Apr 1, 2019 · 32m · 20vc
20VC: Initialized's Garry Tan on The Most Important Thing A Seed Investor Can Do For Founders, How Ownership Requirements Change With Evolution of Funds & Why There Is Not Too Much Capital Chasing Too Few Deals
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In this episode of The 20 Minute VC, host Harry Stebbings interviews Garry Tan, co-founder of Initialized Capital, about his journey from software engineer to venture capitalist. Tan offers practical insights on operational founder coaching, navigating product-market fit, scaling seed fund mechanics, and building institutional decision-making frameworks.
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 34.4% of the talking time here. How this is scored →
Harry as informed peer 4.3 Guest teaching 5.1 Guest disagreement 1.4 Harry pushing back 3.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 27:30 Tan dismisses conventional 'too much capital' VC trope
Tan explicitly rejects the common financial trope that there is too much money chasing too few deals, calling it completely opposite to his daily reality.
Hardest push from Harry ▶ 8:24 Stebbings challenges VC operational over-involvementStebbings pushes back on the trend of platform and operational VC models, questioning whether VCs like Andreessen Horowitz unburden or overburden founders.
Biggest teaching moment ▶ 8:45 Tan delineates pre-seed coaching vs post-Series A scalingTan re-educates the host on how operational help actually works, explaining that pre-seed requires strategic coaching while later stages require organizational scaling.
Harry holds his own ▶ 21:52 Stebbings probes Tan on pricing discipline and missed dealsStebbings demonstrates sharp knowledge by asking Tan to admit to specific cases where rigid price discipline caused Initialized to miss out on winning 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 |
|---|---|---|---|---|---|---|
| Garry Tan's Journey from Engineer to Venture Investor | 4 | 4 | 1 | 3 | Stebbings breaks script to ask about Naval Ravikant's theory on unbundling VC. Tan clarifies how his Y Combinator experience moved him from an unbundled advisor role back into a bundled fund model. | |
| Scaling Initialized from Angel Fund to Institutional Venture Firm | 4 | 5 | 1 | 2 | Stebbings quotes investor Andy McLaughlin regarding the conservative shift when managing institutional capital. Tan explains how Initialized scaled horizontally into a multidisciplinary operational team rather than becoming a conservative, tightly held partnership. | |
| Operational Coaching and Believing in Founders | 5 | 6 | 2 | 5 | Stebbings directly challenges Tan on whether VCs like Andreessen Horowitz risk over-burdening founders with operational involvement. Tan reframes by distinguishing between pre-seed coaching and post-Series A organizational scaling. | |
| Founder Relationship Networks and Fundraising Strategy | 5 | 5 | 1 | 4 | Stebbings contrasts opposite viewpoints from past guests Enrique from Brex and Dave Vass from Brightwheel on continuous fundraising versus transactional sprints. Tan advocates for non-transactional relationship building over a six-month window. | |
| Navigating Pre-PMF Challenges and Post-PMF Scaling | 3 | 5 | 1 | 1 | Stebbings asks Tan to outline the requirements for pre-PMF versus post-PMF founders. Tan uses the analogy of getting punched in the face pre-PMF and shifting SMBs to enterprise post-PMF. | |
| Fund Size Evolution, Ownership Targets, and Decision Making | 6 | 5 | 1 | 6 | Stebbings presses Tan on fund scaling, ownership targets, potential round-hogging, and asks if rigid price discipline caused Initialized to miss out on deals. Tan explains Initialized's voting structure and silver bullet policy. | |
| Quick Fire Round: Books, Culture, and Market Misconceptions | 3 | 6 | 3 | 2 | During the quick fire round, Tan forcefully rejects the common industry belief that too much capital is chasing too few good deals, asserting that capital, founders, and ideas are infinite. |
Statements from this episode (13)
Tan: More product builders and engineers will enter early-stage VC
“Over time, I think it'll change radically, because I think we'll have quite a lot more people helping people at that very earliest stage, that kind of background.”
Tan: Yuri Milner offered $150K to all YC W11 companies
“That was the batch that Yuri Milner and SV Angel came along and said, we're going to give everyone 150,000 dollars to every single company in that batch. It was about 40 companies”
Tan: Operational VC coaching adds more value at pre-seed than post-Series A
“Post series A, series B, and later in particular, it really is about care and feeding the organization. So as a company, you've already chosen your direction. In fact, often you've chosen your go-to-market. And so now it's about taking that go-to-market and sc…”
Tan: Founders who ask investors if they are failing succeed more often
“That was actually one of the big secrets of Y Combinator that if a founder frequently comes to their investors and asks, am I failing? That's almost always correlated and found in the founders who succeed because, you know, at that point you're actually asking…”
Tan: Founders with prior Initialized relationships perform three times better
“We actually ran the numbers recently and people who we worked very closely with previously, their startups outcomes are actually looking about three times better. Then the folks that we didn't have sort of that multi-year background and sort of process with.”
Garry Tan: Founders should build Series A investor relationships over six-plus months
“You really can't expect to build a partnership with your Series A board member more or less in an abbreviated process of a week or two. Almost always what you need to do is sort of build relationships over the course of maybe six months or longer.”
Tan: Google and Facebook alumni lack experience fighting for early users
“A lot of people, especially coming from very hollered halls like Google and Facebook, they've actually never been punched in the face because the overwhelming fire hose of users means that they've never had to fight and scrap for a user.”
Garry Tan: SaaS startups must move upmarket to achieve enterprise scale revenue
“One of the most common things we see in SaaS these days is that sometimes a company that gets started selling to SMB realizes they need to go up market to mid-market and enterprise, because that's where you can actually get to multi-hundreds of millions of dol…”
Tan: 24 months of runway is optimal for seed-stage startups
“We don't need 48 months of runway here. We don't really even sometimes need 36 months. 24 feels really good to us. It gives the company the right kind of cushion to be able to take risks and achieve the next round”
Tan: Highly controversial startup deals generate the best venture returns
“Our experience with the power law is pretty similar to a lot of other people's in that the things that are the most controversial, the things that have either strong yeses Or knows. Those are the ones that seem to perform the best”
Initialized Capital requires two strong yeses or a GP silver bullet
“At initialized, all the GPs get silver bullets, you know, not unlimited ones, but you know, that's sort of the release valve. And then up the middle, we basically require two strong yes in that process.”