Is the current abundance of venture capital available to startups helping or harming them?

Mo Koyfman · Aug 8, 2022

There are too many investors and too much capital in the startup system, which has created bad habits and will dampen returns

Excess capital leads to overfunding businesses too early, removing constraints, founders getting over their skis and being undisciplined — while the best companies are built with focus and discipline

43:30 20VC: Investing Lessons from Fred Wilson and Why Small Funds Outperform Large Funds | Why the Secret to Winning in Venture is Splitting Deals |Learnings From the Biggest Hits and Biggest Losses | Why Anyone That Always Does Their Pro-Rata is Wrong with Mo

Mike Salguero · Apr 5, 2023

Overfunded or very fast-growing companies systematically leave money on the table because they never take the time to hunt operational waste.

Being constrained by not raising money forced ButcherBox to negotiate things like the price of box tape and avoid half-filled trucks; at scale those details matter, and there is a ton of money in relentless waste elimination.

16:58 20VC: The Memo: Scaling to $600M Revenues with No Venture Funding, The Most In Detail Breakdown of Consumer Subscription Unit Economics & Why D2C and Consumer Subscription is Not a VC Backable Model with Mike Salguero, Founder @ ButcherBox

Sarah Guo · Apr 28, 2023

A vanishingly small number of AI companies can spend $100,000,000 upfront well

Constraint is the name of the game in startups — it forces discipline and creativity

Scope: acknowledges some AI companies have extraordinary traction right now; declines to call specific prices crazy since pricing is set by market participants

11:40 20VC: In AI Who Wins? Startups or Incumbents? What Happens to Wealth Inequality? Why Will $10BN+ Companies Only Have 10 People | Why Defensibility in Startups is BS & Speed is Everything? Why Large Groups Worsen Decision-Making with Sarah Guo

Sarah Guo · Apr 28, 2023

For tech startups most of the macro pain is still to come and things will be worse by the end of 2023

A multiyear experiment in the fat startup left companies over-capitalized; they still hold that capital but lack the efficiency to build durable businesses

Scope: myopically focused on tech startups rather than the whole macro

32:21 20VC: In AI Who Wins? Startups or Incumbents? What Happens to Wealth Inequality? Why Will $10BN+ Companies Only Have 10 People | Why Defensibility in Startups is BS & Speed is Everything? Why Large Groups Worsen Decision-Making with Sarah Guo

Ryan Petersen · Nov 13, 2023

No company successfully raises a large amount of money without starting to spend it in undisciplined ways — the money wants to spend itself

He has raised as much as almost anyone and has never seen it done; he himself spent $50k on a shipping-container trade show booth within a week of closing a $20M Series A, a purchase he'd never have made two weeks earlier

15:03 20VC: Flexport's Ryan Petersen: Reflections on Leadership from 13 Years Leading Flexport, Why Velocity not Speed is Most Important in Company Building, How Money Creates Inefficiencies in Scaling, The Future of Trade with China & Why Remote Work is so Cha

Harry Stebbings · Nov 13, 2023

Raising too much money encourages ill discipline and imprudent spending, so founders should ring-fence excess capital in a separate account and forget it exists

16:30 20VC: Flexport's Ryan Petersen: Reflections on Leadership from 13 Years Leading Flexport, Why Velocity not Speed is Most Important in Company Building, How Money Creates Inefficiencies in Scaling, The Future of Trade with China & Why Remote Work is so Cha

Dave Kellogg · Jan 31, 2024

Stuffing startups full of cash is not healthy behavior, so the tightening of the funding environment is the change SaaS most needed

Most founders given large amounts of money simply go spend it, which is a waste

Scope: a few founders are good at raising money and saving it to grow later; he believes this change has already happened

67:18 20VC: The Metrics That Matter in SaaS Today; Why CaC Payback is Flawed & CAC Ratio is Better, Why You Need to Hire Three Sales Reps at a Time, How to Forecast in 2024 & Biggest Mistakes Made Forecasting & How to Make Customer Success Sell More with Dave K

David Frankel · Oct 14, 2024

The defining sin of the last venture era was the boatloads of capital pushed into companies, including deals he participated in

Founders handed $20M on $80M valuations had no idea what to do with the money, and used it to expand into the US before their model was even working in their home market

Scope: includes self-criticism of his own participation in the Otter round

61:44 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Mike Maples · Jan 6, 2025

The worst pattern is companies raising a lot of money before legitimate product market fit and hiring ahead of it — they end up culturally broken and never develop muscle memory for which customers to pursue or which features to build

Pre-PMF headcount gets spent on activity that doesn't contribute to finding fit

46:40 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Shervin Pishevar · Jan 13, 2025

The 2017-2022 period was a drunken era in which mega funds spread billions at irrational valuations, and funding companies with bad business models at that scale is not classic venture capital

