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Aug 3, 2016 · 24m · 20vc

20VC: From Seed To Series A: The Due Diligence, The Valuations, The Investment Decision Making Process with Steve Schlafman @ RRE Ventures

Steve Schlafman · 17m spoken Harry Stebbings · 5m spoken
0:00 / 0:00

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In this episode of The 20 Minute VC, host Harry Stebbings interviews RRE Ventures investor Steve Schlafman about his path into venture capital, the structural differences between Seed and Series A investing, and how VCs evaluate market opportunities and maintain founder-centric governance.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 25% of the talking time here. How this is scored →

Harry as informed peer 2.0 Guest teaching 3.3 Guest disagreement 0.5 Harry pushing back 1.3
05100:0010:0020:001:40–7:12 · Harry as informed peer 1/10 Steve Schlafman's Path into Venture Capital Steve provides a comprehensive overview of his career progression from Microsoft to RRE Ventures. Harry maintains a standard interviewer role, offering light bantering comments about marrying founders.7:12–9:54 · Harry as informed peer 1/10 Differences Between Seed and Series A Investing Steve delivers a detailed masterclass on the structural differences between seed and Series A investing, explaining valuation ranges, check sizes, and ownership targets. Harry listens attentively without pushing back.9:54–12:54 · Harry as informed peer 3/10 Founder Education on Valuations and VC Governance Harry asks a thoughtful question regarding a VC's ethical duty to educate founders about valuation traps. Steve explains the boundaries of VC influence as minority investors while outlining trade-offs.12:54–16:25 · Harry as informed peer 2/10 Trusting Gut Instinct and Seed Investment Decision-Making Harry probes how gut-instinct seed decisions translate into partner consensus at a larger firm. Steve shares examples like Giphy and explains how RRE's seed program structures individual conviction.16:25–18:32 · Harry as informed peer 4/10 Evaluating Market Dynamics and Competitive Landscapes Harry directly challenges Steve's framework, asking why market would be ranked behind founder and product when markets evolve rapidly. Steve politely rejects the premise that his list represented a strict priority order.18:32–23:06 · Harry as informed peer 1/10 Quick Fire Round: Books, Mentorship, and Brightwheel Investment In a rapid-fire setup, Steve shares insights on leadership books, the lack of cross-firm mentorship in VC, and RRE's Brightwheel deal. The dynamic is entirely collaborative and supportive.1:40–7:12 · Guest teaching 2/10 Steve Schlafman's Path into Venture Capital Steve provides a comprehensive overview of his career progression from Microsoft to RRE Ventures. Harry maintains a standard interviewer role, offering light bantering comments about marrying founders.7:12–9:54 · Guest teaching 5/10 Differences Between Seed and Series A Investing Steve delivers a detailed masterclass on the structural differences between seed and Series A investing, explaining valuation ranges, check sizes, and ownership targets. Harry listens attentively without pushing back.9:54–12:54 · Guest teaching 4/10 Founder Education on Valuations and VC Governance Harry asks a thoughtful question regarding a VC's ethical duty to educate founders about valuation traps. Steve explains the boundaries of VC influence as minority investors while outlining trade-offs.12:54–16:25 · Guest teaching 3/10 Trusting Gut Instinct and Seed Investment Decision-Making Harry probes how gut-instinct seed decisions translate into partner consensus at a larger firm. Steve shares examples like Giphy and explains how RRE's seed program structures individual conviction.16:25–18:32 · Guest teaching 4/10 Evaluating Market Dynamics and Competitive Landscapes Harry directly challenges Steve's framework, asking why market would be ranked behind founder and product when markets evolve rapidly. Steve politely rejects the premise that his list represented a strict priority order.18:32–23:06 · Guest teaching 2/10 Quick Fire Round: Books, Mentorship, and Brightwheel Investment In a rapid-fire setup, Steve shares insights on leadership books, the lack of cross-firm mentorship in VC, and RRE's Brightwheel deal. The dynamic is entirely collaborative and supportive.1:40–7:12 · Guest disagreement 0/10 Steve Schlafman's Path into Venture Capital Steve provides a comprehensive overview of his career progression from Microsoft to RRE Ventures. Harry maintains a standard interviewer role, offering light bantering comments about marrying founders.7:12–9:54 · Guest disagreement 0/10 Differences Between Seed and Series A Investing Steve delivers a detailed masterclass on the structural differences between seed and Series A investing, explaining valuation ranges, check sizes, and ownership targets. Harry listens attentively without pushing back.9:54–12:54 · Guest disagreement 1/10 Founder Education on Valuations and VC Governance Harry asks a thoughtful question regarding a VC's ethical duty to educate founders about valuation traps. Steve explains the boundaries of VC influence as minority investors while outlining trade-offs.12:54–16:25 · Guest disagreement 0/10 Trusting Gut Instinct and Seed Investment Decision-Making Harry probes how gut-instinct seed decisions translate into partner consensus at a larger firm. Steve shares examples like Giphy and explains how RRE's seed program structures individual conviction.16:25–18:32 · Guest disagreement 2/10 Evaluating Market Dynamics and Competitive Landscapes Harry directly challenges Steve's framework, asking why market would be ranked behind founder and product when markets evolve rapidly. Steve politely rejects the premise that his list represented a strict priority order.18:32–23:06 · Guest disagreement 0/10 Quick Fire Round: Books, Mentorship, and Brightwheel Investment In a rapid-fire setup, Steve shares insights on leadership books, the lack of cross-firm mentorship in VC, and RRE's Brightwheel deal. The dynamic is entirely collaborative and supportive.1:40–7:12 · Harry pushing back 0/10 Steve Schlafman's Path into Venture Capital Steve provides a comprehensive overview of his career progression from Microsoft to RRE Ventures. Harry maintains a standard interviewer role, offering light bantering comments about marrying founders.7:12–9:54 · Harry pushing back 0/10 Differences Between Seed and Series A Investing Steve delivers a detailed masterclass on the structural differences between seed and Series A investing, explaining valuation ranges, check sizes, and ownership targets. Harry listens attentively without pushing back.9:54–12:54 · Harry pushing back 2/10 Founder Education on Valuations and VC Governance Harry asks a thoughtful question regarding a VC's ethical duty to educate founders about valuation traps. Steve explains the boundaries of VC influence as minority investors while outlining trade-offs.12:54–16:25 · Harry pushing back 1/10 Trusting Gut Instinct and Seed Investment Decision-Making Harry probes how gut-instinct seed decisions translate into partner consensus at a larger firm. Steve shares examples like Giphy and explains how RRE's seed program structures individual conviction.16:25–18:32 · Harry pushing back 5/10 Evaluating Market Dynamics and Competitive Landscapes Harry directly challenges Steve's framework, asking why market would be ranked behind founder and product when markets evolve rapidly. Steve politely rejects the premise that his list represented a strict priority order.18:32–23:06 · Harry pushing back 0/10 Quick Fire Round: Books, Mentorship, and Brightwheel Investment In a rapid-fire setup, Steve shares insights on leadership books, the lack of cross-firm mentorship in VC, and RRE's Brightwheel deal. The dynamic is entirely collaborative and supportive.

