Episode 812 | The 2025 State of TinySeed

Rob Walling:
What was an idea that a r and I started talking about in 2018 and frankly might not have worked. This is the thing that everyone forgets, including me, is that when we proposed investing in Bootstrappers, there was a lot of doubt in my mind whether Bootstrappers would want to raise money. There was a lot of doubt in my mind whether investors would want to invest in Bootstrappers, and there was doubt in my mind whether we knew enough people with money accredited investors who could put money into a fund. 

Welcome back to another episode of Startups For the Rest Of Us. I’m your host, Rob Walling, and in this episode I talk through the state of TinySeed as of the end of 2025, the state of TinySeed is not just inside baseball, right? It’s not just one of the companies that I’m working on alongside MicroConf, but I feel like the trends we’re seeing in terms of TinySeed applications and who we’re funding and the types of businesses that we’re funding can be viewed as a type of fractal of the broader bootstrapped SaaS ecosystem because there is a lot of intermixing of this ecosystem from podcast listeners to folks who buy my book who then become part of the MicroConf community in one way or another, either by attending events or doing mastermind matching who then apply for TinySeed or sometimes if they’ve already exited, they become an investor or a mentor for TinySeed. 

And now that we have TinySeed Seeds SaaS Institute, which is our premium coaching for seven and eight figure founders, there really is a pretty broad ecosystem and community that we see people moving through at various points of their career. And I just got back from an in-person TinySeed event we call Tiny Fest. It was in Cancun in early December of 2025, and I think about Tiny Fest serving three purposes. Number one, we use it as a kickoff event for our fall founders, our fall companies that we have backed. I’ll talk through that batch in just a minute to kind of give you an idea of the trends that we’re seeing. We also use it as an alumni gathering such that TinySeed founders who haven’t seen each other, whether they’re from the same batch or whether they’re coming down to mingle with folks from another batch, it’s a great opportunity for us all to get to a warm place in early December, hang out talk shop and be in a room where everyone understands you, right? 

Everyone instantly gets the struggles and the victories and all the that going through as a mostly bootstrapped SaaS founder. And a third potential purpose and really more of an ancillary one is we do get a good chunk of our TinySeed team together. It’s not everyone, but it is a nice time to see everyone and have another touch point during the year. And one of the nice parts about the event is that it’s relatively small and thus kind of an intimate gathering I believe with significant others and several folks, including Sherry and I brought one or more of our kids. It was 74 people, and so it was in maybe 40, 41 founders who showed up. And that means that you can meet and talk to pretty much everyone over two and a half days. So being there got me reflecting on the last seven years of TinySeed. 

We announced TinySeed in October of 2018 and we raised our fund and started investing in 2019, and that’s kind of incredible to say. We’ve just recently closed our fund three, which is our fourth fund technically because fund naming is just, it’s a thing. And we’ve invested in more than 210 B2B SaaS companies. I believe the number is probably two 11 or two 12. I can get an exact number if you’re the one. And the number of founders is 329. So it is a lot. And when you think about all that happening in seven short years, this is the thing I’ve realized about anything I do in life or my professional career specifically, whether it’s writing books, starting a podcast, starting companies like MicroConf and TinySeed and Drip is that if you show up every day and you put in the work and you keep pushing it forward and things are generally working and you’re going in the right direction and you’re evaluating as you go and you’re making course corrections, you can do a lot in a few years. 

I don’t know when I say seven years, if that feels like a lot or a little amount of time. I will say that saying we’ve invested in more than 210 companies, that sounds like a tremendous amount because keep in mind a lot of the stuff we are doing are not just simple safe signatures. The way our funding is structured to be more favorable to Bootstrappers has had complexities where we’ve invested in all types of corporate entities. We even used to invest in companies that are not US based, and that was very expensive and very time consuming. And we’ve gone down a lot of paths, tried a lot of things, and to think that we are invested in this many companies and then are going to add another, I don’t know, with the funding, we have another 50 to 60, so we’ll be approaching 300. Let’s say we get to somewhere around two 60 ish companies. 

