Last week, my partner Rob Go laid out a provocative take on why seed VC is facing an existential crisis. This week, he explores the path forward. There’s no magic "answer"—but Rob lays out a thoughtful framework for how seed investors can adapt in this new era, and why there’s real reason for optimism in this AI Supercycle.
🚨 Seed VC is Facing an Existential Crisis. What Comes Next? Last week I shared thoughts on the existential crisis in seed VC. This is part II. Spoiler: I’m not going to give “the answer.” That stays in the mystery box. But I’ll share some ideas on what a path forward might look like. Full post in the first comment, but here’s the TLDR: Seed VC is facing existential risk because of: - Industry maturation - Megafunds + YC - Power law becoming consensus - The AI platform shift So… what now? I think the future of seed depends on three things: 1. The magnitude and timing of the AI supercycle 2. Defending/gaining share through sustaining innovations 3. Betting the farm on disruptive innovation 1. The AI Supercycle For years I’ve used the beer industry as a metaphor for VC maturation. But the fatal flaw in that metaphor is that beer doesn’t ride tech waves. VC absolutely does. There’s reason for optimism. Historically, tech supercycles expand the pie. Productivity booms and scope widens. Even a smaller slice can be lucrative. Also, innovation tends to flow infra → enabling tech → apps. Seed VCs thrive in the application layer. That part of the AI wave is upon us —and it will be broader and more significant than people think. 2. Sustaining Innovation Even in a favorable market cycle, firms can fall behind. If AI is as transformative as many believe, it must change VC itself. Seed firms that aren’t deeply integrating data and AI into their workflow will be in trouble. LPs may roll their eyes at AI talk—they’ve heard it all before. But execution is everything. You can’t just hire a data scientist and call it a day. Truly integrating AI into sourcing, diligence, and portfolio work requires uncommon focus and coordination—something most VC firms aren’t structured to do well. 3. Disruptive Innovation Disruption means pursuing seemingly less attractive market segments or winning on different vectors of competition. Ironically, we’ve seen a convergence in strategy among seed funds. Many pitches sound like they were written by ChatGPT: same ownership targets, same taste, same portfolio math. That’s partly because new managers try to fit the mold of what LPs expect. But that's entirely the tail wagging the dog. What might real disruption look like? Still in the mystery box 😄. But I’ll say this: It won't be "back to basics" "artisanal" VC. It will be way more unconventional. My current favorite analogy from another industry is Blumouse Productions 😱. In my last post, Dan G. commented that we need "more confident weirdos" who "float in the unbounded negative space of possibility." Love it. But I'd suggest a tweak. Most founders don’t want chaotic weirdness from their investors. Startups are hard enough - no need to deal with eccentric investor nonsense. What we really need are investors with conviction in their weird taste and weird strategies—combined with professionalism, trust, and executional excellence. That’s the winning combo.
Arit Banerjee
3mo
The convergence point really hits. When every seed fund starts optimizing for the same ownership targets and portfolio math, it’s hard to see how anyone truly stands out. Conviction in weird taste, but with real execution, feels like the right tension.
Mike Carter
10mo
Great piece David Beisel
Lorimer Ventures
10mo
Love this, David Beisel / Rob Go!
Link to full post: https://nextview.vc/blog/a-path-forward-for-seed-vcs/