Embrace Change: Adapt Ownership Strategies

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Investing in seed stages is increasingly seen as unwise, with an average entry of five on twenty-five highlighting the challenges of securing significant ownership in promising ventures. Traditional investment strategies that required ownership of at least 30% for active involvement have become outdated. The focus is shifting towards maintaining a minimum double-digit ownership percentage, with a preference for extraordinary founders even at the cost of smaller shares in less promising companies. The ongoing internal debate about leading rounds emphasizes the importance of perception in the industry; firms must balance the desire to maintain leadership positions in funding rounds with the reality that accepting smaller investments can sometimes be strategically sound.

Kevin Hartz is a Co-Founder and General Partner at A*, an early-stage venture capital firm. Prior to founding A*, Kevin co-founded Eventbrite, a publicly traded company, and served as the CEO for the first 11 years of the company. Before Eventbrite, Kevin co-founded Xoom, a money remittance company that was acquired by PayPal in 2015 for over $1BN. Kevin is also a prolific angel investor having backed companies such as PayPal, Airbnb, Pinterest, Ramp, Trulia, and Anduril at the seed stage, and was an early investor in Uber, Palantir, SpaceX, Square, Gusto and many others.

In Today's Episode with Kevin Hartz We Discuss:

1. What Makes the Best Founders:

What questions does Kevin always ask founders in the investment process?
Does Kevin prefer serial or first time founders? Why?
Does Kevin prefer founders who are new to a problem or who are insiders and experts?
When Kevin has gotten a founder bet wrong, what did he not see that he should have seen?

2. The Exploding Term Sheet That Cost $10BN:

How did an exploding term sheet for the seed round of Airbnb cost Kevin $10BN?
What did Kevin see in the seed round of Airbnb that so few other investors saw?
Does Kevin agree that the best businesses often start off as ridiculous or toys?

3. From World's Greatest Angel to VC with $600M AUM:

Why does Kevin think a barbell strategy of Seed and Series C is best today?
Does Kevin agree that the Series B and growth stage is dead today?
Why does Kevin strongly disagree that seed is the hardest stage of the market?
Why does Kevin think that venture is less collaborative than ever?
How does Kevin approach when to sell vs when to hold a position?
What are his biggest lessons from seeding and holding Opensea?

4. Learning From the World's Best Investors:

What have been Kevin's lessons from his relationship with Peter Thiel?
What have been Kevin's biggest takeaways from investing alongside Roelof Botha in many deals?
What have been Kevin's biggest lessons from watching and observing the great Pierre Lamond?