It’s a lot. It’s a lot of people and it’s a lot of companies that are impacted. And as I’ve reflected on that, I’m just super proud of what we’ve built. What was an idea that a r and I started talking about in 2018 and frankly might not have worked. This is the thing that everyone forgets, including me, is that when we proposed investing in Bootstrappers, there was a lot of doubt in my mind whether Bootstrappers would want to raise money. There was a lot of doubt in my mind whether investors would want to invest in Bootstrappers. And there was doubt in my mind whether we knew enough people with money accredited investors who could put money into a fund. And our first fund and I talked about it and we said, look, if we can raise $750,000, we will basically take no money ourselves, no salaries, and we’ll do one batch of five companies, I think was the thought. 

And that will be a proof of concept just to prove it out. And so we announced it, we got a lot of interest. We got folks offering to help Dharma Shaw, Rand Fishkin both commented on the initial Twitter launch. Several other folks, I don’t want to just sit here and drop names, but a lot of folks reached out and said, this should exist. We basically were saying, look, venture capital is a thing and some folks should raise it, a very small percentage and a lot of folks should bootstrap, but there’s this gap, this middle ground that should exist and that’s what we want to see happen. And it was obvious from the start, at least there were, I shouldn’t say it was obvious because it wasn’t and it was still very stressful as we tried to figure out what our terms should be because when you’re going to invest in bootstrappers, should you just have similar terms to venture capitalists or how do you tweak it? 

In India, VC was already on the scene and they had pretty unique terms at the time, which were much more, it was almost more of a rev share with a tiny bit of equity should be good on that path. We ran numbers for months and months and had all kinds of conversations, and it was very mixed. It was muddy, it was cloudy as to what we should do, but in the end, it was like equity and buying shares in a company has existed for a thousand years. It’s existed for a very, very long time, and it’s proven. And so we arrived at our terms. You can go to TinySeed dot com slash FAQ if you want to find out more about that. But when I talk about this and how many we’ve invested in, and we’ve raised now across all our funds just under $60 million, which sounds to me we’re a tiny fund. 

We’re a micro vc. That’s what we’d be called. But to me that’s a tremendous amount of money to raise from almost entirely from entrepreneurs. Most of our investors are founders themselves or were founders who have exited. Not everyone. There’s a lot of folks who are accredited investors who maybe work a corporate job and listening to this podcast that there’s also a swath of those folks, but to be able to raise that amount of money and the faith that they put in us, specifically with our first fund, I was saying that we were going to raise 750,000 to invest in five, and as we started raising, it worked, our first fund was 4.7 or $0.8 million, and that allowed us to run two batches and invest in 25 companies and to really be able to prove out the model, not prove it out till its end. We didn’t have returns at the end of this, but we proved that some investors were willing to take a flyer on us. 

We proved that our terms were such that bootstrappers were championing at the bit to accept the money, but more importantly to accept the mentorship, the advice in the community. And we built out the program, got the mentors. I mean, I remember folks saying, well, how are you going to get mentors? Are you going to compensate the mentors? Do they get equity? And it was like, no. We believe there are a lot of tier one top level world-class SaaS folks who are either consultants or who are founders or who are founders, folks who have incredible knowledge and they are willing to give back to something like this. And we were right. And if you go to TinySeed dot com slash mentors, you can see that laundry list of folks like the Basecamp, founders like Heaton Shaw and Dev Basu, April Dunford, Asia iRANO, Chris Savage of Wistia, Rand Fishkin, just an incredible roster. 

So it worked. And then we raised our second fund and our subsequent funds, and we are in a pretty unique position of having survived this long and having returned fund one at this point and returned more than fund one, we returned actual investment returns to our fund one investors. And that’s a really good signal and that allows us to raise subsequent funds and has allowed us to see thousands and thousands of applicants over the past seven years, and to fund hundreds of companies and to do hundreds upon hundreds of interview calls and to see trends emerge across B2B SaaS. One interesting trend that we’re seeing of course, is the increase in AI focused startups. Certainly we are seeing, I think across all of our applicants, it’s probably 65%, maybe two thirds that mention ai. And in this current batch, which is 10 companies, so it’s a small sample size, I think 30% of them are true ai. 

