How the Seed-Stage VC Trend Began, The Downsides of Unicorns & Much More


If you are a 20-something tech entrepreneur you could be forgiven for thinking that seed-stage investors, Angellist Syndicates and widely available angel money always existed. It is, of course, a very recent phenomenon.

Let me take you back just 10 years ago to 2005 in Silicon Valley where I returned after 11 years of living in Europe. I was out to raise my first seed money in my second startup of $500,000. I began asking around who the likely investors were for such a market. At the time almost nobody had heard of the following funds: FirstRound Capital, TrueVentures, Floodgate and SoftTech. I think they were all brand new or just forming.

Firms like Baseline, Felicis, ff Ventures, Founder Collective, Freestyle, HomeBrew, IA Ventures, K9, Lowercase, NextView, Resolute, Rincon, Crosscut and the countless other great firms we all now know didn’t exist. Neither did Y Combinator, 500 Startups, TechStars, Amplify, Mucker and countless others.

There was Ron Conway (SV Angel) – I think there was always Ron Conway! :) one of the godfather’s of our industry. And some angels running around like Reid Hoffman & Keith Rabois. But not many others.

If you want to understand the software trend that drove the creation of the seed-stage VC phenomenon I wrote about it that linked blog post but in short: cloud computing drove down the cost to create startups enabling a new category of investor.

But back in 2005 there were a few people who spotted the trend before others and one of the true pioneers was (and continues to be) Jeff Clavier who founded SoftTech VC. And to show you just how similar many of these pioneers of the industry went through a similar startup journey to you – Jeff started by investing his own personal money ($250k) for a few years – $25k at a time – until he could persuade a few institutional investors to give him some money. By fund II (2007) he was able to raise $15 million (if you watch the video you’ll hear an interesting story of how he did this) and he had a proper fund.

“There was no real framework for a $15 million fund at the time so I had to make one up … it was really sort of an experiment … I invested across Funds I & II in 90 companies”

Jeff then raised $55 million in 2010 and $85 million in 2014.

We discussed many things in this great 54-minute interview which you can also listen to on SoundCloud or more importantly subscribe to the podcast and follow the podcast on Twitter (where we also post short clips & behind the scenes stuff).

Some quick highlights include:

The Role of a Seed Stage VC
Jeff and his peer group have done an excellent job at creating a new category of seed-stage VC. Many view themselves as shepherds who help with building your initial team, helping with product launch and promotion. And importantly they play an important role in helping to introduce you …