Good morning 👋
There are some general trends I think are worth betting on:
Products are becoming easier to build in less time thanks to tools like Replit, Cursor, and other coding agents
This has created more quality products in the marketplace which has made buyers more picky
Pre-seed and seed capital now goes towards getting PMF and building distribution as quickly as possible
I think this changes some venture dynamics that haven’t been questioned for some time, and I think it will create more founders who raise one round of funding then never need to raise again.
Here are my notes on why I think that’s a good thing.
Today’s highlights
Why I expect more companies to exit the venture game
The future of VC and the consolidation of great fund managers
The great rebranding
TOP
thoughts on seedstrapping
Something I’ve been thinking about a lot over the past few years is the idea of “seedstrapping”, or raising a small seed round to get off the ground, and then never taking on capital again.
It’s the opposite of what traditional venture advice tells you to do, but I think it’s something that we’ll see more and more of over the coming years.
Here are some high-level notes on why:
Capital efficiency is more achievable than ever. The game has changed, founders can do more with less, and $1-$2m goes a LOT farther than it did just 5-10 years ago.
Product risk has decreased; demand risk has increased. Even somebody with little-to-no coding experience can put together an MVP with Replit or Cursor in a day. Building an MVP is no longer a real barrier for most software businesses; converting sticky customers is.
Failing fast > failing slowly. Assessing demand can be relatively quickly. Dedicate a budget to test different channels (cold email outbound, LinkedIn ads, TT ads, Meta ads, etc.), have this become your primary focus for ~90 days, and you should have enough data to suggest whether or not you have real demand and can convert customers at a favorable rate to what they are spending on your product.
It’s a huge selling point to employees. Employees are tired of layoffs and a lack of agency. Working at a venture-backed startup that is board-controlled makes you a cog in the wheel; if growth is down, the wheel needs to be readjusted. Compare that to a seedstrapped company that has found PMF, has a sustainable business model, and the founder is still the one calling the shots.
It gives founders more control. The more equity you take on, the less control you give up as a founder. Every public company has made that choice along with all of the notable private companies, and it has worked out well for them. But giving up control has tradeoffs, and there is a much longer list of companies that have had to trade direction to the board in exchange for more capital to keep the lights on.
It creates better outcomes for investors (only if you’re early). Investors love markups, but dilution, liquidation preferences, and other clauses can negatively affect your equity. Being a seedstrapped investor means that you can sleep well knowing your equity is at work and growing; you just need to be comfortable knowing that it won’t be priced (unless you get a 409a) for a longer period of time.
Seedstrapping is not a one-size-fits-all topic, but it’s something I’ve been thinking about lately.
If anybody has additional thoughts, I’d love to talk.
GP / LP Mastermind
The “anti-conference” for fund managers 🌴
We don’t like conferences, so we created our own version that we would actually look forward to going to.
📆 Dates: April 24-27, 2025
📍 Location: Miami, FL
ℹ️ Other details:
Small group of 6-10 LPs, GPs, and partners
Golf and padel
Boat charter
Private dinners
No outside sponsors
We’ve already confirmed half of the guests, we only have space for a few more, and applications close in under a month.
If you’re interested, we’d recommend letting us know sooner rather than later …
TWEET
HEADLINES
Perplexity launches $50M seed and pre-seed VC fund (TechCrunch)
The Next Evolution Of Predictive Analytics: Can AI Drive Venture Investment Decisions? (Crunchbase)
Balyasny Asset Management raising $350M for firm’s 1st VC fund (Pitchbook)
MEMOS
Chima: Interoperability for AI agents
Superpower: The all-in-one health membership for elite performers
Documenso: The DocuSign killer
LINKS
🤔 What if the Current Tech IPO Drought isn’t a Drought but the New Normal for Venture?: In this era of bigger IPOs that are occurring less frequently, Venture Reflections believes this will lead to secondary markets becoming the primary way smaller funds achieve liquidity for their investors
💵 Investing in Pre-IPO Secondaries: A good primer on pre-IPO secondaries and how shareholders and employees can “cash out” instead of waiting for that IPO to take place
🔄 The Platform Evolution Cycle: Clouded Judgement believes the AI platform shift is entering phase 3 and 4 and that another golden age of tech investing is upon us
✅ AI Fluency—The Next Interviewing Skill: Job candidates must now be ready to show their fluency in AI, among other critical components, when interviewing which mean the interviewer needs to have standards to evaluate AI fluency
📉 Insane Trends the Past Decade and Why They Made Money: Bowtied Bull’s humorous take on why certain trends popped up in the last decade
MEME
BOARDROOM
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- Clay
(Founder @ Confluence.VC | GP @ Outlaw)
