Why I love pre-seed
Weekly roundup of thoughts, writing, reading
I’m going to attempt to get back to writing a weekly newsletter for a more regular cadence and summary vs sporadic, disorganized posts.
No doubt the format will change as I settle in this but for now I’ll try to summarize the week of what I’m thinking about, what I’ve read and reccomend, what I wrote (if anything), from the past week.
This week I was thinking about why I like pre-seed investing so much.
True pre-seed is its own beast: distinct from Seed just like Seed is distinct from Series A and letter rounds. I’ve loved my time as a first check investor the last few years. But the lower valuations are the least interesting part of pre-seed investing.
More time/no time pressures. There’s no cash burn or ticking clock so founders can focus on getting it right on an absolute basis vs doing the best with what you have, as quickly as possible. Sometimes that means spending 30 honest minutes together and sometimes that means spending 12 months together but either way you do what’s right and best.
Maximum flexibility, purity, and creativity. Without baggage or sunk cost, you can pivot 100x/week and pursue truth. Everyone has a plan until they get punched in the mouth but some plans are better and more resilient to that than others. You can pursue the best plan.
Rare value add through way finding and collaborative due diligence. We (VCs) don’t help with execution but the right investor can help imagine the S-1 and work backwards on the whiteboard from there to what to do today. It’s fun to feel useful - if only occasionally.
What I look for at pre-seed
Direction but not hypotheses: we need to know what we’re talking about but it’s an exploratory process. If you have hypotheses to test and prove it’s likely more of a seed round.
Credibility: founders with the breadth and depth within an idea are credible to pursue it in undefined directions.
Vision: we need to align around the way the world should work, even if we don’t yet know everything about the company you’ll ultimately be running.
Patience: it’s a long way from talking to me getting money at this stage. If you don’t have the patience for that then you don’t have the patience to see the company through for a decade.
Thanks for joining.
-Yoni
I wrote this week
I read this week
Seed Valuations Aren’t Valuations - Nnamdi Iregbulem on Substack
The Secret History of the Mad Men Lawn-Mower Scene - Vulture
Sports Betting Apps Are Even More Toxic Than You Thought - Bloomberg
She Had Thoughts of Harming Her Baby. To Treat Her, Doctors Kept Them Together. - New York Times
I watched this week
The first episode of The Penguin on HBO. Missable.
My first taste of Knicks basketball (pre-season). Glorious.
Ok, but what do YOU define as pre-seed? Is it analogous (as it should be) to a plant, wherein you have no MVP (the seed), no customer (the ground for planting), no revenue (sprouted, with leaf)? Or something above that? Good for you that you are willing to look at ideas in the early stages. That's not only smart, it can easily prove lucrative. Unfortunately, investment has become akin to banking wherein solid proof is required before the loan. Ironically, banks use a formula that doesn't get it wrong 9 of 10 times.