The consensus take is that consensus in venture capital is bad.
To paraphrase:
"Mega-fund VCs driving up valuations on expensive seed rounds for credible founders who are building obvious startup ideas is bad."
On the whole, I think I mostly agree with this take. Especially in regards to the way that lots more money in venture pushes the whole asset class towards mega outcomes or utter failures.
But I also need to be honest about what the data shows. And the data shows...highly valued seed companies DO tend to become unicorns more often.
Data below is from 5,700 startups that raised seed rounds from 2016-2020. We then split them into 4 buckets based on their valuations during that seed round. Each column represents 1,425 startups.
Startups with low seed valuations (1-24th pct): 0.8% unicorn hit rate
Startups with okay seed valuations (25-49th pct): 1.5% unicorn hit rate
Startups with good seed vals (50th-74th pct): 2.6% unicorn hit rate
Startups with great seed vals (75th-99th pct): 5.6% unicorn hit rate
There are LOTS of confounding factors. Big seed valuations tend to mean bigger seed rounds. This doesn't look at exits, just highest valuation post-seed. Etc etc etc, lots of factors.
But shopping at the higher end of the seed market is not a dumb strategy.
Big note - if instead of a binary outcome (did you become a unicorn or not), you wanted to measure a multiples outcome (did this investment grow by 20x or 50x or whatever), the picture changes.
~6% of startups in each of the columns ended up being worth 50x the initial seed round valuation at some point.
Venture is comprised of many different, overlapping games being played simultaneously. There are multiple winning strategies.
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