We The Builders E20: Seth Berman, Cofounder of Susa and Kivu Ventures on History and State of Early Stage Venture Capital
How Early Seed Felt And Why It Scaled Fast
- Seed investing in 2010 was intimate and small, letting early angels like Seth Berman access outsized winners from tiny portfolios.
- Seth invested $5–25K into 22 angels, with 6 quick exits and early stakes in Robinhood and Flexport that defined Susa's start.
Why Seed Became Hypercompetitive
- The seed ecosystem exploded: multi-stage funds moved earlier and fund-of-funds fueled ~900+ seed funds, compressing stages and raising competition.
- This pushed seed earlier (pre-seed→seed, seed→Series A) and made rounds winner-take-all.
Prefer Series A For Clearer Signals
- Move to Series A/B when you want clearer product-market signals and faster feedback loops.
- Seth now focuses on companies with product in market and customers so DD and outcomes are measurable.
Intro
Seth Berman is the cofounder of Susa Ventures and Kivu Ventures. He started angel investing at Y Combinator demo days back when there used to be twenty companies and a handful of investors looking at them. He then went on to start one of the early few seed funds funding 10 unicorns across ~100 investments. Some of these include companies like Robinhood, Flexport and Chapter (Cofounded by Cobi Blumenfeld-Gantz, who has also been on the show). See link below to the original episode.
Special thanks to Cobi for the intro. We filmed this in Aspen CO on my first trip there. Since I don’t ski, the only reason I had heard of the city was Aspen Institute and their events.
Highlights
Sharing below some of the topics we covered in the episode. You can also check out the Full Episode on YouTube.
The Early Days of Seed Investing [02:03 - 04:31]
* “I was angel investing starting in 2010 and I was fortunate enough to be one of the first people that would go to Y Combinator’s demo days.”
* “When I started going, it was probably 12 founders that were presenting and 12 investors in the audience.”
* “I think we invested in five or six companies that became unicorn businesses in a fairly small portfolio.”
The Explosion of the Seed Ecosystem [05:34 - 09:00]
* “There’s now 900 plus seed funds out there in the ecosystem.”
* “Any great company that’s running a competitive process, if they’re talking to 20 funds, 19 of them are going to lose and one of them is going to win.”
* “What used to be seed is now series A and what used to be pre-seed is now seed.”
* “It’s very challenging for them to let other large seed funds in or multi-stage funds. So it becomes a winner take all round.”
The Series A Opportunity [09:00 - 10:30]
* “I felt like there’s a tsunami of seed-stage deals coming to series A.”
* “I graduated from doing seed to series A and B now.”
* “I’m more focused on companies that have some sort of product market fit.”
* “Series A funds, there’s probably 30 super high quality funds, but there’s not 900.”
Missing Out on Pinterest [10:30 - 12:40]
* “One of my biggest misses was Pinterest. I remember meeting with the founders outside at TechCrunch Disrupt.”
* “The number that I remember seeing was they are over 20 minutes time on site per day. And that was a similar number to what Facebook had.”
* “I should have known that with that much engagement, they were going to build something really special.”
The Era of the “No-Deck” Fundraise [12:50 - 13:47]
* “Any founder that has really strong experience can go out and fundraise with no product.”
* “They can literally just have an idea and pitch it and raise funding and not even a deck.”
* “A creative can come in with no technical expertise really and build a sizable business.”
* “The gates are down. And if you’re a creative person or entrepreneurial person and you have an idea... it’s easier ever to build a product.”
Vertical AI and the Super Cycle [13:34 - 14:43]
* “What we’re seeing in AI... it’s changing everybody’s workflow on a daily basis.”
* “A lot of these models whether they’re vertical specific or they’re horizontal is they’re breaking the benchmarks way faster than anybody could imagine.”
* “I see adoption of them at my much higher rates than I’ve seen other super cycles in the past.”
AI 2.0: Physical Intelligence [14:43 - 16:15]
* “We call it physical intelligence... we think AI 2.0 is really when intelligence starts affecting physical objects.”
