What explains why some founders prefer big-brand VC firms over individual investors: founder experience level or proximity to the venture ecosystem?

Harry Stebbings · Oct 2, 2023

Mature, second-time founders more often choose smaller specialist funds because they know brand doesn't deliver the help needed, while first-time founders tend to succumb to brand names.

Observed pattern in who picks him and his friends over multistage funds.

30:08 20VC: The Services Model of Venture Capital is Broken, The Best Founders Do Need Help, The Most Important Signals to Assess When Meeting Founders & Why Kids Bring Less Happiness and More Joy with Phin Barnes @ TheGP

Tom Hulme · May 8, 2024

First-time founders look for investors who add a lot of value, whereas second-time founders view value-add differently

Second-time founders understand the trade-off and bias from experience

8:38 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Harry Stebbings · May 8, 2024

Second-time founders typically want one investor they've worked with before and know is excellent, and passive money for the rest of the round

8:53 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Harry Stebbings · Oct 25, 2024

Younger founders crave brand-name firms more, while second-time serial founders who have already experienced the multi-stage product choose the individual investor instead

Second-time founders have seen the multi-stage product and found it wasn't all it's cracked up to be

Scope: stated as his own observed lesson and offered for Mark's disagreement; contrary to the common assumption that younger founders back new firms

11:44 20VC: The Truth About Multi-Stage Firms; Why Portfolio Services are for VCs not Founders | Why Politics is Rife & Decision-Making is Broken in Large VCs | Why Reserves are Bad for Founders & How Boutique Firms Will Win with Mark Goldberg @ Chemistry

Phin Barnes · Oct 2, 2023

A services-heavy venture product appeals disproportionately to more experienced founders, because they've seen how hard it is to hire an exceptional person and what a world-class product org in year one unlocks.

Experienced founders understand the compounding effects of early DNA — downstream recruiting, earlier customers, faster market learning — and have the maturity to know their critical needs and take the cheat codes.

30:35 Experienced founders value services more because they understand compounding effects of early hires

Mark Goldberg · Oct 25, 2024

Founder preference for big-brand VC firms is driven by proximity to the venture ecosystem rather than by age

Founders outside the ecosystem only know the household names like Andreessen, Kleiner Perkins and Sequoia, so that's what they gravitate to

12:06 Proximity to the ecosystem not founder age explains brand preference

Mark Goldberg · Oct 25, 2024

Founders who want the validation of an established, decades-old fund brand are not a good fit for Chemistry

Different founders want different things, and Chemistry can't offer thirty-to-fifty-year brand equity

23:29 Validation seeking founders gravitate to established brand name funds