Verissimo Monthly - March 2025
The Unintended Consequences of Raising Seed Money from Large Funds
Thoughts on Investing and Starting Up
When it comes to large funds making investments into seed stage companies, everyone talks about two main issues:
Signaling risk. If that fund doesn't follow on with a core investment, then it tarnishes the company for the rest of the market.
Incentive alignment. They are not economically incentivized to actually care about the company. A $3M check simply will not move the needle for a $1B+ fund.
But there is a third set of issues which may be even more problematic:
Involvement in the company - which includes:
Stage-specific advice
Attitude toward the status of the business
Stage-specific advice can be a real problem in one very clear, specific situation:
Giving genuinely great advice on how to grow a company/business before it is ready to do so can be totally detrimental to the mid and long term prospects for the company.
Premature growth is like lifting heavy weights before age 12... it can result in seriously stunted growth.
Attitude towards the status of the business may even be a bigger issue:
Once an early-stage investor has placed their bet, they (should) go from being a diligencing investor to a helpful teammate and advisor. This transition is fundamental to the relationship between founders and their investors. Once you're in a company, you ought to be in it to win it. Your job is now to do whatever you can to make this company successful. The problem with large funds taking option bets into seed stage companies is just that: they are option bets ahead of potentially much larger checks later on. The result is that those investors do not make the transition from diligencing investor to teammate after they wire the money - they are still a diligencing investor… except now they’re insiders. The feedback they give and the questions they ask will all be meaningfully colored by their role being fundamentally rooted in diligencing the company for a future investment.
While there is value to that critical eye in the room, too much of it often adds undue pressure to founders, preventing founders from expressing the sort of confident vulnerability which allows them to engage their stakeholders in the most productive way.
Even in a more positive light, their advice will always be directed specifically toward how the company can become a core investment for their fund, regardless of whether or not that still makes sense (because it is a KPI for any seed investment program in a large fund).
A lot changes in the first 2 years of any company - these stories are much more variable and complicated than what gets shared publicly. Having the sort of unwavering support, focus, economic alignment and stage-specific advice can be the game changer for founders.
So my advice to founders who are getting approached by large funds to lead small rounds: let those rounds be led by stage-appropriate investors, and let the big guys make their option bets alongside that (if they so desire).
A massive fund owning 20% of your company for $3M creates a very unstable situation which does not stand to benefit founders or investors. If it makes sense, let them own 5% and buy up to 20% in the next round—that’s their core strategy anyway! Alternatively, if they’re doing what seems like an excessive amount of diligence for what will be a small check for them, tell them you’re focused on raising from seed funds and should schedule a call for 9 months out. This will give them some relief that their multi-stage competitors are not taking the deal either, and then they can potentially invest in their sweet spot down the road.
In any case, founders should be asking VCs: “What percentage of your fund are you investing into this round?” This metric matters a lot.
Programming, Events, Content and More
🎙 Podcast Feature: Tech on the Rocks
Tune in to Verissimo’s Nitay Joffe and Kostas Pardalis founder of Typedef, as they chat with tech geniuses on Tech on the Rocks—where hardware, cloud, and all things future-tech meet over a virtual drink!
Episode 15: Apurva Mehta - Reinventing Stream Processing: From LinkedIn to Responsive with Apurva Mehta - https://techontherocks.show/15
Episode 16: From Data Mesh to Lake House: Revolutionizing Metadata with Lakekeeper - https://techontherocks.transistor.fm/16
🚀 Founder & Community Programming
Reminder to check out our It’s All About Everything Series!
Portfolio Highlights
Lenkie announced a Series A consisting of a £4 million equity raise and an additional £45 million debt facility, led by a large US private credit fund.
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Alta recently announced its $7 million seed funding alongside its official market launch. The round was led by Entrée Capital and Target Global—we were the third largest investor.
Alta provides an AI-powered workforce that streamlines sales and revenue operations. Its specialized AI agents—Katie for personalized outreach, Luna for analytics and insights, and Alex for automated calling—integrate seamlessly with existing sales, marketing, billing, and collaboration tools. By automating routine tasks and delivering actionable insights, Alta helps teams accelerate growth and optimize revenue performance.
Novella is a digital insurance wholesaler revolutionizing Excess & Surplus (E&S) insurance through AI-powered solutions. Its technology transforms the traditional quote-to-bind process by ensuring brokers submit complete, accurate information upfront—streamlining operations and cutting processing times from weeks to days.
Curvenote is a web-first publishing platform transforming how researchers create, share, and communicate scientific work—moving beyond static PDFs. The platform combines an intuitive authoring environment—supporting Markdown, interactive figures, and real-time previews—with powerful automated integrity checks and computational reproducibility. Trusted by prestigious organizations including the American Geophysical Union and Microscopy Society of America, Curvenote is bringing scientific authoring into the 21st century.
Novodia delivers fast, affordable, and high-quality custom curricula by combining proprietary pedagogical AI with subject-matter expertise. It bridges the gap between school districts' demand for vetted, standards-aligned content and teachers' need for dynamic, engaging classroom experiences that reach every student.
Who we are
Verissimo Ventures is a Pre-seed and Seed Venture Fund based in Israel and the US. We invest primarily in enterprise software companies and take a fundamentals-driven approach to early-stage investing. We work closely with founders to help them build the strongest, most fundamentally sound businesses with potential for explosive growth and a meaningful impact on the market.
We were founded in 2020 and are currently investing out of our $26M Fund 2.