Occasionally we make an investment of seed-size into a larger round being led by another venture firm. For example, a first institutional round of $3M, where another venture firm invests $2.25M, and we invest $750K.
We call these Pseudo-Seeds, because while the investment size resembles that of a Seed, the company is typically more mature than a Seed, and sometimes may already have product or revenue.
We do this when we love something about the investment â e.g., the entrepreneurs, or the domain, or the business model, or the far out brashness of an idea â but it doesn't quite meet the metrics of a Series A for us.
In other words, for us the investment is still an experiment, while for the other venture firm it may be less of an experiment.
We reciprocate by not using up a board seat, and not adding to the entrepreneurs overhead in any way, while still adding the value which both sides are speculating that we'll add, which is the reason for creating such an arrangement in the first place.
Why Most Traditional Venture Firms Don't Make Seed Investments
What We've Learned