speaking balance: gold is Harry, purple is the guest (3 minute bins)

0:00 · Harry 68.1% · guest 31.9%0:00 · Harry 68.1% · guest 31.9%3:00 · Harry 0.1% · guest 99.9%3:00 · Harry 0.1% · guest 99.9%6:00 · Harry 13.7% · guest 86.3%6:00 · Harry 13.7% · guest 86.3%9:00 · Harry 13.2% · guest 86.8%9:00 · Harry 13.2% · guest 86.8%12:00 · Harry 16.3% · guest 83.7%12:00 · Harry 16.3% · guest 83.7%15:00 · Harry 19.5% · guest 80.5%15:00 · Harry 19.5% · guest 80.5%18:00 · Harry 17.6% · guest 82.4%18:00 · Harry 17.6% · guest 82.4%21:00 · Harry 33.9% · guest 66.1%21:00 · Harry 33.9% · guest 66.1%24:00 · Harry 100% · guest 0%24:00 · Harry 100% · guest 0%
Sharpest disagreement ▶ 16:33 Rejecting Hierarchy Premise

Steve counters Harry's pushback by rejecting the premise that founder, product, and market were listed in a strict order of priority.

 Hardest push from Harry ▶ 16:18 Challenging Market Prioritization

Harry directly challenges Steve's evaluation framework, questioning why market would be ranked second when markets evolve so rapidly.

 Biggest teaching moment ▶ 8:35 Series A Valuation Math and Ownership Dynamics

Steve educates Harry on the structural math differences between Seed and Series A investing, including target ownership percentages and pre-money variability.