WeWork took $18B despite a business model he passed on — remembering the dot-com crash clearing out office buildings, he saw no strength in a model where you don't own the property and can be removed from your customers

49:13 20VC: Shervin Pishevar on The Epic Uber War and What Really Happened in the Firing of Travis Kalanick | Raising $15BN to Win China | Why The Traditional Venture Capital Model is Dead | The Future of Quantum and How We Will Cure All Diseases in 10 Years

Sridhar Ramaswamy · Feb 10, 2025

Unconstrained capital is not obviously an advantage — it is easy to be uncalibrated about spending, so founders should be careful what they wish for

DeepSeek illustrates that having rich uncles is not always a good thing; innovation is about driving forward in the face of constraints

29:17 20VC: Why Model Providers Will Kill Many Startups Moving into the Application Layer | Why Deepseek is not a Threat to OpenAI & Why OpenAI Beats Anthropic | Apps vs Models vs Infrastructure: Where is Value in AI with Sridhar Ramaswamy, Snowflake CEO

Nabeel Hyatt · Apr 4, 2025

Too much capital can ruin a company, so passing is usually about round and check size rather than valuation — a $25M round can kill a company that would have thrived on $10M

If you don't believe the founder can spend $20M well, the capital changes the company itself; valuation and check size are algebraically linked but the real objection is the amount going in

Scope: specific to their model of a small partnership needing meaningful ownership

40:11 20VC: Why To Win in AI, Investors Need to Change Their Approach | Why VC is Run by Principals and Associates and is a Broken System | The Bull Case for Anthropic & Whether Deepseek Changes Their Strategy with Nabeel Hyatt @ Spark Capital

Harry Stebbings · Aug 25, 2025

Excess capital can foie gras companies and distort their journey in a negative way

Investors forget that the immediate 3x-priced follow-on offers pushing more money in can harm the company

46:27 20VC: Do Margins Matter in AI? | Is Defensibility Gone For Good? | Is Vertical SaaS Dead in a World of AI | What SaaS Rules Are BS and No Longer Apply in a World of AI | The Future of Venture: Why Chanel vs Walmart is BS with Byron Deeter

Lucas Swisher · Feb 23, 2026

The dangerous case is growth funds chasing venture-stage companies, because that capital breeds complacency and overspending, whereas capital scarcity at the early stage breeds great outcomes

Early-stage companies given growth-sized capital lose the discipline that scarcity imposes

41:05 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Arvind Jain · Jul 11, 2026

There is too much capital available to startups today, and it creates failure paths by pushing them into unsustainable structures such as seed-stage companies paying $500k engineer salaries that even Google refuses to pay

Founders and investors accept cost structures that cannot be sustained, and Google knows it doesn't need to buy talent that way, so this isn't a path to winning

48:34 20VC: Why OpenAI and Anthropic Won't Win the App Layer | Why Teams Will Get Bigger Not Smaller in a World of AI | Why AI Removes Incumbents Advantage of Bundling | China vs America: Who Wins the AI War with Arvind Jain, Co-Founder @ Glean

Roger Ehrenberg · Feb 19, 2024

There is no going back from venture's high capital supply — it is a permanent structural shift, not a cyclical one

New sources of liquidity have become LPs: sovereigns were absent last cycle and are now everywhere, and the number of multibillionaire and deca-billionaire family offices has skyrocketed, so prudent asset allocation pushes that money into venture

10:22 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital

Jason Lemkin · May 27, 2024

Seed investing is systemically broken today

Just as much capital is chasing fewer and fewer companies that can grow at triple-digit rates

0:00 20VC: Why Seed is Systemically Broken | Why Pricing is Worse Than Ever and There is More Funding Than Ever | Benchmarks for Churn, Retention and Growth Rates - Good vs Great | Why Last Vintage for Private Equity Will Suck with Jason Lemkin

Jason Lemkin · May 27, 2024

Because far fewer companies are growing at triple-digit rates than in 2021 while capital supply is unchanged, today's outliers are flooded with even more capital than during the peak

The same amount of capital is chasing a much smaller segment of the startup community that can still grow at triple digits

38:17 20VC: Why Seed is Systemically Broken | Why Pricing is Worse Than Ever and There is More Funding Than Ever | Benchmarks for Churn, Retention and Growth Rates - Good vs Great | Why Last Vintage for Private Equity Will Suck with Jason Lemkin

Harry Stebbings · Jun 17, 2024 · hedged

There is too much money in venture today

26:41 20VC: Index's Danny Rimer on Investing Lessons from Hits like Figma, Discord and Etsy to Missing Snapchat, Airbnb, Facebook & Spotify | Why Valuation is a Trap and Market Sizing, Signalling and Sector/Geo-Specific Funds are all Noise

