My First Million
The best business ideas come from noticing what's working and doing it better, faster, or for a different audience.
Venture capital is bifurcating into two strategies: 70% growth deals at high valuations betting on 5x returns, and 30% seed deals at $60-100M valuations betting on 100x outcomes with uniquely high loss rates
The Reasoning
The potential for $100B+ outcomes in AI means the math works even with extremely high valuations and loss rates, similar to how $1B outcomes used to justify venture math
What Needs to Be True
- AI companies can actually reach $100B+ valuations
- The rate of $100B outcomes justifies high loss rates
- Growth stage deals continue to deliver predictable 3-5x returns
- Limited partners accept the new risk/return profile
Counterargument
High valuations and high loss rates may not generate acceptable returns even with occasional mega-outcomes
What Would Change This View
Evidence that $100B+ outcomes are much rarer than expected, or that high-valuation growth deals stop working
Implications for Builders
Seed stage founders must build for truly massive outcomes
Growth stage companies have access to more capital
Middle-stage companies may struggle to raise
Investors will be more concentrated in fewer, larger bets
Example Application
“A seed fund pays $100M valuation knowing that 90% of investments will fail, but the one that becomes worth $100B+ will return the entire fund”
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