And, in most cases, it works, so they’re rewarded for it. But yeah, a lot of people are not going to like it. With respect to the Bay Area , one of my strongly held beliefs is that this local ecosystem is nearly impossible to replicate anywhere. There are countless posts and Tweetstorms as to why, but I think it boils down to the intergenerational culture in the area whereby folks are conditioned to accept delayed rewards, to invest in the ground around them, and to pay it forward. Those attributes are really hard to find anywhere else in the world.
Some VCs (e.g., Greylock, Founders Fund) focus their seed investments on founders they already know from prior investments. Others (e.g., Profounders) have an LP base with seasoned entrepreneurs who use their network to source and vet potential dr ken ellner investments. As such, VCs are counting on being able to deploy much more capital in subsequent rounds. They view the seed investment as an optionality allowing potential investment in the larger rounds from A-round and beyond.
The future is unwritten, and Florida is a very business-friendly state, so I think it’s a great new option for folks who want that. For me personally, Miami is not currently realistic. If I were younger, single, no kids and an early stage investor, I’d definitely spend more time outside of the Bay Area, but only after I felt my network and deal sources were locked in. That only happened as my family settled down, too. Reputation is one thing, financial success is another. Sometimes people have both, sometimes they just attain one, many attain none.
2021 feels like a mega “Risk On” world, where the only downside is not taking a big swing in something interesting. What your alluding to specifically is — “Hey, this firm was never gonna hire me . So, why didn’t they just say that upfront? It can be an unseen weight around the conversation. I know from my 2010–13 experience, and the way you framed it, I am 110% sure just my persistence and presence when I met some of these folks felt too much like I wanted something.
Good seed investors establish clear criteria and preferably have metrics and analytics in place, allowing them to evaluate companies and decide which companies should receive additional investments. They are also very disciplined in not investing further in companies that are going sideways or downhill. Another big challenge for VCs doing seed investments is how to handle the larger number of companies in the portfolio, both in terms of making more investments but also in terms of working with the companies as a value-adding, active investor. 500 Startups and Seedcamp both run seed funds on top of their accelerator programs. Coupled with significant assistance from external mentors and advisors, these seed funds have allowed them to select investments in a more scalable manner. Sourcing and investment selection can easily become a very time-consuming task when the number of opportunities also includes seed deals.