Harry Stebbings · Oct 14, 2024

The overcapitalization dynamic has not actually changed much since the boom

63:21 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Mike Maples · Jan 6, 2025 · hedged

There is too much money in venture capital right now, and it is not going to recede — it may get worse

Scope: 'I think it might be' worse

57:15 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Harry Stebbings · Jan 20, 2025

Adding another billion a year of pension money to European venture would be bad because Europe already has too much cash

The ecosystem already has way too much capital relative to opportunity

Scope: acknowledges he is arguing against himself

39:23 20VC: Why Large Seed Rounds Increase the Chances of Success | When to Sell in Venture | Why Multi-Stage Firms Do Not Do The Work | Is Europe Totally F****** and Why AI Means London Can Compete with the US with Hussein Kanji

Jason Lemkin · May 6, 2022

Large funding rounds are not the core problem: truly great VPs know how to deploy capital without blowing through it, while mediocre or mismatched VPs will spend all of it — the blame belongs to CEOs lowering the bar on VP hiring

Truly great sales leaders and marketers spend maybe 50% more, on rev ops and enablement rather than crummy reps or non-performing programs; he has never actually seen good teams blow through all the money

Scope: founders often screw up a few VP hires first, e.g. falling in love with a logo

9:03 20VC: Why the Traditional Seed Fund Model No Longer Works, Why Multi-Stage Funds Investing at Seed Bring Signaling Risk but also Less Pressure, The One Criteria All Potential Sales Hires Need to Have and The Clear Signs of 10x Sales Hires with Jason Lemki

Jason Lemkin · Jan 13, 2023

The fate of the 2021-vintage companies that raised at 100x ARR depends mostly on the founders, because unprecedented runway lets them drift for years without consequence

For the first time in his lifetime companies can raise enough to have a decade of runway and just fart around doing whatever they want

Scope: based on two of his own portfolio companies with a decade of runway

24:45 20VC: WTF is Going On in VC? Are VCs Still Investing? How Has What VCs Want in Investments Changed? Are LPs Investing in New Funds? Why VCs That Invest in Public Markets Are Losers? Dec 2023; Will It Be Better Or Worse with Jason Lemkin

Jake Gibson · Jul 14, 2023

Long runway is only dangerous for bad founders — bad founders raise a lot and spend it, while great founders keep the same urgency and roadmap they would have had on a much smaller raise

33:00 20VC: Why Fund Sizes Should Be Smaller, Should Founders Also Have Their Own Funds, Is Emerging Markets Investing Gone, Is Fintech Investing Dead & Who Will Be The Winners and Losers in VC in the Next 10 Years with Sheel Mohnot, Co-Founder @ BTV

Harry Stebbings · Oct 27, 2023

Too much cash too early has a net negative impact on 99.9% of companies, unless the founder is an exceptional allocator of capital.

Scope: exception for rare generational founders who are exceptional capital allocators

7:22 20VC: The Three Types of Seed Round Today, Why Seed Has Never Been More Competitive, Why Pricing Has Never Been Higher, Why Boards at Pre-Seed Can Be Helpful & How Too Much Cash Too Soon Can Harm Companies with Ed Sim, Founder @ Boldstart

Saam Motamedi · Jul 15, 2024

Whether a large early round helps or hurts depends entirely on the founder; with the best founders capital is purely an accelerant

The best founders inherently carry velocity, desperation and paranoia regardless of capital, and extra money lets them think bigger, build a more complete product and target larger customers from day one; he has seen $1M rounds without that orientation and large seeds with it

Scope: concedes more capital can create temptation to overspend and be less scrappy

30:14 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock

Harry Stebbings · Jul 15, 2024

Raising and deploying large amounts of capital early only works if the founder is exceptional, at the level of Parker Conrad

30:57 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock

Jason Lemkin · Aug 11, 2023

Founders today have lost respect for capital

The one founder he ever asked for money back in ten years responded 'what do you care?' rather than explaining why he needed it, and he sees the same attitude repeatedly

Scope: not all founders are that blunt

26:22 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

Jason Lemkin · Aug 11, 2023

The era of cheap capital has permanently changed founder mentality — founders no longer think the way they used to and have no respect for capital

27:17 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

Mike Maples · Sep 20, 2023

Too much money makes founders stupid and contributes to doing stupid things

19:18 20VC Roundtable: Is the VC Model Broken? The Biggest Disconnect Ever Between TVPI & DPI, Why Market Size is Dangerous, Why "Go Fast" is Terrible Advice, The Dangers of Raising Large Rounds at High Prices & Why Next Year Will See the Biggest Hiring Spree i

Jason Lemkin · May 27, 2024

Only the best founders escape 3-5% SMB churn; everyone else stays stuck, and VCs make it worse by letting capital obscure the problem

