What’s 🔥 in Enterprise IT/VC #474

The $5M Line That Is Redrawing Inception/Seed Investing

Your round size picks your investors. Your fund size picks your battles.

When boldstart launched in 2010 as the first enterprise seed firm, seed wasn’t even a category. Most funds were generalists. Our bet on being first and specializing in enterprise had plenty of skeptics 🤣. And trust me, fundraising was brutal for years.

Fifteen years later, inception is the most competitive stage in all of venture. Beezer Clarkson’s latest analysis shows just how crowded it’s gotten:

The data on Inception/Seed

Here are some key takeaways from Beezer Clarkson’s post here:

~90% of priced seed rounds happen below $20M, where dedicated seed funds still have the advantage.

Cross $20M, and the dynamic flips. Nearly 70% of those deals have a mega-fund leading or co-leading.

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The $5M line

Once deal size crosses $5M, you’re competing with multistage funds 40% of the time. Above $20M, most specialist/boutique funds don’t even play.

My take: megas will keep tooling up with seed-specific partners and dedicated funds to dominate inception/seed at $5M and above. That 40% will hit >60% in coming years.

And as you can see below, the number of sub-$5M deals keeps shrinking...which means inception/seed firms need to think hard about how they want to compete and win in their swim lane.

This is multistagers indexing the market, buying early for optionality, tripling down on winners. They’re less price-sensitive and can throw more money at founders for the same dilution, which means they pay higher prices.

Median valuations climbing. Round sizes growing. The dispersion widening.

So what does this mean? Ball control 🏀!

You all know our story: Inception. To compete in this market, be ruthlessly clear about who you are and how you construct your portfolio. Bigger fund? Own more, lead more to get ball control. You’ll face multistage funds writing seed checks.

Want to battle for super experienced founders? Put on your helmet 🪖 and cleats. Have a real competitive advantage. Be there first. Deep domain expertise. Longstanding relationships. “You’re not an option check” is table stakes. You need more to win lead/co-lead opportunities (👇🏻 watch clip below).

At boldstart: helmets on, cleats on. We lead or co-lead any size round at Inception, $500K to $30M, first checks $250K to $15M, focused on technical founders building the autonomous enterprise. Our $250M fund drops that first term sheet, gets ball control, locks in founders fast. We have reserves with an Opportunity Fund to back founders as they scale.

We don’t call ourselves pre-seed or seed. We’re Inception. As early as you can go. Looking for a true believer who knows your domain, moves fast, and drops a lead term sheet?

We’re built for this fight.

The bottom line

Battling multistagers/megas isn’t for everyone. But whether you like it or not, rounds are getting bigger, and the race to be first only intensifies. I wrote about this two years ago 👇🏻, and it’s playing out even faster than I thought...because of AI.

Founder and investors, choose which swim lane you want to own and win.

As always, 🙏🏼 for reading and please share with your friends and colleagues!

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Scaling Startups

#Y, definitely feeling that way…

#💯 agree - for us, comes down to founder energy - at this point below, pretty much a zero percent chance of success

#learning with AI

one of my fave tools as you know is Notebook LLM from Google - here’s an infographic summarizing the widely commented on interview between Dwarkesh and Ilya from Safe Super Intelligence

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Enterprise Tech

#still so early!

#Gemini 🤯

#one last data point - switching costs for LLMs are incredibly low unless workflows and other context dialed in across teams and orgs

#integrations but even more important IMO, workflows

#pausing and zooming out on the era we are all living through 🤔

#coding agents do much better with structure…

#and the elite engineers benefit the most

#the future of security - teams of agents running simulations of production environments - read more here 👇🏻 (wired)

#the future of GPUs is optical - i have one of these in stealth at moment as well so yes this is going to happen

#AI has expanded the number of developers and is by far the #1 use case of AI thus far

#more research, less compute 🤔

#another MIT study on agent automation and jobs

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Markets

#so much noise that Google now is crowned 👑 winner after being left for dead bt Philippe has something to say…

#Tesla also makes its own chips

#this is going to be insane

#worth a read