The Ledger
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Jain: Multi-stage VCs fail at pre-seed by applying Series A frameworks
“And this is, I think, also where it's tough for multi-stage investing firms, frankly, to invest at this pre-traction stage, because what the company looks like is very different than when you look at it as Series A. And I think it's easy to fall in the trap of…”
Jain: Series A funds preempt rounds sooner and at inflated valuations
“In a prepared mind for a Series A fund, we certainly see those rounds getting preempted, and maybe those rounds are getting done sooner than they would have five, 10 years ago, and they're getting done at a price higher than those companies probably deserve.”
Jain: Early startups should raise $500k-$1M for 12-15 months runway
“And this is where we recommend to founders, like, look, you should raise somewhere between half a million to million dollars, which we think is the right balance between having enough to really be heads down and execute for, let's say, 12 to 15 months. But at …”
Jain: Startups face more variation across growth stages than sectors
“We think there's more variance on the problems that companies face across stages and phases of the business than there are across sectors.”
Jain: Afore Capital achieves an 86%+ pre-seed portfolio graduation rate
“And our graduation rate's been upwards of 86%, and it's because we're able to do this diligence to really figure out, can the company get to the next stage?”
Jain: Afore Capital represents 40% of capital in pre-seed focused funds
“In fact, you know, a four accounts were about 40% of capital that has gone into funds exclusively focused on pre-seed.”
Jain: Best pre-seed startups reshape markets in ways founders cannot anticipate
“In my opinion, best companies will either expand or shrink the market in ways even the founders cannot anticipate at the pre-seed stage.”
Jain: Early-stage diligence should focus on reaching the next inflection point
“And the way we operate is we make a list of key questions we have to answer in the diligence process. And these are basically things that need to go right for this company to get to the next inflection point. Not necessarily for this to be a massive business.”
Jain: Media overstates frequency of massive initial seed rounds for new founders
“I think it happens much less frequently than the media may make it up to seem. Mostly because when that happens, it becomes news. Hence, we all hear about it, and it makes it feel like that is what is happening day to day. But the reality on the ground is, for…”
Gaurav Jain: Afore Capital treats follow-on checks as new investments
“We consider each check we write, even in existing portfolio companies, as a new investment. So we run a very similar process where we will put together a memo and really try to understand, is this, if we were to have a blank slate, would we invest in this comp…”