The Case For Seed: Why The Best Part Of Venture Isn’t Broken
Originally published on Forbes.com
Every few years, venture capital goes through a bout of self-doubt. Commentators look at consolidation at the top, track the rise of mega funds and wonder if the classic seed model still has a place.
The current cycle adds an extra twist: an AI supercycle pulling unprecedented dollars toward a small set of brand-name platforms. From a distance, it can look like the oxygen has been pulled from the room.
Up close, early-stage venture looks very different. Seed isn't a scale game. It's a craft that needs to be evaluated on its own terms: speed to insight, quality of company formation, depth of founder support and the power-law math of small funds. When you take a closer look, I think the case for seed is strong and getting stronger.
The Wrong Frame Leads To The Wrong Conclusion
If you're an early-stage investor and your reference point is giant venture capital firms like a16z or Sequoia, you're probably playing on the wrong field. Mega funds have a specific mandate: Deploy very large pools of capital into opportunities that can absorb them. That mandate pushes them toward later entry, consensus stories and platformized support.
These firms do critical work for the ecosystem, but their constraints are real. The larger the fund, the more the machine optimizes for check size, ownership thresholds and process.
Seed operates under a different set of constraints. Fund sizes are smaller, and portfolios are intentionally concentrated. Decisions are made with incomplete data, in markets that often don't yet have a vocabulary.
The job is to recognize rare potential, help it coalesce into a company and do the unglamorous work that moves a team from idea to product to a first repeatable motion. That work doesn't scale well, which is exactly why it's so valuable.
What Founders Actually Need At The Beginning
Founders, by and large, don't choose a seed partner for the size of the platform; they choose a partner for judgment, access and time.
Judgment means a willingness to be early for the right reasons. It's the difference between "we'll lead once three other firms circle" and "we've done the work, we understand the wedge, and we're ready to commit now." That decision speed and clarity save founders months of time fundraising so that they can focus on building.
Access means putting a real network to work: the first design partners, the first senior hire who can truly raise the team's ceiling, the early customers who will test an ugly product because they trust the investor who sent it. These touches bend a company's trajectory. This is where an investor's prior career and operating scars from hard-earned lessons matter.
Time is the rarest currency. The average seed founder needs working sessions on pricing, a second brain on sales architecture and a back-and-forth on messaging across dozens of customer calls. They need help turning raw insight into a crisp thesis and a crisp thesis into a repeatable playbook.
A partner investing in a handful of companies a year can show up at that altitude. A partner trying to spread time across dozens cannot.
The Economics Still Favor Focus
There is also a simple economic reason to be optimistic about seed. Smaller, focused funds are designed to convert a small number of outliers into excellent returns. The power-law lives at the early stage.
A $10 to $50 million fund that builds a concentrated portfolio of first-or second-round positions doesn't need a parade of unicorns to work. One or two breakout companies valued in the hundreds of millions can generate fund-returning outcomes and produce strong multiples.
Scale changes the math. If a firm manages billions, it needs a meaningful share of the total exit value of the entire venture market to reach the same multiples. Even for the very best, that's challenging.
Rather than as competitors, I see the great growth firms as partners. The seed job is to help a team earn the right to raise that next round on strong terms. The growth job is to help that same team scale. Great seed firms specialize in formation, focus and hands-on help. Great megafunds specialize in acceleration, global reach and capital intensity. The two models rely on each other.
A Better Reading Of The AI Moment
I see much of the "venture is broken" narrative flowing from a narrow reading of the AI wave. Foundation models require staggering capital outlays, but the eye-popping rounds are just a small part of the story.
The opportunity is broader, and there is compelling potential outside of the hyperscalers. As intelligence becomes a core capability inside software, new product experiences become possible, workflows change and legacy cost structures break open.
In contrast to companies building AI that need massive data centers, companies building with AI require crisp product thinking, credible early access to customers and a network that helps them win design partners. In other words, the exact kind of support that great seed investors provide.
What A Winning Seed Practice Looks Like
The best seed firms are company-building partners with investment discipline. They keep fund sizes aligned with their strategy. They take enough ownership to care, reserve enough to protect it and avoid the temptation to chase every new round.
They also run a small number of active relationships at any one time, so they can be present when it matters. They show up with working knowledge of customer prospects and a network that compounds the founders' own.
In my experience, this model produces durable companies, strong handoffs to Series A leaders and multiples that compare favorably to the rest of venture.
Seed is where conviction meets work. It's where outliers are recognized early and shaped into businesses that deserve large outcomes. It's where the investor-founder relationship looks like a partnership rather than a transaction.
The mega funds will continue to play an essential role in scaling the most important companies. Their success depends on a vibrant formation engine. That engine is seed, and it is running.