Lately, we’ve seen large funds coming down-market, playing in the seed stage. And while the attention might feel validating, the impact often isn’t.
These funds are used to writing $5M–$10M checks without blinking. But when they apply that same muscle at seed, it’s like handing a porterhouse steak to a newborn. Technically it’s food—but the baby doesn’t have teeth, can’t chew it, and definitely can’t digest it. That kind of “nourishment” can actually do more harm than good.
Seed is about learning. Testing. Tinkering. Finding product-market fit. Not scaling like you’ve already nailed it. A big check too early can kill the scrappiness, warp decision-making, and set expectations that aren’t aligned with where the company actually is.
And lately, it’s not just large funds anymore—it’s MEGA funds. (The kind that need a luggage cart just to move their capital stack from one term sheet to the next.)
At Laconia, one of the first things we dig into during due diligence—even at pre-seed—is the financial model. Not because we expect a crystal ball, but because it tells us how a founder thinks.
How they prioritize. Where they’re focused. Whether they understand their own levers. It gives us a lens into capital efficiency, customer acquisition strategy, burn, and—most importantly—what the real capital needs are.
That number should drive the raise. Not what a mega fund wants to deploy.
We’ve seen too many founders raise more than they need simply because someone offered. And while it feels great in the moment, it often leads to bloated burn, rushed hiring, distracted execution, and pressure to grow before the foundation is solid.
A great financial model isn’t about perfect projections—it’s about knowing what it’ll take to hit meaningful milestones. And using that to figure out how much you really need to raise.
And sometimes, those founder conversations get real. We’ll push back when a raise feels oversized and ask: what are you really trying to accomplish with this capital? Are you building a foundation or booking a growth plan the business isn’t ready to deliver on?
We’ve passed on deals where the cap table was already bloated and the expectations baked in from the last round made the next one nearly impossible to price. More money isn't always more runway. Sometimes it just means you burn through the wrong stage faster.
Founders: don’t let someone else’s fund size dictate your future. Raise what you need to prove what you can. That’s how real businesses get built.
Because at the end of the day—babies don’t need steak. They need the right nourishment to grow into something strong.