Aug 30, 2024 · 45m · saastr
Navigating Fundraising and the VC Landscape Today with 20VC and Visionaries Club
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this in-depth conversation, 20VC founder Harry Stebbings and Visionaries Club founding partner Robert Lacher analyze the modern venture capital landscape, uncovering the structural pitfalls of multi-stage seed investing and follow-on reserves while offering practical advice for founders navigating fundraising, governance, and market discipline.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
Jason as informed peer 7.3 Guest teaching 3.3 Guest disagreement 1.8 Jason pushing back 3.7
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 2:45 Robert refuses Harry's demand to rank multi-stage firms
When Harry repeatedly interrupts and demands a ranked top three of competitor funds, Robert explicitly pushes back, telling Harry he will not get an answer or recommendation.
Hardest push from Jason ▶ 2:23 Harry repeatedly presses for fund rankingsHarry rejects Robert's diplomatic framing of multi-stage funds and aggressively interrupts to demand a specific top-three ranking of growth and multi-stage firms.
Biggest teaching moment ▶ 33:37 Robert breaks down ARR requirements for billion-dollar valuation increasesRobert explains the harsh mathematical reality of public SaaS multiples, showing that adding a billion in valuation requires generating 100 million in net new ARR.
Jason holds their own ▶ 11:29 Harry dismantles reserve logic using 2,700 GP track recordsHarry counters conventional pro-rata wisdom by citing his dataset of 2,700 GPs to prove that follow-on reserves fail to hit a 3x TVPI 78% of the time.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Multi-Stage Funds at Seed and Signaling Risk | 7 | 4 | 4 | 6 | Harry presses Robert to rank the top multi-stage venture funds directly, which Robert refuses to do. Both speakers demonstrate deep insider knowledge of signaling risks, preemptive term sheets, and orphan company dynamics when multi-stage funds invest at seed. | |
| Pro-Rata Rights and Follow-On Reserve Strategies | 8 | 2 | 2 | 5 | Harry challenges the conventional pro-rata model by citing proprietary data across 2,700 GP track records showing reserves are misallocated 78% of the time. Robert walks through Visionaries' follow-on strategy before agreeing that standard pro-rata rights often harm founders. | |
| VC Value-Add Realities, Platforms, and Board Governance | 7 | 3 | 1 | 3 | Harry categorizes three types of VCs and dismisses shallow platform talent teams as ineffective sales tactics. Robert details the difference between GP-led support and consulting-style platform teams while evaluating board governance. | |
| Market Bifurcation, Hype Cycles, and Non-Obvious Outliers | 7 | 3 | 2 | 3 | Robert introduces the left-door versus right-door framework regarding hyped deals versus neglected quality SaaS companies. Harry points out that junior partners face misaligned promotion incentives that drive them into consensus hype deals. | |
| Valuation Discipline, Dilution Traps, and Capital Efficiency | 8 | 4 | 1 | 3 | Harry shares empirical data from 170 investments showing that startups raising over 5 million at seed consistently perform worst. Robert explains the severe cultural, ESOP, and ARR multiple penalties of raising at bloated valuations. | |
| Transitioning to SaaS Metrics and Parting Advice for Founders | 7 | 4 | 1 | 2 | Harry introduces the Walt Disney storytelling versus Jordan Belfort metrics transition heuristic for fundraising stages. Robert explains the heightened Series A ARR threshold of 1.5M to 2.5M before both share closing advice. |
Statements from this episode (23)
Lacher: Visionaries Club LPs Are Exclusively Successful Entrepreneurs and Founders
“The difference from our LP base compared to other VCs is that we only have successful entrepreneurs. So we have 25 unicorn founders, like the founders of UiPath, Miro, Flix, Barcello, Fresh.”
Lacher: 90% of European Companies Are Family Businesses, Including LVMH
“If you look at the European economy, the DNA are 90% of the companies are family businesses. Some of the best companies like LVMH, Peugeot, Fiat, Ferrari, they're all family owned”
Lacher: Multi-Stage VC Funds in London Increased Fivefold Over Five Years
“What happened in the last three years is that there have been a tons of multi-stage funds entering Europe, building a new office. So five years ago, it was Excel index, Atomico, Boulder, and a few competing, and now you have Sequoia. NEA, you have Iconic, you …”
Lacher: Multi-stage VC win rates at Series A dropped from 50% to 1-10%
“Series A has become such a red ocean for VCs competing to enter the rounds that it's just very difficult to win deals. If you were a multi-stage fund five years ago, you would maybe have a 50% chance to win a term sheet in one of your great founders, right? An…”
Lacher: Seed Checks From Multi-Stage VCs Create Severe Series A Risk
“If you have an aggressive Multi-stage fund in your cap table, everyone knows if you're killing it, they would preempt your next round. They would clearly do the A round. That's certain. Can give you 10,000 examples. It's just, if things are going okay, but not…”
Stebbings: Seed checks under 2-3% of VC fund size are pure optionality bets
“Does this multi-stage fund care about me enough? Am I meaningful enough in proportion to that fund size? So it's like, what portion, what proportion of that fund size is this check? Sub two to three percent. Honestly, it's a total optionality bet.”
