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

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

Oct 27, 2023

Ed Sim, Founder and Managing Partner @ Boldstart, discusses the three types of seed rounds, why too much cash can harm companies, and the future of growth funds. He also explores the impact of IPOs, AI startups, and M&A in the market.

47:48

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Ed Sim

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Quick takeaways

Three types of seed rounds: discovery, classic, and Megatron Jumbo, each catering to different founder profiles and funding needs.

High pricing in seed rounds is a concerning trend, with risks of detrimental impact on startups.

Inception investing offers an alternative to traditional pre-seed and seed rounds, aiming to provide founders with the right amount of capital and support.

Deep dives

Different types of funding rounds

The podcast episode discusses the three different types of funding rounds: discovery round, classic round, and Megatron Jumbo round. The discovery round is for first-time founders exploring new markets with funding less than 2 million. The classic round is for first or second-time founders seeking funding between 3 to 5 million. The Megatron Jumbo round is for seasoned founders with prior exits, seeking funding greater than 5 million, usually between 6 to 10 million.

The Evolution of Pre-Seed and Seed Rounds in Venture Capital

01:58

Introduction

4min

Changing Landscape of Seed Rounds

19min

The Impact of Dilution and Capital Efficiency

8min

Seed Rounds and Investor Dynamics

10min

The Competitiveness of Seed Rounds and the Prevalence of AI Startups in Venture Capital

2min

Correlation Between Interest Rates and Valuations, Ideal Range for Valuations, and Investment Strategy

3min

Expressing Gratitude, Mentioning Feedback, and Introducing Sponsors

4min

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?

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