Commoditization of Seed Investing
Arjun Sethi, co-founder of Tribe Capital, on investor allocation strategies and democratizing access to capital
Seed is getting commoditized because the scarce thing is no longer money, it is differentiated judgment and support. More angels, operators, micro funds, accelerators, and multistage firms now write the first check, which makes capital easier to find but makes ownership, pricing, and investor selection more competitive. That pushes early investors to win with sector context, founder access, and a clear plan for follow on and secondary liquidity, not just by showing up with a SAFE.
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At the earliest stage, more participants can now invest. Arjun Sethi frames that as a broadening of the investor base, with more capital flowing to angels and seed investors who know a sector, region, or customer problem well. The result is a market where access is wider and the check itself is less differentiated.
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That crowding shows up in later research too. Pre-seed rounds under $1M were the only funding bucket that increased in 2023, even as Series A, B, and C capital fell sharply. At the same time, larger firms have pushed down into seed, and accelerators and pre-seed funds now blur together.
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When many investors can get into seed, the economics shift toward portfolio management. Early funds increasingly think about taking partial liquidity later, because pre-seed and seed have the highest failure rates, while a rare breakout can become a 25x to 50x position well before IPO. That makes secondaries part of the seed playbook, not just a late-stage tool.
The next step is a seed market split between generalist money and specialist money. Generalist capital will keep making first checks abundant, while the best early investors will look more like product scouts and company builders, winning allocation with expertise and then managing risk through pro rata rights, follow on discipline, and earlier secondary sales.