Expecting Miracles: Wanting to Grow Healthy Trees Without Sprouting any Seeds.

You have painted a detailed picture of early stage investment conditions that are pushing the investment stack up to later stages, and leaving a vacuum at the early stage.

VC’s Invest in < 1% of the Deals But Have an Impact on Decision Making of the Other 99%: I totally understand the self-interest of each individual institution to invest at a later stage to better identify and selectively bet on a potential Unicorn. However, as a total society, they are expecting someone else to come along and sprout the seeds from which they can cherry pick.

Even your definition of “pre-seed” is close to or post MVP, and begs for a “pre-pre- seed” investment. We can keep going back till we reach the “pollination” stage.

Life, of course does not move in such a linear fashion and many curve balls can disrupt the present game.

Ultimately the early stage investment burden will always fall on the entrepreneur. They can do two things to upset the apple cart. 1. Build their MVP at lower “cash” cost and look for “earliest stage” investment as late as possible. With lean manufacturing processes as well as team members willing to participate at low cash, this is becoming more viable.

I know of at least one early stage company that returned their LP money because the early stage valuations demanded, by healthy seeds, was too high.

The task ahead for us is to “educate” the entrepreneur that the VC criteria coming down to the earliest stages is a program that is against their best interest. If you are not VC material do not waste your time chasing those who are chasing Unicorns and get to a position of strength before seeking money.

Even if you are looking for VC type investment, one way or another the onus is on you to go as far as you can. See my post Entrepreneurs: Are-you-marrying-a-partner-or-a-rapist?