First companies are ones that couldn’t exist. AI first companies for me are those that couldn’t have existed three years ago. If you go back five years, you just couldn’t have built it because the AI wasn’t there. So that’s when I say AI first, some people call ’em wrappers or whatever, but no, it’s just that AI where AI is at the core of the company, it didn’t become possible until about three and a half years ago. We have, I believe three, maybe four out of 10, but I think it’s more like three. So it’s about 30%. We were seeing a lot of AI focused startups that have a lot of churn, even if they’re growing fast with 10, 15, 20% churn, it’s catastrophic. We are seeing vibe coded, a lot of vibe coded. We are asking particularly if folks are using no code or vibe coding, and it’s okay to use AI to code as long as an engineer is supervising slash running that process because we know that you can have AI build you something. 

And we know that in 6, 12, 18 months, it will become very, very hard to maintain. Feature velocity will shut down. You’ll have regression, massive regression bugs. When you release something into production, it breaks something in some other part entirely. And these are the things where we don’t want to back founders where it’s kind of a ticking time bomb. So I don’t have exact numbers on vibe coding because we ask for it, but it’s not so easy to calculate. I know of the interviews we did, which let’s say we did 30 to 35 synchronous interviews, there were a few, maybe 10% that were vibe coded top, so would that be three? Yeah, that sounds about right. One interesting thing to note is that we had more applicants in fall of 2025 than at any time in the past four-ish years. I know our very first application in 2019, we just said, come one, come all. 

If you’re software based startup and you charge a subscription, apply. And so we had a lot, hundreds and hundreds of people with no revenue, we had all almost a thousand applicants to that one. What we quickly realized is we don’t want top level numbers, we don’t want headline numbers. We actually want folks to have a minimum bar. And so that’s when we started saying, look, if you have $500 of MRR, then apply and only B2B SaaS. We just say we don’t want two set of marketplaces for the most part, unless you already have traction. We don’t want B2C, we don’t want non SaaS. We still get some of that, but realistically, we actually cut the number of applicants after that first batch by had least half, but it dramatically increased the number that we got with revenue. And so in fall of 2025, we had 40% more applicants than we did in spring of 2025. 

Now, there’s also an odd seasonality that none of us understand why, but fall batches get more applicants than spring batches, and that’s just a trend we’ve seen. So I believe year over year from fall to fall, we grew just under 10%. And from two years ago we grew about 17%. So does that just imply that Tiny Seeds reach is more or that more people are starting SaaS companies because they can because of no code, because of ai, vibe, coding or other reasons potentially folks being concerned about the economy or wanting to start site projects? I don’t know which of those it is, but it definitely works out pretty well for us. We accept a lower percentage of applicants than Harvard does. So Harvard accepts about three and a half percent, and we are below that, which puts us in a pretty privileged position that I take very seriously. 

And one interesting footnote, I don’t know how important this is, but we do track average MRR across our entire applicant pool. And keep in mind, average there’s a lot with zero or there’s a certain percentage with zero. So take this for what it’s worth, but tends to be between about 4,000 MRR and 5,000 MRR. And the range of course has been zero MRR up to hundreds of thousands of MRR. So it’s this huge wide span, but that average number falling towards the lower end as would be expected, right? This is just a standard bell curve distribution for startups. And then we also track referral stats. We ask folks, how did you originally hear about TinySeed or what made you decide to apply? And what’s interesting is that at this point, more than 75% of our applicants come from referrals from TinySeed alumni, from MicroConf or MicroConf YouTube from startups. 

For the Rest Of Us, from other word of mouth referrals or from our social media or email lists or my books or my email list. And this number actually, all those combined is I believe it’s around 80% every time. And so it’s an interesting moat when you think about it, like what moat does TinySeed have? And the moat that we have is that if you were to try to go and just get search traffic for an accelerator, which I dunno, somewhere between seven and 15% of our referrals or of our applicants come from search traffic each month, you’re not getting the highest quality potential founders and you’re not getting a huge swath, right? The idea of having a lot of founders to pick from is really the key here. If you’re going to start a venture fund or an accelerator, it’s to have a lot of really good companies to pick from. 