Stebbings: 20VC Never Makes Follow-On Investments to Eliminate Signaling Risk
“We remove signaling so we don't ever do follow-on.”
Stebbings: 78% of the time VC follow-on reserves are misallocated
“When you actually look at the data, and we have probably the most data across, I think almost anyone, we have 2700 GP track records, and when you look across that data set, 78% of the time reserves are misallocated.”
Stebbings: VC funds with heavy reserves are misaligned on round valuations
“If you have actually a very heavy skew towards reserves, Actually, we're not aligned, because that new round that you're getting, I don't want it to be that high, because I want to double down and put more in. It's much more beneficial to me that it's lower.”
Lacher: Founders Should Kill Pro-Rata Rights to Eliminate Signaling Risks
“If I was a founder, and I'm speaking against my own interests a little as an investor, being opportunistic, but why the hell would you give someone a paratha right? Because either that investor needs to earn it and really show that they're doing great work, so…”
Lacher: Outperforming portfolio founders are independent and seek targeted advice
“Those founders in our portfolio that really outperformed were pretty independent Founders that really just were looking, if they were looking for advice, they were looking for a 10 out of 10 highly strategic or on the point advice to answer a certain question.”
Stebbings: Europe Has Many Dangerous VCs Who Know Nothing Yet Interfere
“And then there are the really dangerous investors who think they know everything but actually know nothing and want to do a lot. Big cross. Worst of the worst. Europe has a lot of them, sadly.”
Stebbings: Small VC Platform Hires Are Ineffective Compared to Top Firms
“Andreessen have hundreds. They're actually very deep across every segment of hiring, across every segment of B to B customer acquisition. They are a machine. Insight is the same. We have Insight who've done our companies, and it is a machine that they roll in.…”
Stebbings: Founders should construct their cap table like a sports team
“I would just say that build your cap table like you do a sports team. Everyone has a very specific position. A left back, a right back. Have someone for PR and marketing. Have one for engineering and recruiting. Have one for fundraising. Have one for pre-produ…”
Stebbings: Early-stage VCs should roll off startup boards by Series B
“I always want to roll off the board. As you said, you shouldn't have five investors on the board who generally don't have that much of a different perspective. If at the Series B, not that much use for me to be there, really. If the founder wants it, fine. Abs…”
Stebbings: Multi-stage VC employees must chase hype deals to get promoted
“If you are a strategic person in a multi-stage fund, getting into one of these hot deals is what's going to get you the promotion. Doing the slightly off the beaten track, but amazing company that might take three or four years to get to product market fit, or…”
Stebbings: Founders should pitch VC firm founders to avoid orphaned investments
“And that's why I also really like, and I always push people, work with the founders of firms. They ain't leaving, number one. You're not going to get orphaned. They're not afraid to take these courageous bets. They're not getting fired by other partners.”
Lacher: Visionaries Club Passed on Pigment Follow-On Due to Valuation
“So we were seed investors in, in, in pigment, tacto, and I could take deal. We didn't follow on in pigment deal. Some of the best companies because we thought it was too expensive. It was wrong, right?”
Stebbings: Offering 10% dilution prevents startups from attracting top-tier VCs
“So if you come to a venture market with a 10% dilution round, you're not gonna get the best venture investors in the world to partner with you, because you're gonna be giving it max eight percent away, because there's gonna be two percent for angels, maybe eve…”
Stebbings: Startups Raising Over $5M at Seed Have Consistently Performed Worst
“I've done a 170 investments in 10 years. And we analyzed performance across them, according to actually how much they raised at the seed. And consistently the worst performing companies raised five million or more at the seed round.”
Stebbings: Raising Capital Pre-Launch Is Often Easier Than Post-Launch
“Walt Disney is sell me this story, make it magical, and make it wonderful. That's your pre-seed and your seed, and then you need to know when to sell me the pen. And there is a very rude transition between the two that I think will catch people up, and I think…”
Lacher: Series A ARR Thresholds Have Shifted to $1.5M–$2.5M
“I think what maybe used to be if we take 500 K AR maybe three years ago with a great Walt Disney story and a few great product references would have been in a round that many would have many VC funds would have looked at, which Today, I think the corridor has …”
Stebbings: Pitch Decks Should Explicitly List Reasons Not to Invest
“One slide everyone should have on their deck, I think, is three reasons why you should not invest in us today. And then say, our, I don't know, our sales cycle is too slow, give the data. Our net retention number is too low, give the data. And then on the next…”