SMB's fast early top-line growth (customers acquired in a day rather than a year) masks the underlying churn, and funding lets founders brute-force through it

46:52 20VC: Why Seed is Systemically Broken | Why Pricing is Worse Than Ever and There is More Funding Than Ever | Benchmarks for Churn, Retention and Growth Rates - Good vs Great | Why Last Vintage for Private Equity Will Suck with Jason Lemkin

Kevin Hartz · Jul 22, 2024

The combination of abundant capital and almost no oversight is the central challenge of this era, causing even the best founders to drift and lose the discipline that comes when every penny counts

There are no checks and balances now; discipline comes from scarcity, and hands-on assistance and insight are in short supply

Scope: not arguing for a return to the 1980s/90s model of VCs strangling founders and ousting CEOs

11:29 20VC: How I Lost Airbnb at Seed Because of an Exploding Term Sheet | Investing Lessons from Roelof Botha & Peter Thiel | Why VC is Less Collaborative Than Ever and Great Companies Are Being Destroyed by Too Much Cash with Kevin Hartz @ A*

Tom Blomfield · May 13, 2024

Companies should raise less money before product-market fit, because extra capital pre-PMF doesn't help

Most YC companies at Demo Day are pre-PMF; more capital leads them to hire lots of people, which slows everything down and makes them less nimble

Scope: applies pre-product-market fit; once product-market fit exists, pour gasoline on the fire; 'probably best for most companies'

33:58 20VC: Behind the Scenes at Y Combinator: The Interview Process | What the Best & Worst Do in the Program | Do the Best All Raise Pre-Demo Day & YC's Fundraising Advice to Startups | Why the Value is in Application Layer AI with Tom Blomfield

Max Altman · Nov 21, 2025

Massive rounds ($100M+) from megafunds should come after the Series A, not at seed — best companies do need huge war chests eventually, just not right out of the gate

Getting all the gravity and capital behind the best companies helps them build a moat against competitors, but concentrating that firepower at the seed stage distorts the market

Scope: concedes companies do need hundreds of millions eventually; timing objection, not size objection

48:32 20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Lucas Swisher · Feb 23, 2026

Large capital is a huge advantage only when paired with strong product-market fit; with weak product-market fit it has historically been a disadvantage

With insane PMF, capital lets you hire a huge sales force and take a market faster; without PMF the money is misdirected

Scope: describes the PMF-plus-capital case as almost tautological

40:01 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Gili Raanan · Mar 28, 2026

Too much capital arriving too fast is not something to worry about for companies with product market fit

It takes a lot of money to build these companies anyway — if not needed this year it's needed next year — and with real PMF the yield on sales and marketing spend is decent enough to turn into a profitable business

Scope: only where product market fit and decent go-to-market execution exist; does not apply where the magic number is poor

22:11 20VC: The Venture Model is Broken | You Need to be Greedy and Selfish to Win Early Stage Investing | Why Margins Do Not Matter for Early-Stage Startups | The Growth Rate that is Required in a World of AI with Gili Raanan, Founder @ Cyberstarts

Emil Michael · Oct 24, 2022

The explosion of late-stage capital is more good than bad for founders, and loose money cycles serve a real purpose

Capital-hungry business models can only get funded in those conditions — companies like Uber and Airbnb were built in that era because they could raise a lot and try many things; if money had been tight Uber might never have launched Eats

Scope: unclear whether the resulting overvaluations are good, and not good for investors wanting cheaper entry

44:16 20VC: Uber's Journey to Becoming the Most Valuable Private Tech Company in History, Raising $3BN From Saudi in Just 60 Days, Uber's $30BN Mistake in Food Delivery, Why Recent Uber M&A Will be the Worst in Tech & Mastering Negotiations and Deal-Making with

Gili Raanan · Mar 18, 2024

The return of 2021-style valuations is not something to worry about: if you can raise significant cash to build a business you should, and the discipline of systematic company-building shouldn't change just because there is more money in the bank

The market is the market; the responsibility sits with investors, board members and founders to keep spending disciplined

44:55 20VC: 19 Company Portfolio: 1 Decacorn, 7 Unicorns, 4 Acquisitions; One of the Best Seed Investors of All Time on How to Pick Generational Defining Founders, Why Nothing but the Founder Matters & Why the Best Investors are Never Happy w/ Gili Raanan

Peter Singlehurst · Mar 19, 2025

Across the market as a whole there is currently neither an excess nor a deficit of capital — a golden mean that provides enough to invest without so much that it damages long-term business quality

Too much capital detracts from the long-term quality of businesses; the current balance funds investment without that distortion, and combined with abundant experiments and human capital makes now an excellent time for growth equity

Scope: some parts of the market are still quite exuberant; argued at the whole-market level

