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"Turpentine VC" | Venture Capital and Investing cover image

E56: Upfront Ventures' Mark Suster on Fund Management and the Exit Landscape

"Turpentine VC" | Venture Capital and Investing

NOTE

The Barbell Strategy: Navigating Seed Investments in a Valuation Surge

The barbell strategy in venture capital involves focusing investments at the seed stage, typically writing checks between $3.2 to $3.5 million, while almost completely avoiding A and B rounds. This approach is grounded in the significant valuation increases seen in A and B investments from 2010 to 2022, where capital inflows surged by 9X, driving valuations up by around 300%. As a result, seed-stage investors find themselves priced out of the A round market, which is viewed as the most overvalued tier in venture capital. Larger funds, such as those operating with $2 billion, can afford the inflated valuations due to their capacity for larger checks, which creates a disparity that smaller funds cannot navigate without facing unsustainable valuations.

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