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Dec 28, 2016 · 23m · 20vc

20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership

Kent Goldman · 16m spoken Harry Stebbings · 6m spoken
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 Kent Goldman, founder of Upside Partnership and former partner at First Round Capital. Goldman discusses the strategic rationale behind small seed funds, sharing fund carry with founders, seed valuation mindsets, and lessons learned operating as a solo general partner.

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 28.9% of the talking time here. How this is scored →

Harry as informed peer 3.0 Guest teaching 2.6 Guest disagreement 0.4 Harry pushing back 0.9
05100:0010:0020:001:50–5:08 · Harry as informed peer 1/10 Kent Goldman's Career Path and Entry into First Round Capital The host asks a standard biographical entry question about Kent's career path. Kent shares a detailed anecdote about a Facebook Beacon ad and entering First Round Capital without any friction or debate.5:08–7:14 · Harry as informed peer 2/10 The Strategic Thesis Behind Upside Partnership's Small Fund Size Harry prompts Kent on his catalyst for leaving First Round to launch Upside Partnership. Kent outlines his thesis on fund size differentiation and avoiding lead-check competition in a supportive monologue.7:14–10:33 · Harry as informed peer 4/10 Follow-On Investment Strategy and Capital Reserve Allocation Harry introduces a logical counter-point regarding follow-on reserves for small funds. Kent explains his 70 percent reserve model and founder-partner carry structure to address the trade-off.10:33–13:43 · Harry as informed peer 3/10 LP Dynamics, Fundraising Pitch, and Capital Horizon Harry inquires about pitching innovative fund structures to LPs and asks whether all LP capital is identical. Kent mildly rejects the premise that all money is green by stressing LP patience and alignment.13:43–16:43 · Harry as informed peer 4/10 Seed Valuation as a Litmus Test and Portfolio Dilution Harry questions how check size relates to valuation and dilution upstream. Kent gently scoffs at seed valuation debates, reframing valuation as an internal litmus test of enthusiasm rather than a primary filter.16:43–18:58 · Harry as informed peer 5/10 Sole GP Decision-Making Framework and Evaluation Priorities Harry displays domain insight by bringing up past guest Nick Weaver's framework from Menlo Ventures on market size vs team. Kent explains his sole GP decision checklist and why he overweights team over product.18:58–22:13 · Harry as informed peer 2/10 Quick-Fire Round: Launch Challenges, Favorite Books, and Future Vision A collaborative quick-fire section covering launch challenges, favorite books, fund scaling plans, and recent investments with no pushback.1:50–5:08 · Guest teaching 1/10 Kent Goldman's Career Path and Entry into First Round Capital The host asks a standard biographical entry question about Kent's career path. Kent shares a detailed anecdote about a Facebook Beacon ad and entering First Round Capital without any friction or debate.5:08–7:14 · Guest teaching 2/10 The Strategic Thesis Behind Upside Partnership's Small Fund Size Harry prompts Kent on his catalyst for leaving First Round to launch Upside Partnership. Kent outlines his thesis on fund size differentiation and avoiding lead-check competition in a supportive monologue.7:14–10:33 · Guest teaching 3/10 Follow-On Investment Strategy and Capital Reserve Allocation Harry introduces a logical counter-point regarding follow-on reserves for small funds. Kent explains his 70 percent reserve model and founder-partner carry structure to address the trade-off.10:33–13:43 · Guest teaching 3/10 LP Dynamics, Fundraising Pitch, and Capital Horizon Harry inquires about pitching innovative fund structures to LPs and asks whether all LP capital is identical. Kent mildly rejects the premise that all money is green by stressing LP patience and alignment.13:43–16:43 · Guest teaching 4/10 Seed Valuation as a Litmus Test and Portfolio Dilution Harry questions how check size relates to valuation and dilution upstream. Kent gently scoffs at seed valuation debates, reframing valuation as an internal litmus test of enthusiasm rather than a primary filter.16:43–18:58 · Guest teaching 3/10 Sole GP Decision-Making Framework and Evaluation Priorities Harry displays domain insight by bringing up past guest Nick Weaver's framework from Menlo Ventures on market size vs team. Kent explains his sole GP decision checklist and why he overweights team over product.18:58–22:13 · Guest teaching 2/10 Quick-Fire Round: Launch Challenges, Favorite Books, and Future Vision A collaborative quick-fire section covering launch challenges, favorite books, fund scaling plans, and recent investments with no pushback.1:50–5:08 · Guest disagreement 0/10 Kent Goldman's Career Path and Entry into First Round Capital The host asks a standard biographical entry question about Kent's career path. Kent shares a detailed anecdote about a Facebook Beacon ad and entering First Round Capital without any friction or debate.5:08–7:14 · Guest disagreement 0/10 The Strategic Thesis Behind Upside Partnership's Small Fund Size Harry prompts Kent on his catalyst for leaving First Round to launch Upside Partnership. Kent outlines his thesis on fund size differentiation and avoiding lead-check competition in a supportive monologue.7:14–10:33 · Guest disagreement 0/10 Follow-On Investment Strategy and Capital Reserve Allocation Harry introduces a logical counter-point regarding follow-on reserves for small funds. Kent explains his 70 percent reserve model and founder-partner carry structure to address the trade-off.10:33–13:43 · Guest disagreement 1/10 LP Dynamics, Fundraising Pitch, and Capital Horizon Harry inquires about pitching innovative fund structures to LPs and asks whether all LP capital is identical. Kent mildly rejects the premise that all money is green by stressing LP patience and alignment.13:43–16:43 · Guest disagreement 2/10 Seed Valuation as a Litmus Test and Portfolio Dilution Harry questions how check size relates to valuation and dilution upstream. Kent gently scoffs at seed valuation debates, reframing valuation as an internal litmus test of enthusiasm rather than a primary filter.16:43–18:58 · Guest disagreement 0/10 Sole GP Decision-Making Framework and Evaluation Priorities Harry displays domain insight by bringing up past guest Nick Weaver's framework from Menlo Ventures on market size vs team. Kent explains his sole GP decision checklist and why he overweights team over product.18:58–22:13 · Guest disagreement 0/10 Quick-Fire Round: Launch Challenges, Favorite Books, and Future Vision A collaborative quick-fire section covering launch challenges, favorite books, fund scaling plans, and recent investments with no pushback.1:50–5:08 · Harry pushing back 0/10 Kent Goldman's Career Path and Entry into First Round Capital The host asks a standard biographical entry question about Kent's career path. Kent shares a detailed anecdote about a Facebook Beacon ad and entering First Round Capital without any friction or debate.5:08–7:14 · Harry pushing back 0/10 The Strategic Thesis Behind Upside Partnership's Small Fund Size Harry prompts Kent on his catalyst for leaving First Round to launch Upside Partnership. Kent outlines his thesis on fund size differentiation and avoiding lead-check competition in a supportive monologue.7:14–10:33 · Harry pushing back 2/10 Follow-On Investment Strategy and Capital Reserve Allocation Harry introduces a logical counter-point regarding follow-on reserves for small funds. Kent explains his 70 percent reserve model and founder-partner carry structure to address the trade-off.10:33–13:43 · Harry pushing back 1/10 LP Dynamics, Fundraising Pitch, and Capital Horizon Harry inquires about pitching innovative fund structures to LPs and asks whether all LP capital is identical. Kent mildly rejects the premise that all money is green by stressing LP patience and alignment.13:43–16:43 · Harry pushing back 2/10 Seed Valuation as a Litmus Test and Portfolio Dilution Harry questions how check size relates to valuation and dilution upstream. Kent gently scoffs at seed valuation debates, reframing valuation as an internal litmus test of enthusiasm rather than a primary filter.16:43–18:58 · Harry pushing back 1/10 Sole GP Decision-Making Framework and Evaluation Priorities Harry displays domain insight by bringing up past guest Nick Weaver's framework from Menlo Ventures on market size vs team. Kent explains his sole GP decision checklist and why he overweights team over product.18:58–22:13 · Harry pushing back 0/10 Quick-Fire Round: Launch Challenges, Favorite Books, and Future Vision A collaborative quick-fire section covering launch challenges, favorite books, fund scaling plans, and recent investments with no pushback.