66:55 20VC: The 10 Question Framework a $217BN Manager Uses to Make Investment Decisions | Lessons from Turning Down Stripe, Coinbase and Losing Money on Northvault | The Bull Case for Bytedance | How Anduril Could Be a $200BN Company with Peter Singlehurst

Bucky Moore · May 5, 2025

There is not too much capital in venture today; the industry is in a healthy place

There is an enormous amount of valuable work still to do and he feels he's seeing the future every day and can't cover all of it; the real constraint is helping enough founders from unlikely backgrounds pursue their visions

Scope: admits it's easy to argue the opposite on bad days; self-describes as an optimist

38:35 20VC Exclusive: Why Mega Platforms Will Win in VC | Why You Cannot Do VC If You Do Not Do Pre-Seed | Why Market Sizing is BS | Where Will Foundation Models Build/Buy Apps vs Where Will They Not with Bucky Moore

Eric Paley · Sep 20, 2023

Overcapitalized companies fail not from wastefulness but from limited intellectual capacity for good decision-making and prioritization, which excess hiring destroys through loss of focus

You can't hire lots of people before building the platform that lets you figure things out; parallel processing things that aren't working and pushing to scale things only kind of working drives down long-term value, and every company would always add five more engineers or salespeople if it could

19:23 20VC Roundtable: Is the VC Model Broken? The Biggest Disconnect Ever Between TVPI & DPI, Why Market Size is Dangerous, Why "Go Fast" is Terrible Advice, The Dangers of Raising Large Rounds at High Prices & Why Next Year Will See the Biggest Hiring Spree i

Harry Stebbings · Jan 6, 2025

Large growth funds wrongly assume dollar efficiency is constant across stages; dropping $100M into a company makes the outsized outcome far less likely because the company loses focus and starts doing ten other things

Big cheques force companies into hiring and side projects that dilute focus

45:22 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Victor Riparbelli · Jan 15, 2025

Synthesia would not have been as successful if it had raised the larger $8M round; the capital constraints forced focus on customers and selling

With more money they would have built deepfake detection because everyone wanted it, hired a team for it, and lost focus; constraints forced discipline and charging customers from day one

Scope: counterfactual about their own company

7:58 20VC: Why Scaling Laws Will Not Continue | OpenAI vs Anthropic vs X.ai: Who Wins and Why | How Far Will Model Providers Go Into the Application Layer | The End State for Models: Many Specialised or Few Generalised with Victor Riparbelli @ Synthesia

Harry Stebbings · Jan 12, 2026

The damage from over-funding founders isn't moral hazard or complacency — it's the 'foie gras-ing' of startups, where excess capital makes them pursue ten initiatives instead of two

None of the ten things work, the team gets disincentivized, they break up and the culture deteriorates

Scope: explicitly a disagreement with Alex's moral hazard framing

33:40 20VC: a16z's $15BN Fundraise with Alex Rampell | The Best Companies Have Hostages Not Customers | The Best Founders Materialise Capital, Customers and Labour | Mid-Sized Funds with Die and The Future of Venture Capital

Jason Lemkin · Nov 30, 2022

Companies that raised $50M+ at $150M+ valuations with only $30-500k ARR will not succeed; they become zombies with infinite runway and no urgency

Growth collapses to zero but ten years of runway removes any forcing function, and VCs have stopped intervening because they have bigger problems than their zombies

Scope: framed as concern about however you define 'zombie'

27:36 20VC: Jason Lemkin on Why Founders Do Not Care About Their VCs Anymore, Why Zoom Made Us All Worse Investors, Why 80-90% IRR Should Have Been Warning Signs and the Algolia Journey From Seed to $2.25BN Valuation

Harry Stebbings · May 13, 2024

Large seed rounds cause founders to lose urgency and slow their execution speed; roughly $5M on $25M is the sweet spot

Across 170 investments the commonality he observes is that when the seed round is large, urgency and execution speed drop

33:45 20VC: Behind the Scenes at Y Combinator: The Interview Process | What the Best & Worst Do in the Program | Do the Best All Raise Pre-Demo Day & YC's Fundraising Advice to Startups | Why the Value is in Application Layer AI with Tom Blomfield

Harry Stebbings · Jul 15, 2024

Giving founders a lot of money early is not the solution — his worst performing companies are the $5M on $25M+ rounds

Abundant early capital removes urgency, creativity and speed of decision-making because founders can just buy their way out of problems

29:58 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock

Harry Stebbings · Sep 6, 2024

The worst category of seed investments is companies that raise $5M on $25M — they move slower, lose urgency, try too many things at once, and founders lose proximity to customers

Excess capital lets them do more than one thing at once, which destroys focus and urgency

Scope: based on his own 170 investments over ten years

34:18 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures

Martín Escobari · Nov 11, 2022

The real damage from abundant tourist capital is not lost market share for investors but companies losing discipline, since fast spending turns learning feedback loops into noise

Measured growth focused on unit economics lets feedback loops arrive in time to fix strategy; burning $100M quickly destroys that learning and companies lose their soul and viable business models

20:37 20VC: Why Market Size is Everything | Three Signs of a Bull Market and How To Remain Disciplined | Why Investing is a Young Person's Game | The Secret to Negotiation | Missing a $200M Opportunity in Nubank and more with Martín Escobari, Co-President @ Ge

Immad Akhund · May 12, 2025

VCs pushing founders to spend the money aggressively is a mistake on the VCs' part.

