20VC: David Tisch on How Multi-Stage Funds Changed The Game For Seed Rounds, Why Signalling Risk is BS, The Three Most Important Variables for Founders When Raising Their Seed Round & A Debate on Portfolio Construction: Does Ownership Matter

David Tisch is the Managing Partner of BoxGroup, one of the leading seed-stage investment firms of the last decade having invested in over 500 seed-stage startups, including Plaid, Ro, Ramp, PillPack, Amplitude, Flatiron Health, Stripe, Warby Parker, Harry’s, Oscar, Flexport, Classpass, Vine, GroupMe, Airtable and more. David is also the Chairman of GoodDog, a marketplace to find pets online.

In Today’s Episode with David Tisch We Discuss:

1.) From Techstars To Founding BoxGroup:

• How did David start his own firm in the form of Box having started at Techstars?

• What advice from Brad Feld does David always remember and hold close?

• What does David know now that he wishes he had known when started investing?

2.) The Debate: The Math Does Not Work: Portfolio Construction:

• Ownership Does not Matter: How does David justify writing $100K checks from a $127.5M early-stage fund? Even if it is a home run, it does not make a difference to the fund?

• Level of Diversification: If David is writing small checks like this, with his fund size he will have hundreds of companies, what does David believe is the right level of diversification?

• Reserves management: How does David think about the ratio of initial to reserves when deploying the funds today? How does reserves management change in a recession?

• How does David prevent other VCs from using this to try and push him down to always writing a $100K check?

• Why does David believe that the size of check he is able to invest is the VC’s problem and not the founders?

• Price Sensitivity: How does David assess his own relationship to price today? Why does he believe that company valuation is not something that the investor controls?

3.) Advice to Founders Raising Rounds:

• What does David believe is the #1 role of the CEO?

• What are the three most important variables for founders to focus on when raising their round?

• How should founders analyze the tradeoff between the brand of the VC and the size of the round?

• Does signaling really make a difference when a large fund invests at seed?

• How did multi-stage funds change the seed landscape forever with a new product?

• Who does David believe are the tourists in early-stage venture? Will they leave in the recession?

4.) David Tisch: AMA:

• Why does David believe that consumer social is not fun anymore?

• Who when they send him a deal does David take it most seriously?

• How does David want to ensure that bad VC behaviour is exposed?

• What would David most like to change about the venture landscape today?