Good afternoon, everyone. This is a topic we can discuss for a really long time. It's a very important one. It's probably one that's important to many founders in the audience, and it's about how to raise seed financing. So let's jump right in. How is raising a seed round in 2026 different from how it was raising seed financing in the pre-AI era? Frederick, you want to start?
Sure. I think that in this new era of AI, you cannot afford to just raise money with just a pitch deck. I think we have so many tools available, so many systems that you have to have a working prototype, if not customers. True Ventures and a16z have a portfolio company in common that we invested in at the seed called Nectar Social, an AI platform for community management and social listening, who came to raise a seed round with a working product and actual customers. And during the diligence, we even referenced customers, which was pretty novel. And I think it's very important to, whether you are a first-time founder or a serial entrepreneur, if you are an entrepreneur that loves what you're doing, you want a prototype and you want to launch a product. So I think I see more and more founders that have a working prototype or a product that is out there already.
Yeah. But what about you? More than the working prototype, are we also seeing revenue at the seed?
Yeah, I mean, the cost to build is almost zero these days, right? So you can get to prototypes much quicker, you can get to revenue much quicker. I would say a little bit counter to what you're saying, I do think there's tons of startups being funded. There's tons of money in the system right now, but it's also, in a funny way, you're also seeing a lot of concentration. So there's a smaller set of firms raising a ton, taking up a lot of the capital in a smaller set of companies. And so some of the early art of venture capital, I think, is a little lost in terms of it getting a little more transactional, which none of us really love, right? But that whole concept of still funding things before it's known, which is where we tend to play and we love to play, that art is still what we love. So there's still a lot of that, although you can do much more, but we're still looking to fund before it's known. It's just that that whole part of the market is sort of less, that sort of art is becoming less known these days because all we're talking about is king-making or queen-making or whatever you want to call it these days.
I think Anish might be taking a shot at me here.
No, no, I'm not taking a shot. Not at all.
Just kidding. Just kidding.
Yeah, of course. Of course. The love is mutual.
Look, I think right now this is the best. And so, first of all, maybe just to say I have literally been where you guys are. In 2008, I was here as an attendee thinking, hey, if any of these investors just hangs with me for five minutes, they'll see how brilliant I am and everything in my life will work out. And that wasn't quite the way it went. But yeah, I think this is the best time ever to be building because, look, obviously new intelligence primitives. Consumers are downloading tons of products. They're really curious about products in a way they haven't been since the iPhone. People are willing to pay for stuff. And then for the first time in a long time, if you just wait, everything changes. And maybe your thing that didn't work does work. So I don't know, if you're not kind of building now, then when are you going to build? So yeah.
Yeah. Well, Anish just said it's really hard to find something that is not known. So I was wondering if either one of you can explain what could be not, like obviously you won't know what you don't know, but what is known? Is it basically all the AI companies? And what is the unknown that is very hard to find for you right now?
Yeah, I mean, I guess I said it so I can start. I think, look, the pace is so fast right now. So we're seeing models come up all the time and new innovation coming up all the time. So it's impossible to know what we're going to look like a year from now. Nearly impossible. But we can have, in the early days when we fund, at least a theory or an idea or narrative of where things are going. So what we're looking for in these early days when we fund somebody is just those kinds of characteristics, like that relentlessness, that speed, and also just a viewpoint on where things may potentially be. So all I was saying was that we don't necessarily, and we don't need to have a lot of data when we fund. We've been doing that for 20 years. Our whole firm is based on funding at a really, really early stage. And so we're looking at the characteristics of the individual early on, and whether they have that kind of tinkering capability and just that relentlessness to build and sell and hire. That's what we're really looking for.
So speaking of the characteristics of individuals, what type of backgrounds are you looking for right now? What type of founders are most interesting? Specifically, we're seeing a lot of very young founders. They're very much in vogue right now. Some are dropping out of college. Some are even dropping out of high school. And can you comment on this trend?
It's great. I think we need more young founders. Why not? Because I think right now it's a moment at which being more technical is a competitive advantage, and who's more technical than somebody who's kind of at the edge of the technology every day? And also, you have fewer preconceived notions about the way that things were always done. So I think young founders have always been advantaged, but never more so than now. I know, Frederick, what do you think?
No, I really think that it's very interesting that you want to have founders, and young founders, like you said, don't have any preconceived notions, but we're ready to get to the next frontier. Like AI is changing the paradigm of how we live our lives. Look at how Apple, iPhone, and iOS have changed lives. I was at Uber, and we would never think that Uber would actually change how people go from point A to point B, change the way that people move around cities because we have an iPhone in our hand and with a click of a button we could actually order a car and it replaced car ownership. I think the next founder will not just slap AI on a product and be like, now we're calling it an AI product because it's the same product but just AI on top of it. It's actually reinventing the future, and now human behavior is going to change with this technology and really bring the customer along, the consumer along in the journey to be able to be like, this is now how people are going to use AI to really live their daily life in a very different manner. And the best founders are going to be able to not only see that but articulate it to their investors and to the people they're going to hire to really change the world. And you have to be fearless, you have to be courageous, and you need to really get to a level that some people will never understand.