VCs optimize for home runs from the rare anomaly founders who can handle it, but most founders — especially younger ones — will overspend, so the industry needs frameworks for spending aggressively while staying successful.

Scope: acknowledges the framework for doing it well is tricky

14:10 20VC Exclusive: Mercury Founder Launches First $26M Fund | Why Founders Should Take the Highest Price | Why Serial Entrepreneurs are Better | Why AI Is So Overhyped | The Future of Venture Capital with Immad Akhund

Byron Deeter · Aug 25, 2025

There is a real risk of overfunding businesses, and the danger is not the capital itself but spending it in a disruptive way

Investors showing up the next day with huge markups are seductive to founders; the right frame is to be fully capitalized for the next horizon of risks and goals and not choke on the extra money

Scope: some extra capital can be fine if tied to the plan

46:45 20VC: Do Margins Matter in AI? | Is Defensibility Gone For Good? | Is Vertical SaaS Dead in a World of AI | What SaaS Rules Are BS and No Longer Apply in a World of AI | The Future of Venture: Why Chanel vs Walmart is BS with Byron Deeter

Jason Fried · Jan 6, 2023

If a company can't make its own money and outside funding dries up, things have to change: there will be layoffs, deep cuts and austerity, and such companies will realize they have too many people and have been spending wildly on things that don't work

It's basic economics — if you spend more than you make and burn through your cash without outside money available, you have to become a different business; it's not that he thinks it will shift, it has to

7:56 20VC: Why Financial Planning and Goals Do Not Work, The Decision to Ban Politics in the Workplace and Losing 1/3 of the Team Overnight & The One Question That Will Drive All Decision-Making for Leaders with Jason Fried, CEO @ 37Signals

Ed Sim · Jan 10, 2024

2024 is the year the reckoning arrives for over-funded companies, because extending runway is worthless if you aren't growing

2023 tested whether these companies could execute; now founders growing only 20% while still burning cash have to confront whether they have a business at all

6:08 20VC: Did Figma Kill M&A Markets in 2024, The Three Biggest Mistakes Made in Growth Investing, The Three Requirements Companies Need to Go Public in 2024 with Ed Sim and Jamin Ball

Nabeel Hyatt · Apr 4, 2025

An overcapitalized company's probability of eventual death rises, and its decay is observable in advance through hiring velocity, quality of hires and execution speed

The money delays but doesn't prevent failure — it 'takes a long time' because they have a lot of money — and you can watch it teetering and redeploy elsewhere

Scope: different dynamic than four years ago

42:13 20VC: Why To Win in AI, Investors Need to Change Their Approach | Why VC is Run by Principals and Associates and is a Broken System | The Bull Case for Anthropic & Whether Deepseek Changes Their Strategy with Nabeel Hyatt @ Spark Capital

Taavet Hinrikus · Apr 28, 2025

There is an excess supply of capital relative to the founder base in sectors deemed hot

In 2021 any employee of a hot company would get checks written without even a meeting, as happened with Google employees years earlier, which makes no sense

Scope: only in hot sectors; early pre-product-market investing should be separated from later stage

38:20 20VC: VCs are Spreadsheet Monkeys and are Commoditised | Why Fees and Carry Misalign GPs and LPs | Why Founders Will Realise Multi-Stage Funds Damage Seed Rounds | Why We Need European Sovereignty More Than Ever with Taavet Hinrikus

Brendan Foody · Sep 15, 2025 · hedged

From an investor's vantage point there is too much cash in the private markets today

It's fundamentally a supply and demand question, so the answer depends on which side you sit

Scope: stated as how he'd see it if he were an investor rather than a founder

33:46 20VC: Mercor: From $1M to $500M in 17 Months: The Fastest Growing Company in the World | How to Think About Margins and Revenue Sustainability in AI | Why Evaluation Benchmarks in AI are BS Today with Brendan Foody

Max Altman · Nov 21, 2025

Low-dilution rounds are simply a supply-and-demand outcome: capital into venture went up roughly 10x while the number of great companies only grew two or three fold, handing founders all the leverage over process and terms

Hundreds of billions of capital are chasing only slightly more companies, so there isn't 10x as much good equity to buy

52:24 20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Harry Stebbings · Dec 6, 2021

Oversupply of capital, now compressed down into Series A and B, is distorting companies' execution plans and turning good companies bad.

