Mar 18, 2019 · 24m · 20vc
20VC: The Acceptable vs Unacceptable Risks To Take When Seed Investing, Why Loss Ratio Is Not A Consideration & Why Series A Is The Right Time To Establish A Board with Mike Hirshland, Co-Founder @ Resolute Ventures
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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 Mike Hirschland, co-founder of Resolute Ventures, on early-stage seed investing strategies, risk tolerance, portfolio mechanics, and founder-investor alignment. Mike shares why seed funds should focus on team quality over loss ratios and why formal boards are counterproductive before Series A.
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 41.4% of the talking time here. How this is scored →
Harry as informed peer 2.7 Guest teaching 2.3 Guest disagreement 1.8 Harry pushing back 1.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:48 Rejecting board intimacy
Mike directly dismisses Harry's premise regarding board intimacy, stating candidly that he has rarely seen it work in venture capital.
Hardest push from Harry ▶ 10:23 Challenging fund evolution assumptionsHarry uses Jason Lemkin's thesis on fund evolution across fund iterations to challenge Mike on how Resolute approaches target ownership.
Biggest teaching moment ▶ 9:14 Educating on seed fund economicsMike re-educates Harry on power-law dynamics, demonstrating why loss ratios are an irrelevant metric for seed funds holding strong ownership in winners.
Harry holds his own ▶ 7:22 Framing risk categoriesHarry demonstrates domain expertise by introducing his co-investor Fred Destin's structured framework on acceptable versus unacceptable risks in seed deals.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Mike Hirschland's Career Journey to Resolute Ventures | 1 | 1 | 0 | 0 | Harry welcomes Mike and prompts him to share his career story. Mike explains his trajectory from lawyer for the Senate Judiciary Committee to joining Polaris and eventually founding Resolute. | |
| Investing at 'Old Seed' and Assessing Risk Types | 3 | 2 | 1 | 1 | Harry introduces his co-investing partner Fred Destin's framework on acceptable versus unacceptable risks. Mike explains that Resolute invests at 'old seed' before traction, taking product market fit risk while strictly avoiding team risk. | |
| Disregarding Loss Ratios and Ownership Dynamics | 4 | 4 | 3 | 2 | Harry quotes Jason Lemkin regarding fund ownership evolution and asks how Mike frames loss ratios to LPs. Mike bluntly rejects caring about loss ratios, explaining that upside power-law returns drive sub-$100M seed funds. | |
| Portfolio Construction and Pre-Series A Follow-On Investments | 3 | 2 | 2 | 2 | Harry asks about founder-investor relationships and quotes Josh Koppelman on founders rushing investor choices. Mike nuances the concept of 'founder friendly', emphasizing the need to give direct critical feedback when necessary. | |
| Why Seed Stage Boards Are Counterproductive | 3 | 4 | 4 | 2 | Harry brings up Fred Destin's concept of building board intimacy. Mike candidly rejects the premise, stating he rarely sees true board intimacy and criticizes seed stage boards as counterproductive administrative drags. | |
| Quickfire Round with Mike Hirschland | 2 | 1 | 1 | 1 | In the quickfire round, Harry asks rapid questions on fundraising, industry changes, books, and price sensitivity. Mike calls out the VC community's confusion and lack of clarity surrounding pre-seed and seed stage naming. |
Statements from this episode (11)
Early seed investing is challenging out of a billion-dollar fund
“The challenge of doing really early stage seed investing out of a billion dollar fund. And a very large platform.”
Resolute Ventures prefers investing before startups show early traction
“Our MO, what we really like to do is to be backing teams we fall in love with ideas that we fall in love with, and just that, and so we really do not necessarily look for traction at all. Now, in some instances, when companies approach us, they happen to have …”
Early startup traction does not predict long-term product-market fit
“But our view is that, that those early signs of traction really are not very telling about whether they're ultimately going to have meaningful traction and product market fit.”
Resolute Ventures does not consider loss ratio in seed investing
“Quite honestly, we don't think about loss ratio, which I suppose is in some that might be the answer that it's less important to us and is likely going to be higher. Honestly, when those conversations come up with LPs, I tend to be very direct in that we reall…”
Sub-$100M seed funds need 4-7 big wins with 10% ownership
“You can only lose one times your money, so, you know, losses are limited, and really, for a seed fund, for a sub-hundred-million-dollar seed fund, if you end up having a handful of companies, four, five, six, seven, that truly are venture-scale returns in the …”
Resolute targets 30 to 35 companies and 10% initial ownership
“Each fund has a portfolio of 30 to 35 companies, and I think we are very consistent in terms of our initial check, which we think is critical in terms of getting to 10% on that first check”
True VC support requires direct feedback, not superficial founder-friendliness
“There's a difference between, you know, the phrase that's become tossed about a lot being quote founder friendly on the one hand, which means that you're always going to be yielding to the founder and supporting what they want and want to do versus having, you…”
Founders rush investor selection instead of thoroughly evaluating fit
“I think in many instances, yes. I think founders, with good reason, want a very fast process, and they want to get back to work, and are sometimes inclined, really, just to get the best deal as quickly as they can and get back to work. I would personally advis…”
Series A is the right time to form a startup board
“Well, I think it's around the Series A. I think when you're raising a Series A level amount of capital, I think that the investors have an understandable interest In governance and as a company is starting to mature and build out its organization and its manag…”
Seed-stage investor boards are an unnecessary drag on founder time
“And I think too often having a formalized board, an investor led board during the seed stage brings a lot of the trappings of From the post-series A board dynamic into the seed stage, where there's some degree of formality, there's a fair amount of preparation…”
Very few VCs are actually interested in pre-traction startups
“And too often, everybody says they do all of it, when in fact, they're very Few investors, VCs, who really are interested in pretraction, So I think there's just a lot of confusion in the marketplace in terms of who really wants to invest when and clarity arou…”