Dec 21, 2016 · 32m · 20vc
20VC: AngelList's Parker Thompson on How He Evaluates Startup Founders & Why The Move To Series A Is Harder Than Ever?
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The 20 Minute VC, host Harry Stebbings interviews Parker Thompson, partner at AngelList and creator of Startup L Jackson. Thompson shares critical insights on evaluating early-stage founders, navigating seed and Series A fundraising dynamics, and understanding the evolving role of venture capital firms.
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 26.3% of the talking time here. How this is scored →
Harry as informed peer 3.3 Guest teaching 3.5 Guest disagreement 2.2 Harry pushing back 1.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 9:20 Parker attacks standard VC refusal lines
Parker forcefully calls the common VC reponse 'you don't have enough traction' something that 'drives me insane', calling it out as non-actionable or a polite lie.
Hardest push from Harry ▶ 13:47 Harry calls out 'Always Be Raising' adviceHarry directly challenges the conventional VC advice that founders should 'Always Be Raising', asking Parker point-blank if it is 'a bit of bullshit'.
Biggest teaching moment ▶ 8:00 Parker corrects Harry's assumption on founder questioningWhen Harry assumes testing founder velocity means asking about entering new verticals, Parker flatly corrects him with 'No' and explains why customer knowledge questions are far more telling.
Harry holds his own ▶ 24:09 Harry references leaked a16z returns reportHarry demonstrates sharp VC knowledge by bringing up Rolf Winkler's report on Andreessen Horowitz and noting how critics often fail to account for fund size when evaluating returns.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Parker Thompson's Career Path and Scaling 500 Startups | 2 | 2 | 1 | 1 | The host asks open-ended introductory questions about Parker's career and experience scaling 500 Startups. Parker politely provides background context on his move from Pivotal to 500 Startups and AngelList without any friction or pushback. | |
| Founder Evaluation, Velocity of Learning, and Customer Insight | 2 | 4 | 2 | 1 | When the host guesses how Parker tests learning velocity by asking about new verticals, Parker corrects him ('No, I think they're more roundabout questions'). Parker educates the host on evaluating founders through deep customer understanding rather than direct operational hypotheticals. | |
| Defining Early-Stage Traction and VC Partnership Dynamics | 3 | 5 | 4 | 2 | Parker forcefully rejects the common VC phrase 'not enough traction', saying it drives him insane because it is disingenuous or unhelpful. He also dismisses the host's premise that founders should spend time researching internal VC partnership dynamics, calling it 'lawyering the process'. | |
| Fundraising Milestones, Seed-Plus Rounds, and War Chests | 5 | 4 | 2 | 3 | Harry presses Parker on whether 'Always Be Raising' advice is 'a bit of bullshit' and cites Mike Maples on bridge rounds being 'bridges to nowhere'. Parker articulately breaks down fundraising dynamics, seed-plus mechanics, and why optimizing for dilution over opportunity is a negative signal. | |
| The Future of Venture Capital and Strategic Value Add | 6 | 3 | 2 | 2 | Harry demonstrates strong industry knowledge by bringing up Rolf Winkler's leaked report on Andreessen Horowitz's fund returns and highlighting fund size context. Parker agrees with the host's assessment and provides nuanced context on cap table engineering and venture disruption. | |
| Quick Fire Round: Books, Food Science, and Commonwealth Network | 2 | 3 | 2 | 1 | During the quick fire round, Parker offers strong personal opinions against Soylent and food engineering, advocating humility in food science. The conversation remains lighthearted and collaborative through to the wrap-up. |
Statements from this episode (12)
Parker Thompson created the Startup L Jackson Twitter parody account
“Now, Parker is a partner at AngelList, And creator of popular Twitter parody account Startup L Jackson.”
Traditional VCs scale by adding partners rather than building operational infrastructure
“VCs who typically are scaling by adding a partner and then doing a few more deals a quarter or a year.”
A founder's velocity of learning strongly predicts early-stage startup success
“How fast do these people learn is something I focus more and more on. So I try to ask people questions that give me insight into their learning process and their velocity of learning. Cause I think at the early stage, that seems to be a strong predictor of suc…”
VCs citing 'lack of traction' are usually just politely dismissing founders
“Yeah, I mean, just to speak to that response for a second, that drives me insane, right? Like, let me say you don't have enough traction, right? You're either not able to articulate something actionable, or you're just trying to be nice, and you really don't l…”
Qualitative customer value matters more than early revenue for nascent startups
“Like, I'm more interested in the value that you're delivering than, for example, how much money you're making, because you're not making real money anyway.”
Bridge rounds offer strong risk-adjusted returns due to flat valuations
“So my personal opinion is bridges are a great way to make money because these are strong companies. And actually a lot of risk has been taken out of the business with Very little valuation bump”
Pre-product startups should raise as much capital as possible
“So if I'm talking to a pre-product company, right, typically my advice to them would be raise as much money as possible because you have no idea where you're going to be in a year.”
Founders should multiply their calculated capital requirements by 1.5
“I tend to talk to founders about focusing on how much money you need and what you think you can accomplish, and my general rule is figure out what you think you need and multiply by 1.5, because something's going to go wrong”
Founders who optimize primarily for minimizing dilution are a negative signal
“And I think anybody who's optimizing for dilution, first of all, if, like, that That's your mentality, and we're having a conversation, I'm already biased against investing.”
ICOs and token marketplaces will not replace traditional venture capital firms
“When we talk about disruption, I'm very skeptical that where we're going to be in 10 years is, you know, everything is initial coin offerings, and there's no VCs, and, you know, there's just sort of marketplaces like AngelList and Bitcoin, right? Like, I don't…”
Top-tier Series A firms like Sequoia and Benchmark won't change models
“I think if you are a traditional series A and beyond VC, you're probably going to do okay if you're really value-add to the Sequoias and the benchmarks of the world. I don't really see them changing their model much at all, because it works really well.”
Wireless last-mile ISPs possess asymmetric cost advantages over legacy cable incumbents
“You're competing against incumbents that people hate who are digging ditches to every house, and so if you can solve this last mile problem with wireless, I think you create a fundamentally asymmetric cost structure”