They mention repeatedly the amount raised, I didn't see where it said at what valuation. If they were left with 75% of the company, that would have been a nice seed round. If they were left with 20% of the company, not so much.
You're right - if we gave up 80% of the company, it would be an awful raise. However, it's a pretty fair assumption that we didn't do that. We chose to take in $1M instead of $300K (which is all we needed). Why would we take in more capital if the valuation wasn't fair?
Good chance it was convertible debt; thus there's no official valuation to report. What matters are any valuation caps on the conversion and the next-round valuation.
My guess would be the seed investors have terms that are essentially like having 20-30% of the current company. Selling an effective majority stake (or anything near it) in a 'seed' round isn't a typical valley thing.
Why would something like Udemy need $1M investment? In a world where Django and Rails exist, etc. Just start building it and doing customer development bootstrapping it. Incrementally improve it as you go along. Keep all equity and maximize simplicity. If you don't want to spend money on a designer try to find one that will take equity. Exercise free promotion channels, also rely on word-of-mouth. Rinse, repeat.
Good question! The simple answer is that our cofounders are immigrants and we need to support their H1B visa for them to be full-time. Unfortunately, we cannot support their visa without funding.
Furthermore, investment is a way to accelerate growth. We're now able to hire additional team members and pay ourselves salaries (I had $250 left in my bank account and $3K in credit card debt when we raised money, so we were nearly broke).