And so TinySeed has gone from a brand that no one knew we existed to having a lot of trust in the space and a lot of word of mouth referrals, both from internal founders as well as folks on the outside. And obviously if you’ve referred someone to TinySeed, really, really appreciate that. It’s a big testament to the trust that you put in me and into what we’re doing. In terms of trends for this current batch fall 2025, I was looking at just locations, which country people are in. And of the 10 companies we founded, it looks like six have founders in the us. One has a founder in Dubai, one in Mexico, one in Chile, one in the uk. And that hasn’t held true for all batches. We’ve had folks from a number of European Eastern European countries as well as Australia, New Zealand. Actually, I probably shouldn’t try to list all the countries, Hong Kong and Singapore, and there is a big mix. 

You can go to tiny c.com/portfolio and scroll down and just look at the countries and states that are mentioned. And it’s fun. You can look at descriptions of the companies and see that over time there has been a little more ai, although it’s not, I think someone released a stat that like 70% of more than 70% of YC companies are now ai, first AI focused. And as I said, while we see a lot of AI applicants, we only fund a subset of those. And the reasons for those are, I don’t know, they’re pretty obvious. It’s that AI first companies right now are the big bet and YC and venture capitalists are funding those types of companies. And YC wants to fund companies that can raise on demo day and where’s a lot of venture money going into these days is going into ai. Well, that’s not why we fund companies. 

We fund companies that either have good fundamentals and growth and great metrics, or we think can have good fundamentals, growth and great metrics and are at least a little bit defensible. There’s some type of a moat and we don’t really care if you can raise follow on funding, it’s fine if you do. It’s a little less than 10% of all TinySeed companies have raised follow on rounds, and we fully support our founders when they want to do that, but that’s not what we’re optimizing for. Unlike most other accelerators, I have noticed a trend across companies we’ve backed and a R, and I started seeing this in the numbers after several batches, is that horizontal B2B SaaS is very hard and at a certain point, a lot of competitors are in your space and it becomes hard to grow. And so vertical and orthogonal SaaS, we’ve seen stronger exits, we’ve seen folks able to get further and have lower churn and all kinds of things in terms of niching down being kind of, I don’t know an advantage, but certainly the trends that we’re seeing made us realize, oh, we should probably back more of those. 

And so if you do look at, again, I keep talking about just the most recent 10, and that trend does not cover everything, but across these 10, we have approximately zero horizontal companies. They all are vertical or orthogonal, I believe. Actually all 10 of these are vertical ranging from retail stores to first responders to jewelers to IT service teams, to cannabis growers and distributors. And on, I guess we could argue about Portia, which is in Chile, and they have a AI powered access control for security entrances and doors and yeah. Is that a vertical per se, can only one? Well, no, because they sell to security companies, so it is truly a vertical SaaS. So yeah, across these last 10, and if you go back to prior, we have definitely started to focus a bit more. And look, this doesn’t mean we’re never going to back horizontal SaaS anymore. 

That’s not what I’m saying. But the numbers have shown us that vertical and orthogonal do have advantages, and so we’ve definitely tilted a bit towards those types of companies. Another thing I love about being invested in this many companies is it helps me have this broader view and not over index on my experience or the experience of my five founder friends that I talk to all the time that maybe I’m in a mastermind with or maybe I hear their stories is I see the revenue graphs of hundreds of B2B SaaS companies ranging from almost zero revenue up to literally millions a year. And I get to see the patterns and get to pull those patterns out and use them to write books like the SaaS Playbook to create content like on this podcast and to write my MicroConf talks. And so it’s a really fun and interesting position to be in, and I take it very seriously and I’m trying to pull out as many learnings as I can to share them with the broader community so that basically we can be a rising tide to lift all the boats. 

One thing that struck me at this year’s tiny fest and the kickoff for the new batch was just the importance of not feeling alone on this journey because that’s the default, whether you’re a single founder or you have three co-founders, it’s isolating to be doing something that almost no one else in your life understands, including potentially your spouse, your parents, your family, your friends. What we do is so specialized and so stressful and a little bit risky that it’s hard to feel alone. And I talked about this in my closing remarks at Tiny Fest, and I talked about how I believe the underlying stress and anxiety that almost all of us feel has to do with this idea of, am I doing the right thing, both on a micro level of am I doing the right thing today or this week? Am I working on the right thing and on the macro level of am I making a fucking catastrophic decision by investing years of my life and enduring all this stress to build this company that I hope works? 

