The Twenty Minute VC

David Tisch: The 3 Most Important Variables When Raising Your Seed Round | 20VC #983

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. ---------------------------------- Timestamps: 0:00 David’s Entry Into the World of Venture 3:03 What does success mean to you? 4:09 BoxGroup’s Portfolio Construction 8:40 Price Sensitivity at Pre-Seed and Seed 25:45 Advice to Founders on Company Valuation 33:02 GPs and Seed Checks 39:58 Which companies do well? 45:30 View on Marketing and Listening to Experts 52:00 Lessons on Recent investments 57:25 VC / Founder Alignment 59:02 What does Venture look like in 5 years? 1:04:49 Quick-Fire Round -------------------------------------------- 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? -------------------------------------------- Subscribe on Spotify: https://open.spotify.com/show/3j2KMcZTtgTNBKwtZBMHvl?si=85bc9196860e4466 Subscribe on Apple Podcasts: https://podcasts.apple.com/us/podcast/the-twenty-minute-vc-20vc-venture-capital-startup/id958230465 Follow Harry Stebbings on Twitter: https://twitter.com/HarryStebbings Follow David Tisch on Twitter: https://twitter.com/davidtisch Follow 20VC on Instagram: https://www.instagram.com/20vc_reels Follow 20VC on TikTok: https://www.tiktok.com/@20vc_tok Visit our Website: https://www.20vc.com ----------------------------------------- #DavidTisch #BoxGroup #HarryStebbings

David TischguestHarry Stebbingshost

Feb 26, 20231h 10mWatch on YouTube ↗

WHAT IT’S REALLY ABOUT

David Tisch Redefines Seed Fundraising: Price, Partners, and Persistence

David Tisch of BoxGroup discusses how he approaches seed investing, portfolio construction, and founder relationships, emphasizing flexibility over rigid fund math. He argues that seed valuations are ultimately set by the market, so investors must decide simply to participate or pass, rather than obsess over price. Tisch frames fundraising around three variables—how much to raise, at what price, and from whom—with “who” and “how much” generally trumping valuation. He also predicts more startup shutdowns rather than mass down rounds, criticizes generic venture advice, and underscores that a CEO’s core job is to become world‑class at fundraising over a 10+ year company journey.

IDEAS WORTH REMEMBERING

5 ideas

Optimize fundraising around ‘who’ and ‘how much’ before valuation.

Tisch advises founders to focus first on raising enough capital from the right people, and only then on price; he’d generally compromise on valuation before compromising on investor quality or sufficient runway.

Treat valuation as a market fact, not a moral issue.

Seed investors don’t truly control price if founders have options; if someone agrees to a valuation, that is the market price, and investors must simply decide whether to participate or walk away.

Build a long-term, nuanced reserve strategy around your best companies.

Instead of rigid public formulas, BoxGroup allocates follow-on capital case-by-case to the most promising portfolio companies, accepting that reserve decisions are inherently situational and best judged over a 10-year horizon.

Expect more shutdowns than down rounds from the 2018–2022 vintage.

Because seed-to-A and A-to-B graduation rates were unnaturally high, Tisch predicts a coming period where many later-stage companies simply close, as M&A is weak and runway ends, rather than neatly re-price via down rounds.

Founders must become excellent fundraisers, not avoid fundraising.

Contrary to the ‘just build product’ meme, Tisch insists the CEO’s job is to get great at fundraising—building relationships early, telling the story well, and repeatedly securing capital on founder-friendly terms.

WORDS WORTH SAVING

5 quotes

Everybody can ask for whatever they want, and everybody can say yes or no. If somebody says yes, that's the price.

— David Tisch

My job is to work for founders. It's not my job to tell a founder what to do.

— David Tisch

I just don't believe in evaluating venture, especially seed venture, on a minute-to-minute, year-to-year basis. It's an incorrect use of energy and mind.

— David Tisch

The CEO specifically, their job is to become great at fundraising.

— David Tisch

Make your own movie. You're not gonna replicate anyone else's movie.

— David Tisch

David Tisch’s background and BoxGroup’s seed investing philosophyPortfolio construction, check sizes, and reserve strategy debatesSeed and pre-seed valuation dynamics and market bifurcationThe three key variables in fundraising: amount, valuation, and investor selectionImpact of macro conditions: down rounds vs. shutdowns and ‘tourist’ capitalSignaling risk, multi-stage funds at seed, and alignment/misalignment with foundersRole of content, generic advice, and founder-specific guidance in venture

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