20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

What It Covers

Max Altman, managing partner at Saga Ventures, discusses building a $125M seed fund, early investments in Rippling at $25M and Reddit at $600M, leaving $2B on the table, seed market dynamics versus Sequoia and Andreessen, and why climate tech fails.

Key Questions Answered

• •Seed ownership strategy: Target 10% initial ownership at seed with one-third reserves, requiring only one winner at $10B exit to return the fund. At 7% dilution by IPO, this generates $700M return from a single company, eliminating need to cover entire market like multi-stage funds.
• •Multi-stage seed competition: Andreessen led 70 seed investments in two years, Sequoia 26, but junior partners typically handle deals. Seed funds win by offering direct GP access, price alignment for next rounds, and serving as conduit to tier-one firms for Series A without competing on follow-on rounds.
• •Pro rata reality: Model only 70-80% pro rata allocation in hot deals, not 100%. Sequoia and top-tier firms aggressively protect their ownership in winners. Pro rata is earned through board work and founder relationships, not a legal right. Plan portfolio construction accordingly to avoid capital constraints.
• •Founder fundraising process: Run clean Series A by starting all conversations simultaneously within one week, not sporadically. Have seed investor introduce directly to specific GPs, not junior partners. Associates share negative signals in WhatsApp groups that poison deals across 20 funds before process officially starts.
• •Secondary timing framework: Sell at IPO lockup expiration unless three criteria met: 10x+ potential remains, brand halo from cap table association, or network access to top founders. Reddit sale at $9B (now $39B) cost $2B in gains, but LPs have auto-sell rules making holding difficult.