investors would fund a fund focused on them.
  • Summary: The idea for TinySeed, proposed in 2018, faced significant internal and external skepticism regarding bootstrappers’ willingness to raise money and the ability to secure accredited investors. Rob Walling notes that the initial goal for Fund 1 was only $750,000 to prove the concept with five companies.
Ecosystem View and Tiny Fest
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(00:00:50)
  • Key Takeaway: TinySeed’s data reflects broader bootstrapped SaaS trends due to the interconnected community spanning MicroConf, books, and mentorship.
  • Summary: The 2025 State of TinySeed reflects the broader bootstrapped SaaS ecosystem because of the interconnected community of listeners, book buyers, and program participants. The recent Tiny Fest in Cancun served three purposes: kicking off the fall batch, alumni networking, and team connection. The event was intimate, hosting 74 people including founders and their families.
Seven Years of Growth Metrics
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(00:03:51)
  • Key Takeaway: In seven years, TinySeed has invested in over 210 B2B SaaS companies, demonstrating significant scale achieved through consistent daily effort.
  • Summary: Since announcing in October 2018 and investing in 2019, TinySeed has invested in over 210 companies (329 founders) and raised just under $60 million across its funds. The fund has successfully returned actual investment returns to its Fund 1 investors, validating the model.
Fund Structure and Mentor Model
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(00:07:18)
  • Key Takeaway: TinySeed settled on traditional equity terms after considering alternatives like revenue share, relying on a strong, uncompensated mentor network for value.
  • Summary: The team spent months debating investment terms, ultimately choosing proven equity structures over models like indie.vc’s revenue share. A key component of the model’s success is the roster of world-class SaaS experts who volunteer as mentors without direct compensation.
AI Startup Trends and Vibe Coding
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(00:10:50)
  • Key Takeaway: Approximately two-thirds of TinySeed applicants mention AI, but only about 30% of the current batch are true AI-first companies that could not exist previously.
  • Summary: The host observes that many AI-focused startups show high churn rates, and the fund is wary of ‘vibe coded’ applications where AI builds the product without sufficient engineering supervision. AI-first companies built without strong engineering oversight risk maintenance issues and feature velocity shutdowns within 6 to 18 months.
Application Volume and Founder Trends
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(00:13:03)
  • Key Takeaway: Fall 2025 saw record application numbers, and TinySeed maintains an acceptance rate lower than Harvard’s, driven primarily by strong word-of-mouth referrals.
  • Summary: The Fall 2025 batch had 40% more applicants than Spring 2025, continuing a trend of growing interest in starting B2B SaaS companies. Over 75% of applicants come from referrals within the TinySeed/MicroConf ecosystem, creating a significant moat against search-traffic-based competitors. The average MRR across the applicant pool tends to hover between $4,000 and $5,000.
Vertical SaaS Outperformance
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(00:19:18)
  • Key Takeaway: Vertical and orthogonal B2B SaaS models demonstrate stronger performance metrics, lower churn, and better exits compared to horizontal SaaS.
  • Summary: Horizontal B2B SaaS is proving difficult due to high competition, leading TinySeed to back more niche vertical solutions. The most recent batch of 10 companies consisted entirely of vertical or orthogonal SaaS, serving industries like retail, first responders, and cannabis.
Importance of Founder Community
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(00:21:59)
  • Key Takeaway: The primary value of the batch-based accelerator model is mitigating the isolating stress and anxiety inherent in the entrepreneurial journey through shared experience.
  • Summary: The default state for founders is isolation because few outside their immediate circle understand the stress and risk involved in building a company. The community aspect, reinforced by mandatory in-person kickoffs, is what keeps founders going over the long run, even though running an accelerator is significantly more work than one-off investments.