Consistently losing seedling at that stage is nearly always caused by 'damping off disease' which is a fungus that attacks the stem at soil level causing the seedling to fall over. This problem is best avoided by not keeping the soil surface wet, and warm. Take the seedlings to a cooler place with better air circulation, and more light. When water is needed water from the bottom of the pots, only enough to reach the roots. Al

Along with what Al said, start your seeds in soil, not in a paper towel. All the extra handling can add a lot of fungus and bacteria to the stems. Skip the baggie phase and don't spray the plants with water. Also, peat pellets aren't very good. Use potting mix with plastic cups or 6-paks.

And by 'soil' people are referring not to something you dig out of your garden but a proper seed starting mix. Good luck.

I am in zone 9 as well. I grow seeds in trays and in the ground. Both ways are totally outside. They get the natural exposure to the elements that way. When grown outside in zone 9, I personally, from my own experience, repeat MY experience grow the seeds in the same soil that the plant will grow in..soil that is alive.
If you grow in a closed container without adequate air flow that changes everything. Lack of air flow and excess moisture can spell death.
Interesting you should mention cone flowers because in zone 9 I found perennials should be planted when the seeds normally fall to the ground, which in many cases is now. Just planted 200 Sparkler guara seeds 2 days ago.
Incidentally I tried the damp towel method a couple of times. Found that the germination rate did go up. But once they germinated I transplanted them into garden soil outside. Keep shaded until they get used to the light. When I grow outside I water when dry. I let them get wet and dry like in nature but have it more often damp then dry till it gets going. But then I am retired and can check my seedlings a few times a day.
The biggest problem with some seedling when planted outside is that you might go out one morning and they are gone. Something ate them. For me it is pill bugs. For some seedlings I keep them in raised trays protected from the bugs until they are big enough to fend the bug off. I raise the trays on bricks with duct tape around the brick (sticky side out). That catches the ground crawlers like pill bugs.
The good thing about trays is you can bring them in incase of real cold weather. The bad thing is they are exposed totally to the outside temperature, unlike seeds planted in the ground which can benefit from the ground heat. Trial and Error is the best teacher.

Hey guys,

Most of you say that it's better to start the seed in soil,
But I find that many of my seeds on soil rot because of fungus or any other factor I don't understand, maybe bitten by bugs.
It's a dilemma for me.
I also germinate them on paper towel method , the seedlings are okay but "leggy"

I've been using the winter sowing method for more years than I care to count. I've never had damping off and I get great germination rates. It's much less expensive than electric lights and doesn't take up the space inside. I strongly recommend reading the wintersowing FAQ.

Martha