Thread by @gdibner

I'm not sure this is true, but I am starting to think it might be. Thesis: seed funds and "accelerators" basically can no longer work together. Choose one path and you self-select out of the other.

The best seed funds, like Angular, have gotten pretty good at adding a ton of value and connecting portfolio companies with customers and investors. We're willing to write big checks and build great syndicates - and in many cases, we add a lot of signaling power.

If you have a great seed fund onboard, you don't really "need" the benefits of an accelerator - and they are probably not worth the significant dilution that they involve. The seed funds should get you to the Series A.

On the flip side, if you have given up 7-10% of your company for the accelerator itself and another 5-10% to angels, you are already massively diluted going into demo day. The only way that dilution makes sense, is if you can jack up your valuation on the next round.

So accelerator companies typically go down one of two paths: Thin Rounds or Inflated Rounds. Thin Round: raise a little and dilute very little (i,e. $1M on $15M post). Inflated Round: raise as much as possible at as high a valuation as your investors will bear.

Thin Rounds are really challenging for seed funds because they typically mean the seed fund won't get enough equity to make it work AND the companies are typically under-resourced.

Smart seed funds are focused on ownership to make their models work and are focused on derisking the path to Series A. Thin Rounds make both of those things much tougher.

Inflated Rounds (i.e. $10M+ on $30M+ pre) are equally challenging for Seed Funds - basically impossible for them. The fund math just doesn't work - these are basically Series A rounds - companies that have skipped the seed stage entirely.

It's totally ok and maybe even advisable for a company to skip the seed stage if it can - and most smart seed funds are disciplined enough to know these rounds are not relevant for them.

I don't know yet if the thesis that Seed Funds and Accelerators can't really work together is true, but I do think a strong case can be made. To me, this is a consequence of our overly exuberant private tech markets and the perceived "death of risk."

Seed funds work when there is seed risk. But if enough founders and funders don't believe that seed risk exists, the logic of seed rounds drops away.

So what's a seed fund to do? As always, at Angular we take this as an injunction to be yet more contrarian and to seek out risk: to back founders and ideas that wouldn't otherwise get backed - and to go all in.

At the end of the day, the best seed funds (in fact the best VC funds of all stages) are actually really "accelerators" as well - just that we are highly focused and concentrated on a small set of companies we work extremely closely with and care deeply about.

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