Seed Fund

“Their numbers are better than 90% of seed fund numbers on their growth growth vehicle.”

“As a fund, I think our hypothesis is that you want to be in the best in class companies in any capacity. So, you know, we're obviously a tip of spear approach on the seed fund. So we're trying to Start to build that relationship over time and we want to get on…”

“Well, they're just gonna go away.”

“We have a three hundred million dollar seed fund eight hundred million venture fund, and one and a half billion gross fund.”

“What became obvious to me was that seed funds that claimed they had proprietary deal flow were mostly kidding themselves, they're a little delusional, and it's hard to believe that a seed firm that has two or three people have more coverage at early stage than…”

“When you have limited reserves from a Cedar smaller fund, you put it all in your fastest growing companies. Like, a hundred fucking percent. There's only one criterion. Triple digits growth, you know, double digits per month, that's it.”

“How much better is the YC locked in return than a seed fund at the same stage? They basically have roughly a two X advantage. If you say to yourself, you know, if I look at the deals they do, if you, and then if you extrapolate based on the published hit rates…”

“I think you mega platforms are destroying seed. Time and time again, I see 10 on 50, and it is not good for the company, and you beat us. Like, to be clear, you beat the seed funds, because you just come in and buy it. I get it. We do three on 15, you guys com…”

“I'm not sure it says something systemic about seed versus non seed. I just think it says extraordinarily good picking from a very connected investor who just You know, most of whose stuff is working really well at a much higher level and to go from, you know, …”

“Because actually when you take away fees, you've got 40 of investable, and when you think about the average seed round today being three to five million dollars, if you want to lead it and take real ownership like they say they do, there's no way that you're g…”

“Why do companies end up in the Bay Area getting on the ham, what I would like to call the hamster wheel of death, where you're just like always trying to catch up with your last post money. It's because in a lot of cases, check size, mandatory check size of th…”

“The lesson for us is like, this hard work stuff, you need to be well capitalized to be able to do, and some, sometimes it's not our place. Like, even if we could do the work, we don't have the capital base to be able to do these things.”

“The seed fund, you're talking to a lot of founders. Some of them are going to be Like, very low quality just by nature. Some of them are going to be amazing, and you get in early, and that's cool, but like, if you really just want to hang out with really inter…”

“You can make money on the buy, and you can make money on the sell. And what most people don't understand is that the seed funds are actually better positioned to make money on the sell than anybody. Better, better positioned than the multi-stage by a wide marg…”

“It's hard to do PE styles early stage because there's just so much, so many different people that will give you that Three on 15 or two on 10 or two on 20. And I think that competition just drives up prices and ultimately lowers returns.”

“Like we don't need, you know, unicorn or bus. Like we just don't need that. And if we own 10% of a business, 20% of a business that exits for two hundred million dollars, like we're doing really, really well.”

“Fund returners, you need four or five good fund, good companies. If we sell four companies at two hundred fifty million dollars each, right, we can return a fund. If we sell 10 companies at a hundred million each, like, nobody cares about that, we can return a…”

“Rearview mirror on this, you can't build a fund on this. Rearview mirror, you can think about that one that you missed, and they're one or two in a generation. There are these generational companies, or maybe there is one a year, and if you're in that company,…”

“Generally when I meet a founder at a seed stage, I'll tell him or her, I'll underwrite the entire round. So there's no financing risk, but We should split it into three sleeves. One sleeve is for index, one sleeve is for a seed fund, and the third sleeve is fo…”

“I actually think that they've come in with such efficiency that actually they've made it so much harder for the existing pure seed players. They've increased price. They've increased supply. I think you will see returns significantly denigrate. We all saw five…”

“When I was raising fund one for floodgate, I would go to an LP and say, We believe that there's a gap between angels and VCs and VCs are writing five million dollar checks, angels, 250,000 dollar check. We believe that 500,000 is the new five million because o…”

“If you're a fifty million dollar seed fund, to do a three X, you have to produce a total of maybe two hundred and twenty million in total outcomes. There's a number of ways to do that, and they have a lot more optionality. In their outcomes than a large fund.”

“He's probably deploys more capital than most seed funds, I would say, every year.”

“A seed fund has a 10 to 12 year maturity, and it's really more like 15 years, and that's just the truth about venture capital. It takes longer for your fund to mature, and you might return your fund in year seven, eight, or nine, but you're yielding most of th…”

“Really in today's world, you're going to suffer 50% dilution on the way to IPO. That core seed fund that you struggled to get 12% of, you know, it could be six by the IPO.”

“Our seed funds are sixty million dollars in size and we write first and last check. To new teams. No follow-on investments out of the seed funds.”