Companies build 20-person sales teams before having a playbook and hire customer success before having revenue.

Scope: he frames it as his concern rather than certainty

15:44 20VC: Bill Gurley and Michael Eisenberg on The First Signs of an Impending Bust, What Happens with a Market Crash, How Do Public Markets Impact Private Valuations & The Biggest Lessons from 20 Years Investing in Venture

Mike Maples · Sep 20, 2023

The core failure mode is hiring ahead of product market fit; pre-PMF, having N-minus-one resources beats N-plus-one

Too many resources let you pursue losing ideas too long and build too much opinionated product footprint too soon, then try to sell an opinionated product nobody wants; too few resources force elimination of distractions, and a tiny focused team lets customers pull product out of you so you escalate commitment as you escalate certainty

Scope: happened in 2021 and is happening again now in many cases

20:04 20VC Roundtable: Is the VC Model Broken? The Biggest Disconnect Ever Between TVPI & DPI, Why Market Size is Dangerous, Why "Go Fast" is Terrible Advice, The Dangers of Raising Large Rounds at High Prices & Why Next Year Will See the Biggest Hiring Spree i

Gili Raanan · Mar 18, 2024

Abundant capital does produce bad behaviour, but that doesn't make it disqualifying — the same is true of TikTok or Facebook, which are still thriving

Bad behaviour attaches to most powerful tools without invalidating them

Scope: Concedes the bad behaviour exists

45:36 20VC: 19 Company Portfolio: 1 Decacorn, 7 Unicorns, 4 Acquisitions; One of the Best Seed Investors of All Time on How to Pick Generational Defining Founders, Why Nothing but the Founder Matters & Why the Best Investors are Never Happy w/ Gili Raanan

Mark Suster · May 1, 2024

It is a mistake to label market excesses good or bad; over-capitalization produces both losses and lasting infrastructure

Markets will be markets — the 1990s US telecom over-capitalization lost a lot of people money but funded the broadband fiber that the following industry was built on

30:56 20VC: Mark Suster on The Biggest Fundraising Lessons for VCs, Why the Correction in Venture is Still to Come, Why Private Equity Will Replace IPOs and M&A as the Exit Path & The Woke Left and a Trump Administration; What Happens?

Mamoon Hamid · Oct 21, 2024

There is more capital in venture than ever and it leads to overfunding of half a dozen or a dozen competitors alongside the true leader in a category

The excess capital assumes everything will be a decacorn

Scope: some leaders may deserve the overfunding

20:43 20VC: Kleiner Perkins' Mamoon Hamid on Investing Lessons from Leading Rounds in Figma, Slack and Rippling | Lessons Building a Generational Defining Firm with Kleiner Perkins | AI: Where Value Accrues, Startups vs Incumbents & Scaling Laws

Anjney Midha · Apr 14, 2026

VC over-funding of inference companies is self-destructive because 50 companies competing for scarce compute starve the genuinely innovative teams of the resources they need for their next round of product innovation

All the inference teams are calling him asking for compute, because their product is reselling compute and it has been hoarded by hyperscalers and by parties sitting on compute without innovating

Scope: describes this as already happening now

45:35 20VC: Anj Midha on Investing $300M into Anthropic | The Early Days of Anthropic & How 21 of 22 VCs Turned it Down | The Four Bottlenecks to Compute | What the China Has Smashed and Why We Should Be Worried

Deven Parekh · Oct 11, 2023

A major reason rounds aren't happening is that companies raised huge amounts at the 2021 peak and have no motivation to raise at a clearing price

Multiple portfolio companies hold $300-500M of cash on their balance sheets and know they can't replicate their last round's price — but they don't need to, because they took advantage of the cheap capital window

9:40 20VC Roundtable: Are IPOs Back? Is Growth Dead? What Does it Take to Raise a Growth Round Today? How Do VCs Solve The Liquidity Challenge? Will We See a Massive Resetting of Valuations? AI Hype Growth Rounds?

