The word of seed investing has changed so much since I began investing in the 1990’s.
I began to do it full time in 2006 as web 2.0 was getting started. I invested in GolfNow.com and Lifelock both out of Phoenix and started Wallstrip. Forget about the financial terms, the process was slow. There was no such thing as a ‘hot deal’. Putting together rounds took time. You met your investors, you spent time with them, you carefully tried to construct your cap table and if you could raise money, there were some generally accepted ranges that were followed.
The venture capitalists had a lot more power over the terms and cap table.
With the proliferation of technology, software eating the world, and the FED printing endlessly, today the founders at the seed stage have a lot more power.
I have no idea if this is good or bad, it just is. If you want to invest in 2021, you have to make more rapid decisions. We have more choices and less time to make decisions so at times it feels overwhelming.
Fred Wilson wrote a post titled ‘Blinking‘ that discusses the trend and how they deal with it and what it means. He concludes with:
It is tempting to mourn the loss of careful and considered investing but from where I sit it seems gone for good, at least for early stage venture capital, so I think it’s a better use of our time to spend adapting to the market, as my partner Brad likes to say, and building the conviction to act quickly and decisively.
There is no law that says you have to conform to the new ‘rules of engagement’ but I am with Fred and Union Square that my time is better spent adapting to the market than waiting for it to come back to me.