The Twenty Minute VCAdam Besnivick: How to Invest in Pre-Seed & Seed Stage Companies; Looking Glass Capital | E1020
CHAPTERS
Breaking into venture: Twitter networking, cold emails, and the Lowercase Capital break
Adam shares how joining Twitter in 2009 became his on-ramp into venture—following VCs, engaging publicly, and turning online relationships into real opportunities. He recounts landing work with Chris Sacca via persistent cold outreach and follow-up.
- •Used Twitter early to learn VC discourse and build relationships at scale
- •Cold-emailed hundreds of investors to transition from traditional finance to venture
- •Got a role with Chris Sacca/Lowercase through persistence and proactive follow-up
- •Early lesson: manufacturing surface area creates unexpected career leverage
Reputation as a compounding asset: what Adam learned from Chris Sacca
Adam emphasizes that reputation—especially with founders—is the one currency investors fully control. He contrasts reputation with track record and explains how founder-first behavior compounds into better deal flow and stronger references over time.
- •Founder respect and reputation are central to long-term investing success
- •Track record matters but is partially outside an investor’s control
- •Different reputations: with founders vs. with other investors
- •Sterling founder reputation cannot be compromised
Mindset shift: preferring to see great deals (even if you pass) + the case for focus
Adam describes the psychological shift from fearing regret (missing iconic deals) to valuing being in the flow of great companies, even when passing. Harry pushes back on the need to see everything, teeing up Adam’s thematic approach.
- •Early surprise: investors prefer seeing amazing deals and passing vs. never seeing them
- •Over time, Adam adopted the 'be in the flow' mindset
- •Counterpoint: focus beats scattershot exposure to every deal
- •Theme-based investing as a way to stay targeted while still seeing enough quality
Why 'Looking Glass' and what pre-seed really requires (suspension of disbelief)
Adam explains the fund’s name as a nod to ‘Through the Looking-Glass’—the imagination required to back companies that are pre-product and pre-revenue. He notes that early-stage decisions often look irrational on a simple pros/cons list.
- •Pre-seed investing demands a ‘fantastical’ leap before evidence exists
- •Most early investments have more obvious cons than pros at the time
- •The brand reflects backing founders before conventional validation
- •High-conviction yeses repeated across many uncertain bets
Fund construction: size, check strategy, ownership targets, and avoiding overheated seed pricing
Adam details Fund I and Fund II sizing, check sizes, and the math behind making sure a single $1B outcome can return the fund. He explains how he gets higher ownership at lower entry prices by being early (often first money in) and fishing outside the most crowded seed markets.
- •Fund II target: $20M; Fund I: ~$8.5M—an intentional iterative step-up
- •Typical checks move from ~$300–400K toward ~$400–500K while keeping the same entry point
- •Goal: enough ownership that a $1B outcome can return/meaningfully move the fund
- •Average Fund I entry: ~9.1 post; emphasis on being first money/‘first yes’
- •Geographic mix beyond SF/NY helps keep valuations down
The hard part of raising $20M: LP types, minimums, and the docs/data room approach
Adam explains why a $20M fund can be trickier to raise than a smaller friends-and-family vehicle and outlines the LP segments he targets (family offices, smaller FoFs, HNW individuals). He also shares a highly formal materials strategy—data room, memos, updates—and when it’s too much.
- •$20M sits below many institutional minimums; often above casual individual-check dynamics
- •LP base: smaller fund-of-funds, family offices, HNW individuals; limited institutional appetite under ~$40–50M
- •Lesson from Fund I: have sub docs and legal materials ready earlier than you think
- •Data room includes investment memos, historical LP updates, deck, appendix, legal docs
- •Balance: provide ‘everything’ but keep an easy starting point (deck + references + track record)
LP sourcing mechanics: warm networks, many meetings, urgency via momentum, and first-close timing
Adam describes how first-fund LPs largely come from people who already know you, plus referrals from early ‘yes’ LPs. He discusses LP check-size unpredictability, how to create urgency without bluffing, and why doing an earlier first close helps you start investing and build proof points.
- •Fund I LPs were almost entirely ‘known’ relationships or direct referrals
- •LP count and meeting volume: many small checks plus occasional large anchors
- •Minimum checks (often flexed) used to shape the LP base while preserving strategic value
- •Urgency is created through momentum: updates, markups, new deals, co-investor validation
- •First close lesson: don’t wait too long; aim for ~50% of minimum viable fund size
Pre-seed decision-making without data: mission-driven founder ‘origin stories’ and resilience by category
Adam explains how he underwrites founders when there’s little to no traction: deep motivation, unique suitability, and why they chose the problem. He argues certain sectors (healthcare, climate, education) self-select for unusually resilient founders due to inherent difficulty and regulation.
- •Pre-seed evaluation leans heavily on motivations and founder-market fit
- •‘Mission-driven’ means uniquely compelled and suited—not necessarily social mission
- •Hard categories can filter for resilience and long-term commitment
- •Founder origin story is a key signal when metrics don’t exist
- •Avoids sectors that attract more ‘fly-by-night’ entrepreneurship
A disciplined pre-seed model: fixed guardrails, leading without being the biggest check, and syndicate-building
Adam describes his ‘institutional’ approach at pre-seed: strict check-size and ownership targets, minimal strategy drift, and comfort leading rounds through terms-setting and founder support rather than sheer dollars. He explains exceptions, concerns about adverse selection, and how he helps fill rounds by curating complementary investors.
- •Guardrails enable focus; exceptions become deliberate and rare (not accidental drift)
- •Rejects scattershot portfolio construction common in sub-$25M funds
- •Leading = setting terms, being first call, catalyzing the syndicate—not necessarily largest check
- •Strategy: commit early, then help place the rest of the round with targeted investors
- •Thematic credibility helps win allocations even in competitive syndicates
Portfolio math: loss ratio expectations and learning from ‘risks & mitigants’
Adam frames early-stage returns as a ‘grand slam’ game where a minority of companies drive most outcomes and many will be zeros or sub-1X. He explains how writing explicit risks and mitigants in memos lets him audit whether failures were foreseeable versus true surprises.
- •Expects a meaningful portion of the portfolio to be zero/sub-1X over time
- •Comfort with power-law returns: 20–30% of companies drive most gains
- •Keeps a formal ‘risks & mitigants’ section in every investment memo
- •Underperformance often ties to known risks that did not mitigate as hoped
- •Memo discipline supports honest post-mortems without rewriting history
Thematic investing debate + founder fundraising mistakes + what’s changing in venture
Adam defends thematic investing as a bandwidth strategy that improves sourcing, inbound, credibility, and syndicate construction—especially as a solo GP. He then lays out common founder mistakes in round composition and discusses market structure shifts: what ‘seed’ even means now, discipline on burn/runway, reduced pace post-2021, signaling views changing, and his hope for more transparency in fundraising processes.
- •Themes drive sourcing: other investors and founders know when to bring him in
- •Cold inbound/outbound improves with instant relevance and portfolio validation
- •Founder mistakes: too narrow an investor funnel; over-indexing on brand names; ignoring the specific partner fit
- •Market shift: ‘seed’ labels are inflated; multi-stage behavior changed the ecosystem; whiplash from 2021 to 2023
- •Runway philosophy: target ~24 months gross burn; skepticism that most teams can ‘raise 5 and spend like 1.5’
- •Quick-fire: future bifurcation into specialized smaller funds vs. behemoths; winners adapt and offer distinct value; changed mind on signaling; desire for more transparency; Looking Glass aims for iterative Fund III growth