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

0:00 · Harry 78.7% · guest 21.3%0:00 · Harry 78.7% · guest 21.3%3:00 · Harry 9.2% · guest 90.8%3:00 · Harry 9.2% · guest 90.8%6:00 · Harry 19.1% · guest 80.9%6:00 · Harry 19.1% · guest 80.9%9:00 · Harry 9.7% · guest 90.3%9:00 · Harry 9.7% · guest 90.3%12:00 · Harry 16.9% · guest 83.1%12:00 · Harry 16.9% · guest 83.1%15:00 · Harry 15.4% · guest 84.6%15:00 · Harry 15.4% · guest 84.6%18:00 · Harry 27.6% · guest 72.4%18:00 · Harry 27.6% · guest 72.4%21:00 · Harry 58.5% · guest 41.5%21:00 · Harry 58.5% · guest 41.5%
Sharpest disagreement ▶ 14:04 Kent mocks seed valuation debates

Kent directly challenges the conventional VC logic of haggling over seed valuations, chuckling at investors who walk away from a potential billion-dollar company over a two million dollar valuation difference.

 Hardest push from Harry ▶ 7:07 Harry questions small fund follow-on dynamics

Harry pushes back on Kent's small fund thesis by raising the structural issue of lower follow-on ratios compared to larger seed funds.

 Biggest teaching moment ▶ 14:04 Kent reframes valuation as enthusiasm test

Kent educates the host on how seed stage valuation math actually functions in practice, explaining why valuation serves as a personal indicator of belief rather than a mathematical obstacle.

