I knew seed had changed when I started seeing “seed” rounds of $10 million or more, on notes with caps north of $50 million, for companies that were barely past an idea. Then the conversations among seed investors started to sound different. More than once this year, another seed VC has asked me what percentage of our fund we’re putting into moonshots. And more and more, I’m watching valuations get set by two letters, AI, without much attention to anything else.
I’ve been writing first checks for over 15 years. I’ve never seen the landscape shift this fast.
If you’re in the venture ecosystem, you’ve probably seen the numbers. In the first quarter of this year, five venture firms raised 73% of all the money committed to new US funds. Five firms. In the first half, funds over a billion dollars took about 72% of the capital raised, and first-time managers got less than 10%. AI took 86% of US venture dollars, most of it in a few cities, led by the Bay Area. And “seed” doesn’t mean what it used to. Some funds that call themselves seed now raise $250 million or more. What gets talked about less is what it means for the founders on the other side of the table.
None of this means big rounds are always wrong, or that AI isn’t real. We invest in AI every day. Our focus is the newest AI for the oldest industries, the businesses most of the economy actually runs on.
We’ve seen what seed done right can turn into. TripleLift was one of the first investments we ever made, out of what we call our Fund 0, when the company came out of Entrepreneurs Roundtable Accelerator in New York. They raised under $25 million in venture money over the life of the company, built it carefully, and in 2021 Vista Equity Partners bought a majority stake at a $1.4 billion valuation. They didn’t need a $10 million seed round to get there. They needed time, discipline and investors who let them figure out the business first.
That’s the job seed money is supposed to do: help a company find product-market fit and figure out how big the market really is, before anyone turns on the money spigot. When seed starts acting like growth capital, that job doesn’t get done. Founders pay for it later, at the next round, when the price they took doesn’t match the business they built.
Over the next four posts, I’ll walk through what this shift means for founders: how fund size shapes which exits count, where the next great founders are actually coming from, what real help looks like before product-market fit, and why not every win has to be a unicorn.
Next up: IPO or Die.
This is part 1 of a part 5 series.