And that weighs on you, right? It weighs on all of us. And there’s something about being in a room with thirty, fifty, two hundred and seventy five other founders who are feeling that same thing to one degree or another. And whether you’re doing a thousand dollars of MRR or a million of MRR, I think all of us have that underlying stress and doubt. This is something I said in my closing remarks is that there is a map and a path for us. There’s a script that society has for us to go into grade school and first grade, second grade, third grade, eighth grade, high school, college. Maybe you get a, maybe get a job as an individual contributor, and then you become a manager and then you work your way up and all that’s a path. And that’s fine. When you step off of that path, no one understands why you did it, and you might not even understand really why you did it, or at least you know what you’re going after to change your life, the life of those around you, probably to build some wealth and to provide for your family and to change the life of those folks. 

But there’s doubt. Will this work? Should I have done this? Is this a good decision? And that’s hard, and it’s hard to feel that weight every day. And so one of the reasons that a r and I built TinySeed as a batch based accelerator where you go through with a group of other humans, is that we wanted you to have that community. We want every founder to not feel alone as they’re going through this journey. The mentorship and advice is crucial, and it’s obviously important to saving you six months with 45 minutes of advice, having seen several folks make a similar mistake or what have you. But the community is what keeps you going over the long run. The relationships is what keeps you going over the long run. Our lives would be so much easier if we didn’t run an accelerator. Running an accelerator is a ton of work, and it’s very expensive for all the salaries and all the trips and the in persons. 

And when I see venture capitalists or folks who raise a fund and are just investing one off, two off, I’m so jealous. My life would be so, so much easier, but that would not be the best thing for the founders that we are backing. And R and I were such believers in this idea of community and support and comradery that from day one, even though we are a remote accelerator, we had mastermind groups. That was a key function of what we wanted to build. And that is why TinySeed includes money. When we fund companies, we say the opening kickoff in person is mandatory, and we include money for folks to come learn what the tone is, to build connections early to build those relationships because those relationships are what get you through the years. When I think about all of the times building out on my own, before I had a lot of founder friends and before really as the blog was evolving and before I started this podcast, I was pretty lonely. 

And there was no community like this. There was no MicroConf, TinySeed or listenership of startups For the Rest Of Us. And while I didn’t set out specifically to build this community, I was really pleased that it happened. And I knew early on, probably 20 10, 20 11, oh, this is going to be critical for me in the long run for staying sane to do this race for this many years. And one of the reasons that I’ve kept doing it is because, A, I love it. It’s super exciting. I love being around entrepreneurs, but B, because there are so many incredible relationships, what I, lifelong relationships that I’ve built through this community. So I know a lot of us say it’s super important to get together in person. That’s not just lip service. Like I come away from these events, incredibly energized, and I feel like getting every one in one place, the energy, the connections, the shared experience is game changing. 

And if you run a remote company, you felt this when you’ve had a year end like a company gathering, right? You meet once or twice a year and you get to see everyone in person and hang out, and you feel the energy and you think, man, I know we want to be remote, but wouldn’t it be cool if we could all be in an office all the time? And there is a certain, aside from the commute, forget, I don’t want to be in an office and I don’t want to commute all that. But there is energy and connection and shared experience of being in person with other humans, and that’s the value in the energy that we created last week in Tiny Fest. So thanks for joining me on this walk through this data of Tiny Fest in 2025. Next week, I’m going to be reflecting on my 2025 predictions and looking ahead and making some predictions for 2026. If you’re a founder or an aspiring founder with a B2B SaaS company and you might be interested in applying for TinySeed, you should head to TinySeed dot com slash apply and enter your email address. And although we’re not presently fundraising, we’d love to have you head to TinySeed dot com slash invest and enter your email if you might want to index across dozens, if not hundreds of ambitious B2B SaaS companies. Thanks for joining me this week and every week. This is Rob Walling signing off from episode 812.