I mean, I would even defend, by the way, I think more controversial than young founders is old founders. Apparently, I've become an old founder now, or older, in my late 40s. But look, I think there's a lot of people, I know, I'm sure you guys as well, who are getting off the sidelines for the first time because you can just make stuff sort of trivially and it doesn't have to be so serious and so heavy. I think we're already seeing the sort of renaissance of weird products, and we're going to see more because just like the perceived difficulty, expense, and seriousness can go down, you know.
Yeah, I would agree with that. We're seeing it across any age group, really. It's really the mindset more than anything. Are you like a builder, right? Are you willing to actually, you know, we've had some founders go meet some of our other founders who are really at the cutting edge of AI, and they're actually willing to say, hey, I'm going to redo how I'm doing engineering. I saw that what I'm doing is not correct. But you have to have that courage to do it and that mindset. You can do that effectively at any age. But I agree with Anish too. It's like everybody's coming back. Like, you can't, this is one of the biggest, maybe the biggest moment of disruption, right, that we've ever seen. So you can't sit it out.
So at the seed, I hear it from investors all the time. The most important thing is the team, is the founders, not necessarily the product that you're building. So what are the characteristics of your most ideal founder? Is there something, like what is that kernel that you're looking for, or is it basically you see it when you see it and it's really hard to describe?
You have to be extremely bold. You have to be a bit contrarian, and you have to have a vision that is so clear to yourself that you're ready to go through all the ups and downs that this entrepreneurial journey is going to take you, because it's going to be a hard journey. Like when you look at how LLMs are launching new products every day, and your company can probably die in a day because there is a new model that is being released, and you need to either pivot or reinvent yourself constantly. So it's like, I think the emotional ride of a founder is even more extreme right now. So if you have a vision and you feel so clear in your heart, in your gut, that this is your life mission, I think, and you can articulate it and actually find the investor that sees it with you and can be your partner on this journey.
I think it's fascinating. I think this is such an important point, like just the sort of clarity and purity of intent, because I think there's so many ways to get in our own head about why we're building a company. I built two. One worked, one got product market fit, really worked. The other just didn't get product market fit. And when I look at that, I've looked at it many times. I think a lot of it was the first time around, it was the most important thing in the world to me to build this specific thing and put it in the world. And the second time, I was sort of working backwards from being a founder. So I think only you can know for yourself why. But I think there's sort of so much alpha in having genuine purpose around it versus, you know, I didn't get promoted at X job so I'm going to go do Y thing.
Yeah, I so agree with that. I think so much of the why, like for us when we look at it, it's a 10, 12-year journey with a founder if it works, right? And so you have to look at the founder and sort of in their eyes realize, is there a real purpose there? Is it missionary? Is there a why behind what they're doing? Because that why will imbue the culture in the company. That's why people will stay and hang out. And by the way, like in any 10-year journey, there's at least four or five times where, maybe more, where you're going to get killed. Like you have an opportunity that you're, or there's a chance that the company's not going to make it. And how are you going to navigate that? So we're really looking for that long-term thinking and a person who we think will navigate that.
You all are saying that you want somebody who can think out of the box, but at the same time there are so many companies that are going after the exact same problem. I mean, you know how many vibe coding companies are there, you know, agents, you name it. So how can a founder that is possibly going after something that's already, there's another startup that does that, how can a founder that thinks that they can do it better convince you to invest?
I think that when you study a lot of these things up close, they're actually non-overlapping. And I think we're in such an expansionary period of the market that startups are becoming like, they're diverging, not converging, right? Like look at image models. Two or three years ago, you would have said, well, Midjourney is dominant. Like what's the point of even trying because there's Midjourney? And then there was, right, and then there's BFL, and then there's Krea, and then there's, you know, ChatGPT image 2. And guess what? They're all succeeding right now because they're diverging and specializing in different directions. So I think when you study these things up close, they're less overlapping than they may seem. I don't know. What do you guys think?
Yeah, I mean, I would, we're so early in this whole cycle. I mean, it's like the complete rewrite is happening both at the application layer, infrastructure layer. You know, we're involved in a company, they're building a new foundation model just around biology, for example. No one's talking about that. That's totally different. So I think there's just still so much opportunity. What you have to do as a founder, though, is find your unique contrarian view that, you know, frankly makes us a little uncomfortable. If you make us a little uncomfortable, that's a higher chance of us funding this, funding whatever you're putting together, because it's different. It's unique.
And I think you need to also build a culture of relentlessness around, like, hiring the right people that are really bought into the mission and really want to win. And then you need to work with investors that are actually going to reveal your special powers. I think that every founder that has been, you know, like an incredible founder has been having special powers that are very easy to replicate. You look at Mark Zuckerberg building Facebook with social, Travis Kalanick with marketplaces. I think everyone has their own special powers, and if you have your vision for your company and you have the right investor that can really help you nurture this type of superpower, I think it's very powerful.
You know, maybe just to bring those two points together, like it's so early, and you know, this founder superpowers, if we index this moment to mobile, it's 2010, right? Was Uber started in 2010 or... was starting, and Travis, by the way, was not like a 20-year-old founder. He was further along in his career. So it's just like that gives you a sort of perspective as to where we probably are.
