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

20VC: The Biggest Misconceptions & Hardest Truths About Seed Investing Today; Why The Best Founders Don't Need You, Why Uncapped SAFEs Are Good, Why Reserves Are Bad, Why Signalling is BS, Why Price Doesn't Matter with David Tisch & Terrence Rohan

Feb 5, 2024

David Tisch, Managing Partner at BoxGroup, and Terrence Rohan, Managing Director at Otherwise Fund, dive into the gritty realities of seed investing. They challenge misconceptions like signaling and argue why many traditional strategies, such as maintaining reserves, might actually hinder returns. Tisch insists seed investing remains an inefficient market, advocating for price insensitivity and individual decision-making over groupthink. They also discuss the evolving power dynamics favoring founders in today's funding landscape, emphasizing the need for authentic relationships.

01:29:27

Creator website

Episode guests

Terrence Rohan

David Tisch

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Highlights

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Seed investing requires conviction in the potential of a startup, even when it's not obvious to others.

Seed investors must navigate the challenges of valuations and the unpredictable nature of early-stage investing.

Maintaining a strong network and brand reputation is crucial for accessing the next generation of exceptional founders.

Deep dives

Seed Investing: The Importance of Conviction

Seed investing requires conviction in the potential of a startup, even when it's not obvious to others. The best founders have the ability to see and win, making them better investors. Building long-term relationships with founders is crucial and allows for access to attractive opportunities. Reserving capital for follow-on investments is important but requires careful consideration of fund allocation. The seed market is ripe for disruption due to market expansion, generational changes, and founder options. Seed investors must navigate the challenges of valuations and the unpredictable nature of early-stage investing.

Investing with Conviction and Realism

01:51

Importance of Saying Yes at Seed Stage

01:11

Building long-term relationships over proving immediate value

01:21

Power of the Next Double and Staying Relevant in Technology

01:15

Intro

4min

Building Relationships in Venture Capital

10min

Navigating the Seed Investment Landscape

27min

Maintaining Equilibrium in Venture Capital Decision-Making

2min

Navigating Seed Investment Strategies

12min

Navigating Secondary Sales in Seed Investing

11min

The Influence of VC Branding in Seed Investments

18min

The Human Element in Seed Investing

2min

Final Thoughts and Sponsor Highlights

4min

David Tisch is the Managing Partner of BoxGroup, one of the leading seed-stage investment firms of the last decade having invested in over 500 seed-stage startups, including Plaid, Ro, Ramp, PillPack, Amplitude, Stripe, Warby Parker, Harry’s, Flexport, Classpass, Airtable and more.

Terrence Rohan is the Managing Director @ Otherwise Fund, a fund that discretely empowers a network of today's top founders to make multi-stage venture investments. Terrence has invested in the likes of Figma, Hugging Face, Vanta, Notion and Robinhood to name a few.

In Today's Seed Investing Special We Discuss:

1. Is Seed Investing Now a Commoditised Asset Class:

Why does Dave Tisch believe seed investing will remain the most inefficient market? What does that mean for the future of returns at seed?
Why should you always pay up and be price-insensitive at seed rounds?
Why does David believe that no one is great at seed investing?
Why does David believe that you cannot index the seed market?

2. The Biggest BS Elements of Venture Capital:

Signaling: Why does David believe that the theory of signaling is total BS? Why does Terrence disagree and think it is valid and common?
Group Decision-Making: Why does Terrence believe that investing decisions should be made solo and groups merely encourage consensus decision-making?
Reserves: Why does Terrence believe reserves hurt DPI and are not good? How does David respond given his growth fund?
Venture Value Add: Why do David and Terrence think venture value add services platforms are BS and not worth it?

3. The World of LPs:

What is the single biggest misalignment between VCs and LPs?
What are David and Terrence's biggest pieces of advice for emerging managers today?
Should LPs expect depressed returns from venture as the asset class commoditises?

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

20VC: The Biggest Misconceptions & Hardest Truths About Seed Investing Today; Why The Best Founders Don't Need You, Why Uncapped SAFEs Are Good, Why Reserves Are Bad, Why Signalling is BS, Why Price Doesn't Matter with David Tisch & Terrence Rohan

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Seed Investing: The Importance of Conviction

The Challenge of Picking the Right Startups

Navigating the Reserve Allocation Dilemma

Staying Relevant and Adapting in the Changing Landscape

The Importance of Personal Capital

Investment Advice and Founder-VC Alignment

Investing with Conviction and Realism

Importance of Saying Yes at Seed Stage

Building long-term relationships over proving immediate value

Power of the Next Double and Staying Relevant in Technology

Remember Everything You Learn from Podcasts