Jason Wilk · Apr 21, 2025

The moment when over-funded founders accept sharply reduced acquisition offers has not arrived yet and requires more time for capital to burn down

Because they raised so much, companies have stretched runway far longer than in previous cycles, and people have to actually run out of money first

10:27 20VC: Do Rich Founders Make Better Founders | The Best Performing Fund Would Only Back YC Founders on Their Second Time | Why SPACs Will Come Back | Why Short Sellers Should Be Banned | Is Trump Better for Business than Biden with Jason Wilk @ Dave

Tony Fadell · May 11, 2022

Large rounds should be structured as milestone-based tranches rather than handed over in full, and no team should be swimming in money

Having too much cash removes the constraints that force good decisions; teams take so long that the market moves away from them and the product dies on arrival

37:56 Structure large rounds as milestone based tranches to prevent teams swimming in unconstrained cash

Ryan Petersen · Nov 13, 2023

After raising a large round, a company should immediately institute a ~90-day hiring freeze

Money doesn't solve a company's problems — the team does — and the freeze forces that realization

0:00 Impose a post raise hiring freeze to force spending discipline

Ryan Petersen · Nov 13, 2023

Both are true at once: raising a lot of money at the peak is great capital allocation, and it also breeds bad spending habits — the discipline is possible but only if you live in reality, reviewing the P&L daily and never doing performance reviews without looking at the person's salary

He can play both sides because he did raise a lot and it was his best allocation decision, yet it still led to bad habits

16:51 Raising big and building spending discipline are compatible if you live in reality

Kevin Ryan · Apr 10, 2024

Venture is more competitive than ever because there is roughly four times as much fund capital as in 2017 without four times the opportunities — a bubble of money.

Opportunity has shifted rather than grown: more in AI, far fewer in ecommerce and media, and even fewer in straight enterprise software since large buyers like Bank of America have already purchased what they need.

46:44 Fund capital has quadrupled since 2017 without matching growth in opportunities

Kyle Harrison · Oct 21, 2022

Excess capital in venture is harmful because there are no guardrails or standards of excellence, so money hides bad products, bad go-to-market and bad unit economics, and it flows to whoever will take it rather than to good managers.

Enough money can hide a multitude of sins, and LPs seeking exposure allocate for exposure rather than quality, which muddies the water for everyone else.

30:54 Excess capital lacks guardrails hiding bad products and flowing to whoever will take it not quality managers

Micha Kaufman · Jun 9, 2025

There are far too many startups being founded relative to the markets available to sustain them, so a market cleanup is inevitable via consolidation or companies going bust

When you look at how many companies compete for the same customer, function or need, markets like a cybersecurity sub-segment can only sustain one or two winners, leaving little for the rest

14:41 Market oversupply of startups forces inevitable consolidation or failure

Eric Paley · Sep 20, 2023

Companies with middling (five-to-eight) product market fit and extraordinary valuations accelerate when they should slow down and fix go-to-market, and this is where roughly 80% of companies that raise extraordinary financings end up

Capital has diminishing returns, so accelerating yields declining rather than flat performance; founders then double down because they have the money, are trying to live up to expectations, and don't want to tell the board they need to cut the company in half

21:41 Middling pmf companies with outsized valuations wrongly accelerate instead of fixing gtm

Harry Stebbings · Mar 19, 2025

Over-capitalisation is still happening today, because a surge in growth capital supply leads investors to pay two years ahead of time for companies they believe will be huge, on the mistaken assumption that the amount of capital doesn't change the outcome

Investors reason that getting in early at a high price still guarantees their multiple, but stuffing a company with too much cash damages it

14:31 Surplus growth capital drives overpayment on the mistaken belief that capital amount doesnt change outcomes

Peter Singlehurst · Mar 19, 2025

Over-capitalisation is real in certain parts of the market today but not universally true: it persists in AI/LLM companies while previously hot sectors like fintech now contain good businesses at reasonable prices

Where investors have got bored and moved on, companies are making real strides to profitability, have great products and management, and you aren't asked to pay the earth

15:03 Over capitalization persists in hot sectors like ai while out of favor sectors are reasonably priced

Frank Rotman · Aug 26, 2021

It is a dangerous trend that only partially de-risked companies with unproven business models are attracting massive capital and even going public before their story is complete

There is a 95%+ historical correlation between earnings per share and share price, so companies that can't make money aren't worth what people are paying for them

13:27 Premature public listings of unproven business models reflect a dangerous capital trend

Harry Stebbings · Jun 23, 2025

There are too many tourists in startups — people who think being a founder is sexy and get funded because there is so much VC money

Abundant VC money lets people fund the founder lifestyle rather than the work

67:53 Excess capital funds unqualified tourist founders

Peter Rahal · Aug 8, 2025

Raising money would not have improved RXBAR's growth and they would have wasted it on stupid things

Their marketing was fundamental trial sampling rather than paid ads, they had strong product-market fit, and the constraint was always matching supply to demand — not capital; a balance sheet of growth capital would have invited bad decisions

13:05 Capital does not accelerate growth when supply is the constraint not cash

Alex Taussig · Feb 12, 2024

The end of zero interest rates benefited Vinted a lot because competitors' era of insane discounting ended, letting Vinted take ground with its better business model

Cheap capital funded competitors' heavy discounting and forced hard choices about matching; when rates rose that went away and, when the tide goes out, you see who was swimming naked

26:41 End of zero rates ended competitor discounting benefiting disciplined business models