The Sip Seed Round
Get capital committed but pull it down only when needed, so you keep optionality and psychological freedom
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 85%
A financing structure between bootstrapping and traditional VC. Investors commit a capped amount (Every: up to $2M from Reed Hoffman and Starting Line) on a safe, but the founder pulls the money down only when they choose, rather than banking it all at once. This preserves optionality, avoids the pressure a large bank balance creates to 'burn it,' and enables more risk-taking because the founder knows more capital is available if the account hits zero.
Origin
Coined and practiced by Dan Shipper at Every; he also references the emerging 'seedstrapping' trend and a modified safe with a 3-year equity-conversion option used in their earlier $700k pre-seed.
Core principles
- 01Committed-but-undrawn capital gives risk-taking freedom without the pressure of a big balance
- 02A large number sitting in the account tempts a team to spend it just because it's there
- 03Choose investors philosophically aligned with your desired company shape, not just size-maximizers
- 04Modern AI leverage means you need far less money — two engineers do what once took twenty
- 05Structure the raise to preserve the option to go big OR stay small and profitable
How to run it
- 1
Decide the shape of company you actually want
Clarify whether you want to keep optionality and a playful, founder-controlled business rather than being locked into a must-go-huge trajectory.
Watch out Raising a lot of money can lock you into being 'that serious thing that's totally going for it' — decide before you raise.
- 2
Get a capped commitment on a safe
Have investors commit up to a set amount at a set cap via a safe, rather than wiring the full sum upfront.
Pro tip Every earlier used a modified safe letting investors convert to equity in three years even if the company never raised again — preserving both paths.
- 3
Pull down capital only as needed
Draw the money when you actually need it, keeping the visible bank balance small.
Pro tip Knowing you can get more 'if we go to zero on the bank account' is what unlocks bigger risk-taking psychologically.
- 4
Pick aligned investors
Choose backers who care about what you're building, not just how big it gets, so incentives stay aligned with your chosen shape.
In the wild
Every raised 'up to 2 million' from Reed Hoffman and Starting Line VC, committed but drawn down at will on a safe at a set cap. Shipper says a large balance would tempt the team to burn it; the sip structure lets him take more risk without that pressure, and Reed is philosophically aligned rather than size-obsessed.
→ Founder retains optionality and control; Shipper notes Kora was built for ~$300k all-in, evidence that AI-era companies need far less capital.
Common mistakes
Banking a big round you don't need yet
A large lump sum creates spending pressure and locks you into a high-growth mandate, reducing optionality and the playful risk-taking Shipper values.
Is it for you?
Best for
AI-leverage founders who want a durable, controllable business and low burn while keeping the option to scale big later
Not ideal for
Capital-intensive startups that genuinely need large upfront funding to reach their milestones
From the transcript
“we raised up to 2 million from Reed Hoffman”
“a SIP seed round, which is basically they've committed $2 million, but we can pull it down whenever we want”
“it allows me psychologically to take a lot more risk”
“also for our investors like I I think Reed very much wants us to succeed but like I don't think he he cares like what…”
“all in to build Kora we've spent maybe 300k”
From the episode
The AI-native startup: 5 products, 7-figure revenue, 100% AI-written code
Dan Shipper (co-founder/CEO of Every)