Quote · The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough
Where this was said
The Worst-Performing Funds Will Be the $50M–$100M Seed Funds
At 20:40 · chapter starts 5:21
An honest and revealing section where Frankel admits what Founder Collective has become in this market: an insurance policy. He's seen it clearly in the last 20 deals — founders take the multi-stage fund's $8–9M but keep FC in at $500K or $1M, knowing their champion at the big fund might leave, might lose mandate, or might simply move on to the next hot company. FC's brand and reputation as patient capital is itself a product. Frankel also issues a clear-eyed warning: there is very little evidence yet that the hot AI companies raising massive rounds are capital efficient — if anything, they're anything but. The discussion then moves to valuations: uncapped notes are economically bad for investors but Frankel has written one because he loved the founders. He also raises the normalization of startup founding through YC and questions whether there's a meaningful difference between 'founders' and 'entrepreneurs' — arguing the latter is a rarer, more demanding breed.
Frankel agrees that the worst-performing funds of this vintage will be the $50M–$100M seed funds — too big to be a collaborative friend, too small to lead an $8–$10M seed round.
Of all companies created in the last 25 years, fewer than 100 have sustainably maintained a valuation over $10 billion.
Forget trillion-dollar outcomes. Founder Collective's internal analysis shows the median valuation among the top 500 companies created in the last 25 years is $2.6 billion. Own 5% of one of those, and you've returned your fund. Seed isn't dead — it's just math.
Founder Collective's analysis of the top 500 companies created in the last 25 years shows a median valuation of $2.6 billion — meaning 5% ownership returns a seed fund.
Smart founders are increasingly taking $8–10M from multi-stage funds while quietly keeping Founder Collective in at $500K–$1M. They know the big fund's junior associate might leave, and FC is patient capital that won't orphan them. It costs very little to have a real insurance policy.
Mikey Schulman, CEO of Suno, told Frankel he spends 30–40% of his time on recruiting — echoing Jeff Bezos's famous claim that he spent 50% of his time on hiring.
Frankel is looking for one specific combination: a CEO who is a great salesperson and a CTO who is a genuine magician. The alchemy between them — not identical, not finishing each other's sentences, but deeply aligned — is what separates fundable companies from great companies. In 18 years, he's seen it five times.