 Harry holds his own ▶ 17:57 Harry invokes Menlo Ventures market framework

Harry demonstrates deep industry expertise by bringing up Nick Weaver's learnings from Menlo Ventures regarding the priority of market size relative to team quality.
the scores for every segment, with the reasoning behind each
ChapterTopicHarry as informed peerGuest teachingGuest disagreementHarry pushing backWhy
Kent Goldman's Career Path and Entry into First Round Capital 1100 The host asks a standard biographical entry question about Kent's career path. Kent shares a detailed anecdote about a Facebook Beacon ad and entering First Round Capital without any friction or debate.
The Strategic Thesis Behind Upside Partnership's Small Fund Size 2200 Harry prompts Kent on his catalyst for leaving First Round to launch Upside Partnership. Kent outlines his thesis on fund size differentiation and avoiding lead-check competition in a supportive monologue.
Follow-On Investment Strategy and Capital Reserve Allocation 4302 Harry introduces a logical counter-point regarding follow-on reserves for small funds. Kent explains his 70 percent reserve model and founder-partner carry structure to address the trade-off.
LP Dynamics, Fundraising Pitch, and Capital Horizon 3311 Harry inquires about pitching innovative fund structures to LPs and asks whether all LP capital is identical. Kent mildly rejects the premise that all money is green by stressing LP patience and alignment.
Seed Valuation as a Litmus Test and Portfolio Dilution 4422 Harry questions how check size relates to valuation and dilution upstream. Kent gently scoffs at seed valuation debates, reframing valuation as an internal litmus test of enthusiasm rather than a primary filter.
Sole GP Decision-Making Framework and Evaluation Priorities 5301 Harry displays domain insight by bringing up past guest Nick Weaver's framework from Menlo Ventures on market size vs team. Kent explains his sole GP decision checklist and why he overweights team over product.
Quick-Fire Round: Launch Challenges, Favorite Books, and Future Vision 2200 A collaborative quick-fire section covering launch challenges, favorite books, fund scaling plans, and recent investments with no pushback.

Statements from this episode (11)

Assertion Supported
Josh Koppelman ran Facebook ads targeting Yahoo employees during 2008 takeover
“Josh Koppelman, who had just started First Round Capital, had decided when he saw the news of the takeover attempt, he wanted to see if there's anyone at Yahoo who is sort of loose in the saddle and maybe thinking about joining a startup or starting a company.…”
Kent Goldman Dec 28, 2016 ▶ 3:51
Assertion Not checkable as stated
Seed and friends-and-family rounds were virtually identical in 2008
“In 2008, there's very little difference between a seed round and a friends and family round”
Kent Goldman Dec 28, 2016 ▶ 6:23
Insight
Seed funds expanding to write lead checks creates direct competition
“As all these funds are trying to grow up and everyone was trying to be a lead investor, they're putting themselves in deeper and deeper competition with one another.”
Kent Goldman Dec 28, 2016 ▶ 6:41
Prediction Not checkable as stated
Upside Partnership expects to deploy 70% of its capital into follow-ons
“We expect about 70% of that will actually be deployed into follow-on investments.”
Kent Goldman Dec 28, 2016 ▶ 7:44
Insight
Making portfolio founders fund partners increases mutual support
“If we could actually sort of make founders partners in the fund, they would be more supportive of one another.”
Kent Goldman Dec 28, 2016 ▶ 10:04
Insight
Seed valuation serves as a conviction litmus test, not a price filter
“So internally, when I think about valuation, I almost use it as a litmus test for my own enthusiasm, my own belief in whether or not a company can achieve its high aims. But I don't focus on it sort of that much at the seed stage.”
Kent Goldman Dec 28, 2016 ▶ 14:44
Disclosure
Upside Partnership stops writing follow-on checks at a $100 million valuation
“So before I mentioned, usually we Peter, you know, upside has been petering out as companies hit a hundred million dollars in valuation.”
Kent Goldman Dec 28, 2016 ▶ 15:12
Disclosure
Upside Partnership prefers not to take board seats in portfolio companies
“So I don't worry about whether or not we have a board seat. I, in fact, I almost prefer to sort of not have a board seat.”
Kent Goldman Dec 28, 2016 ▶ 15:51
Insight
Thematic investing fails at the seed stage because it happens too late
“I think it's very hard to be thematic at the seed stage. I think generally by the time you can identify a theme at the seed stage, it's probably too late.”
Kent Goldman Dec 28, 2016 ▶ 18:22
Insight
Early product is the least important evaluation factor in seed investing
“Product is probably the last thing I worry about when I think about product, especially at the seed stage or what the early vision of a product is. That helps you understand how the team thinks about the space as opposed to sort of being, you know, the thing y…”
Kent Goldman Dec 28, 2016 ▶ 18:44
Prediction Held up
Upside Partnership will remain small because scaling breaks the seed fund model
“The vision is to continue to be a small fund. Somewhere where it is now, the second fund that we raise is forty four million. I think sort of if I get too far above that, the model we're seeking to work with begins to break down a little bit. There may be addi…”
Kent Goldman Dec 28, 2016 ▶ 20:52
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