Jason Lemkin: Every VC has a FRAUD in their portfolio; The IPO market is about to EXPLODE | E1046

Conventional advice to avoid doing deals in year one protects the fund more than the new partner; if you have a strong network or brand, you should aggressively back the founders and markets you deeply understand, then learn portfolio construction and ownership discipline from more experienced colleagues.

Lemkin only backed founders better than him, in markets he intuitively understood, at stages where revenue signals existed (e.g., $100k vs ~$1m ARR) and with clear ownership targets; this clarity naturally determines check size, acceptable valuation bands, and reduces stress and downside.

Operator angels and multi‑stage funds have flooded seed with capital, especially for well‑connected ‘insider’ founders, making party‑style rounds with 20–30 small checks common again despite the narrative that conviction‑led rounds are back; traditional seed funds often can’t compete on price or speed here.

Founders still expect fast, ‘hot’ As within 12–18 months at high step‑ups, while A/B investors want disciplined valuations, efficiency, and real traction; companies that miss the window will either fail, reset expectations and burn, or eventually raise from patient investors who wait for post‑hype acceleration.

For efficient companies at $30–60m+ ARR, growth funds are actively offering term sheets around 10–15x ARR and aggressively buying early‑investor secondary stakes when founders won’t raise primaries—cleaning up cap tables at valuations the companies themselves find premature or unnecessary.