 Harry holds his own ▶ 16:18 Questioning Transient Market Nuances

Harry cites the rapid emergence of ephemeral messaging to demonstrate market volatility and press Steve on market evaluation risks.
the scores for every segment, with the reasoning behind each
ChapterTopicHarry as informed peerGuest teachingGuest disagreementHarry pushing backWhy
Steve Schlafman's Path into Venture Capital 1200 Steve provides a comprehensive overview of his career progression from Microsoft to RRE Ventures. Harry maintains a standard interviewer role, offering light bantering comments about marrying founders.
Differences Between Seed and Series A Investing 1500 Steve delivers a detailed masterclass on the structural differences between seed and Series A investing, explaining valuation ranges, check sizes, and ownership targets. Harry listens attentively without pushing back.
Founder Education on Valuations and VC Governance 3412 Harry asks a thoughtful question regarding a VC's ethical duty to educate founders about valuation traps. Steve explains the boundaries of VC influence as minority investors while outlining trade-offs.
Trusting Gut Instinct and Seed Investment Decision-Making 2301 Harry probes how gut-instinct seed decisions translate into partner consensus at a larger firm. Steve shares examples like Giphy and explains how RRE's seed program structures individual conviction.
Evaluating Market Dynamics and Competitive Landscapes 4425 Harry directly challenges Steve's framework, asking why market would be ranked behind founder and product when markets evolve rapidly. Steve politely rejects the premise that his list represented a strict priority order.
Quick Fire Round: Books, Mentorship, and Brightwheel Investment 1200 In a rapid-fire setup, Steve shares insights on leadership books, the lack of cross-firm mentorship in VC, and RRE's Brightwheel deal. The dynamic is entirely collaborative and supportive.

Statements from this episode (9)

Insight
Series A Investing Requires More Operational Commitment Than Seed
“It's been really valuable for me to go from seed investing to more traditional venture investing at the Series A stage, taking board seats, because I like to think it's a much different ballgame, Series A and Series B, and taking board seats and the commitment…”
Steve Schlafman Aug 3, 2016 ▶ 5:57
Assertion Supported
Seed Pre-Money Valuations Typically Range From $3M to $10M
“Generally the valuations are within a tight band. So there's usually anywhere from three to ten million dollars for free money.”
Steve Schlafman Aug 3, 2016 ▶ 7:54
Disclosure
RRE Ventures Writes Initial Series A Checks From $2M to $8M
“You know, in our case at RE, the Series A stage, we can put as little as two million all the way up to call it seven or eight for the initial check.”
Steve Schlafman Aug 3, 2016 ▶ 9:13
Insight
VCs Cannot Control Companies Post-Investment; Leverage Lies in Selection
“It's very hard to control an investment. I think as an investor The things that we can control is the decisions that we make, right? In terms of the entrepreneurs that we back in the markets that they're going after, right? And that, that are attractive to us.…”
Steve Schlafman Aug 3, 2016 ▶ 12:04
Prediction Not checkable as stated
Seed VC Performance Requires Five Years to Truly Evaluate
“Yeah, I mean, I think at the seed stage, a lot of it is gut for me. This is a long-term business, so the reality is, is I'll know if I'm any good at this in, in another five years.”
Steve Schlafman Aug 3, 2016 ▶ 13:10
Disclosure
Schlafman Invested in Zipline After a Single 90-Minute Phone Call
“One of which Remotiv, which is now pivoted into a company called Zipline, that was a pure gut instinct on the founder, Keller, Renato, but that was one where I took an hour, hour and a half phone call, and I'm just like, I absolutely love this guy.”
Steve Schlafman Aug 3, 2016 ▶ 13:46
Assertion Supported
RRE's $280M Fund Allows Three to Five Seed Deals Per Partner
“Because our fund size is two hundred eighty million, each partner can invest in anywhere from three to five seed deals a year.”
Steve Schlafman Aug 3, 2016 ▶ 15:18
Disclosure
Schlafman Invested in Managed by Q Despite a Highly Fragmented Market
“I've funded companies in very competitive spaces such as office services, right? There's a lot of cleaning services managed by Q brought a very different offering to that market, but you could argue that it's a fairly competitive and fragmented market, at leas…”
Steve Schlafman Aug 3, 2016 ▶ 17:59
Opinion
Giphy Created an Entirely New Market Rather Than Competing
“But in the case of Giphy, there's not a market. It's a brand new market.”
Steve Schlafman Aug 3, 2016 ▶ 18:26
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