Oversized early funds trap startups on a valuation 'hamster wheel of death'
Les Craig · 28 - Investing in the Mountain West with Next Frontier Capital General Partner Les Craig · Feb 27, 2025 · at 7:03
Les Craig, General Partner at Next Frontier Capital, contrasts disciplined regional fund sizing with bloated Bay Area early-stage fund mechanics.
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“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 these early stage firms, they could care less what the valuation is. They need to deploy the dollars. They need to get certain ownership. That, that creates what I think is a, unfortunately, some can lead to kind of some toxicity in, in early stage culture where people think that's normal, but it actually becomes a I think a kiss of death for some firms. It's, it creates binary. It's crazy. This binary or bust kind of outcome.”
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