A look at the changing landscape of seed funding as more big VCs compete there, and pros and cons of raising a seed round led by a big VC vs a seed-focused fund
When every fund is a seed fund — When Mike Fitzsimmons went out to raise his seed round, he negotiated with all the usual suspects. Tweets: @dunkhippo33 , @sarthakgh , @dscheinm , @kateclarktweets , and @semil Tweets: Elizabeth Yin / @dunkhippo33 : This is very true if you're a founder with pedigree and fit a certain demographic based in the SF Bay Area for sure. But 90% of founders don't fit this, and this phenomenon isn't reality for those entrepreneurs... https://twitter.com/... Sar Haribhakti / @sarthakgh : My theory is venture is going through what happened in publishing. Anyone who is a really good writer no longer has to join a publication to write. Similarly, tons of great people can now write checks individually. All of this is a symptom of that broader phenomenon https://twitter.com/... Dan Scheinman / @dscheinm : This is what I see. Oddly, it makes finding outliers easier when the herd behavior is more concentrated. https://twitter.com/... Kate Clark / @kateclarktweets : New from me: Today's fight for startup equity requires muscle & a whole lot of cash. A deep dive into the seed funding environment, in which mega-funds (driven by a new pedigree of talent & competition at the Series A) battle seed investors for access: https://techcrunch.com/... @semil : Kate hits the nail on the head. Well-researched w/ proper context. A must-read piece on the State of Seed in The Bay Area, Summer 2019. 👇 https://twitter.com/...
Context & Ripple Effects
Kate Clark's deep dive lands after two years of data showing why seed got crowded: Eric Feng found that 60% of US VC funds raised every year since 2011 have been seed funds, even as the rate of non-seed funds stayed flat for 15 years. Meanwhile the money that did scale went upstream — the $55B VCs raised in 2018 flowed mostly into growth rounds that function as private IPOs.
The result Clark documents is structural: with fewer total deals to fight over — worldwide early-stage rounds fell from ~13.3K in 2014 to ~5.9K per the related coverage — big multi-stage funds started showing up at seed, forcing founders like Mike Fitzsimmons to weigh a mega-fund lead against a specialist.
First-order effects
- Founders raising seed now run two-track negotiations: Fitzsimmons' process shows big VCs bidding directly against seed-focused funds, changing who sets terms at the earliest stage.
- Seed-focused funds lose exclusive access to their core deal flow as multi-stage firms enter the same rounds, pressuring the differentiation that justified their fund size.
Second-order effects
- Elizabeth Yin's counterpoint frames the distributional effect: pedigree Bay Area founders capture the competition for their rounds, while the majority of founders outside that profile see little of it — splitting the seed market into contested and uncontested tiers.
- Because new LP capital concentrated in growth-stage vehicles, big VCs entering seed are effectively buying optionality on their own later-stage pipeline, pushing seed specialists toward either smaller, thesis-driven funds or follow-on strategies.
Third-order effects
- If the pattern holds, 'seed fund' stops being a fund category and becomes a stage any fund plays — consistent with Feng's data showing seed-brand proliferation atop a shrinking early-stage round count, a barbell of many small checks and very large growth rounds.
- The pros-and-cons calculus Clark lays out (big-VC brand and reserves vs. seed fund focus and speed) hardens into standard founder playbook, shifting bargaining power at seed toward whichever side controls the next round's pricing.
The trend: Venture is consolidating into a barbell where multi-stage mega-funds reach down into seed while the number of early-stage rounds shrinks, eroding seed-focused funds' traditional turf.