“Some seed funds won't be able to raise another fund given the vintage we just left. We're hearing that from LPs”

“But on the math of it, we just underwrite a series A fund to a three X and C to a five X, and you just look at what the numbers line up at, and you say, okay, so given the ownership and given the AUM, what needs to be true to return the fund one time, half a t…”

“I actually don't think it's new. At least it's not new for second time founders, right? It's not new.”

“Say if you have a fifty million dollar fund size, you've got forty million investable, you want to do seed today with the average seed being three to four, you can't lead seed rounds with that and have enough diversification. You got twenty two million dollar …”

“We're currently investing out of our fifth fund. In fact, we have two. We have a seed fund, and we have a opportunity fund. The seed fund is a hundred and thirty-five million. The opportunity fund is sixty-five million.”

“We have 60% reserve in a seed fund to follow on.”

“You are not a good enough picker at seed to only have 15 investments. You need a large enough level of diversification, and 30 is generally considered large enough when you run the maths.”

“This does not prove you are a good seed investor, but it merely shows you have access to series B and series C investments. These are very different things, and actually can only serve to discredit you often, as it shows a little bit of naivety.”

“People were looking at the YC standard deal being like, oh, like YC has to compete. There's so many, New seed funds out there. And I think what's interesting is if you would kind of take it inside baseball for a second, that's really not the reason we did it a…”

“And even I think seed funds are having trouble because firms that can do seed startup series A, B, C, and promise to be there with the entrepreneur all the way along, have an advantage against an even a early stage seed fund.”

“Increasingly you're seeing every large firm raise a seed fund because they want to get in sooner to get that ownership and be able to write that big check and preempt the series A.”

“Does the traditional 50, sixty million dollar seed fund work? I don't, I think it doesn't work unless you go with anything that has any proof, any social proof, anything privileged, it doesn't work, right?”

“SPVs are much harder to raise now, and so your ability to protect not just your winners, But also your companies that are struggling and need to get from point A to point B to maybe someday be a winner, it's going to be much harder.”

“Samir Khadji from First Republic Bank in the US is an active observer of the early stage market, and he said that 70 or 80% of the seed funds that he spoke to had six to 12 months of life for most of their portfolio companies.”

“We do, because if you think about seed funds, a lot of them, they have amazing returns, but a lot of that is more TVPI, total value, and they may not have gotten a lot of liquidity, because they're in these great companies, and they continue to accrete in valu…”

“I think what I am seeing though, is the time between those seed rounds in the series A's getting compressed. And as a result, I think founders are actually choosing to, in certain cases, bypass seed funds that can only diverse seed rounds and really go target,…”

“And I think, to be honest, like one of the challenges that the existing seed funds face is that because of the large fund-sized From these multi-stage firms, then they can very quickly write a check with very little diligence, or they can do it based on existi…”

“So I do find that once a company starts to gain some momentum and some heat, it is more difficult for a seed fund to compete with one of the sort of top tier multi-stage funds.”

“This group of people right now, they're voting with their feet, and they're bypassing seed.”

“So we are a seed fund and seed funds, as you know, will never become very large in AUM. Some of the most successful seed funds in America are yet 152 hundred million dollars, two hundred and fifty million dollars at most.”

“In this world, we don't have Results yet. So everything people look at are proxies for real results. And the proxies in seed are who follows your deals? How much money is put behind those deals? Can you continually do that? Can you intercept the good deals?”

“I think consolidation is, is the future. I don't see a lot of first time or second time funds raising their next fund. And it may not be a function of who they are, but rather a very different macro environment and a general understanding by LPs that we just d…”

“The moment a fund is managing more than 10 or twenty million dollars in capital, it's unlikely that it's purely in the seed business. It's at least bleeding into the series A business.”

“And at the time that we started in 2010, you know, there were relatively few seed funds here in the New York area and the Boston area. Fast forward to today, you know, 2017, there's obviously been a proliferation of seed investors.”

“If you own 10% of a company that exits for a hundred, hundred fifty billion dollars with a 40, 50, 60, seventy-five million dollar fund, you can still return a meaningful portion of that fund with a, you know, a 102 hundred million dollar exit. Obviously, the …”

“I think a lot of people don't realize that most of their funds are actually much later Right. So if you have a seed fund that makes its initial 200,000 to 500,000 dollar bet and seed round, and then follows on all the way through, if you do that math, probably…”

“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.”

“And as a result of that, we have an unbelievably high win rate against the top venture firms in the industry and almost always win head to head against the seed funds because typically we're competing with, you know, two guys and a dog and we're bringing an ar…”

“A lot of seed funds today, a lot of our peer group, a lot of whom I respect very much they really look like series B funds in terms of where their average dollar goes in. They may be starting very early, but their average dollar is weighted towards series B.”