20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough
20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough
20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough
In this episode, David Frankel, co-founder of Founder Collective, shares his contrarian views on the current AI boom, the pitfalls of seed-stage investing, and why he believes another dot-com crash is inevitable. He also discusses the importance of discipline in venture capital and the future of AI and biotech.
Frankel warns that the AI boom will create significant 'roadkill' and predicts a dot-com-style crash. He criticizes the trend of seed funds growing to $50-100M, arguing they will underperform, and advocates for small, focused funds like Founder Collective that prioritize returns over management fees. He calls pro rata 'the original sin' and explains his disciplined approach to follow-on investments. Frankel notes that a $1B valuation is now the new Series A, reflecting market irrationality. He emphasizes the importance of backing founders with deep insight and seeking 3x returns on the next round. He also highlights the unprecedented liquidity in secondary markets and the shift in LP preferences. Frankel believes OpenAI and Anthropic will be disrupted, possibly by China or photonic computing, and criticizes Microsoft's AI efforts. He shares lessons on founder dynamics, the unpredictability of startup growth, and the importance of kindness and presence. Finally, he expresses excitement about AI's potential in healthcare, predicting that chemotherapy will become obsolete.
00:00
00:00
The AI boom will have its roadkill.
10:31
10:31
Price matters less when investing in true winners.
27:35
27:35
Pro rata is the original sin in venture capital.
32:50
32:50
A $1 billion valuation is the new standard for Series A.
40:16
40:16
Seek a 3x return on the next funding round.
46:43
46:43
Certainty of returning capital beats potential future gains.
1:03:02
1:03:02
Younger workers are more adaptable to new tools.
1:13:45
1:13:45
A $2B exit wasn't stellar on IRR, but the journey was rewarding.
1:18:42
1:18:42
Presence and kindness are the keys to genuine connection.
1:19:57
1:19:57
AI will make current treatments like chemo outdated.
