20VC: The Three Types of Seed Round Today, Why Seed Has Never Been More Competitive, Why Pricing Has Never Been Higher, Why Boards at Pre-Seed Can Be Helpful & How Too Much Cash Too Soon Can Harm Companies with Ed Sim, Founder @ Boldstart

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4 • 637 Ratings

🗓️ 27 October 2023

⏱️ 48 minutes

🔗️ Recording | iTunes | RSS

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Summary

Ed Sim is one of the best seed round investors in venture as the Founder and Managing Partner @ Boldstart, Ed focuses specifically on developer, infra and SaaS at pre-seed and seed round. Over the last decade, Ed has backed some of the best including Snyk, BigID, Kustomer, Front and Superhuman.

In Today's Episode on Seed Rounds We Discuss:

The Three Types of Seed Round:

What are the three different types of seed round today?
Has seed ever been this competitive?
Will seed be unimpacted by the macro decline we are seeing?
Why are growth and multi-stage funds being more active than ever in seed?

2. Too Much Cash Will Kill You!

Why does Ed believe that too much capital can kill companies at the seed round?
Why does Ed believe that the best founders are not always optimising for the highest price?
What are the single biggest negatives of taking a high price at the seed round?
What advice does Ed have for founders who have large offers from multi-stage funds at seed?

3. Is Growth Dead?

Why does Ed disagree and suggest that growth is not dead?
What do multi-stage and growth funds now what to see that they did not before?
How will the growth market evolve over the next 12-18 months?

4. IPOs, AI and M&A:

What will cause the IPO windows to crack open again?
Why does Ed believe that many investing in AI are simply giving money to Nvidia?
Does Ed agree that 95% of the cash going into AI from venture today will go to zero?
Will we see more or less M&A in the next 12 months?
How did Ed evaluate the Loom acquisition by Atlassian?

Transcript

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0:00.0	The point is the three rounds are there's a discovery round, which my opinion is less than
0:04.4	two million.
0:04.9	So it's usually like maybe a first time founder exploring a new market.
0:08.2	It would graduate into the next round, which would be a classic.
0:11.1	And a classic round, in my opinion, would be three to five million.
0:14.5	And finally, this is the Megatron Jumbo round.
0:17.6	Greater than five, it's usually a $6 to $10 million round.
0:20.3	And it's almost always a to ten million dollar round, and it's almost
0:21.2	always a seasoned founder with a prior exit. So when multi-stage firms see opportunities like this,
0:26.6	they want to supersize it. Instead of raising four or five, why don't you raise ten? I'll give you
0:30.6	the whole thing. Welcome back. This is 20 VC with me, Harry Stebbings. Now, State is a very
0:34.8	real-time show. I've never before seen the level of high pricing at seed
0:39.0	that we are seeing today. Bluntly, it is very concerning. Then yesterday, a dear friend Ed Sim at
0:44.9	Boldstadt tweeted about the three different types of seed round and the next generation of what he
0:49.9	calls Inception Investing. And I thought it was so good we had to do a show on it. This was really,
0:55.7	really fun to do. Ed is one of the best at early stage, having back the lights of superhuman,
1:00.6	sneak, customer, big ID in front, to name a few. And let me know what you think of this style
1:05.6	of show. I really like to hear your thoughts. This is much more news and real-time nature
1:10.2	than our traditional shows.
1:11.6	So let me know on Twitter at Harry Stebbings. But before we dive into the show's day,
1:15.5	we have to talk about Canva. Canva is on a mission to empower the world to design. That is why
1:20.8	they've introduced Magic Studio. Magic Studio brings together the best AI-powered tools for you
	...

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