VCs without follow-on reserves risk being wiped out to zero
Mark Suster · 20VC: Upfront's Mark Suster on COVID Redefining What A Great Company Looks Like and What Valuations Look Like, Why Pay-To-Play Is Back On The Table & Why We Will See The Death of Party Rounds · Apr 20, 2020 · at 23:48
Mark Suster, Managing Partner at Upfront Ventures, highlights the structural risk for seed funds that fail to reserve capital when growth-stage valuations collapse.
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“And don't forget that in that eighty million dollar round that gets cut back to a forty million dollar, if you don't participate, sometimes you get flushed down to zero. And so if you don't have reserves and you're playing in a game where big checks are being written, you have the highest markup, but you might find your position at zero.”
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