* “There’s going to be so many different things that are going to happen over the next 5 to 10 years that bring intelligence into every person’s life on a daily basis.”
* “Bring intelligence into every person’s life... on the manufacturing floor in agriculture and in construction.”
* “We’re trying to find kind of the picks and shovels that invest in those models and in those businesses to allow this new ecosystem to be built.”
Starting a Company vs. Solving a Problem [22:28 - 23:25]
* “I think there’s two types of entrepreneurs. I think there’s an entrepreneur that wants to start a company and there’s an entrepreneur that wants to solve a problem.”
* “We tend to want to invest in entrepreneurs that are trying to solve a problem.”
* “Experience that problem before... have some domain expertise to understand why the problem exists and how to solve it.”
The AI Scientist [32:10 - 34:01]
* “Instead of having a few thousand researchers you can have billions and you can replicate them over and over and over again.”
* “An AI agent can have access to everything and be able to analyze it constantly.”
* “I think there’s going to be profound discoveries over the next decade from these AI scientists.”
* “They’re going to hit prime human sometime in the next two to five years. Prime human being, Albert Einstein level intellect.”
Vertical vs. Horizontal Models [35:51 - 37:21]
* “A startup raised like $50 million to build this model... they tested it against ChatGpt and ChatGpt was better.”
* “They just spent $50 million for nothing... you just don’t have the same sort of resources as these horizontal models and access to compute.”
* “These models might just be so powerful that you don’t need a lot of these vertical specific companies out there today.”
Why Founders Don’t Care About Your VC “Platform” [39:19 - 41:12]
* “If they get multiple term sheets from the tier one funds, they tend not to care so much about the platform and the services.”
* “They care more about the partner that they’re going to be working with.”
* “What we found is it’s very hard to have specialists in every single vertical.”
* “Unless you’re kind of within the sweet spot of the individuals that they hired at that fund... they tend not to be that helpful.”
Investing is Harder Than Tweeting [48:04 - 48:53]
* “I think that investing is incredibly difficult. You only have so much time during the day.”
* “It’s very hard to have the time to kind of build up an online presence.”
* “My focus has always been on do the best deals possible, support those founders, and have those founders speak highly about you.”
Identifying Talent: Broken Resumes and Persistence [01:10:48 - 01:15:00]
* “Sometimes the most talented people have broken resumes. They don’t check the boxes... the credentials aren’t there.”
* “You want somebody that is extremely persistent that is going to run through walls to make things happen.”
* “It’s a very different skill set building a product and building a team and making that team successful.”
* “A lot of founders... they don’t put the resources or the time into go to market at the early stages.”
Timing: Catching the Wave [01:32:00 - 01:35:50]
* “Sometimes as investors, we’re so far in front of the wave and the wave isn’t coming for 10 more years that, you know, we’re just never going to catch it.”
* “Catching it too late... you invested in a social network in 2012 or 2014, you’re probably too late.”
* “Understanding what potential outcomes can be is like absolutely critical to being a great investor.”
The Future of Public Markets and AI Analysts [01:38:16 - 01:43:12]
* “You could go public when you’re doing like 150 million of revenue 10 years ago... in the next two years it might be you have to be doing a billion of revenue.”
* “AI might change that... you might not need those public market analysts anymore and then a lot of these businesses could start going public much earlier.”
The Robinhood Story [01:45:00 - 01:48:00]
* “We met them... and they kind of told us their vision of fee free trading.”
* “We were the only investor that was willing to kind of open up our our books and be like the the investor of record for FINRA.”
* “My feeling on why they were so successful was it was really intuitive UI and it was just a great user experience.”
* “I kept 80% of my stock. So, I still own a lot of Robinhood stock.”
Exceptional Go-To-Market is Now Required [02:00:04 - 02:01:08]
* “Go to market has just become so much more challenging and the go to market motion... needs to be so more highly refined.”
* “If you have the resources, your go to market team should be equal to your product and engineering team.”
* “Build a world-class team around whatever channel you want to focus on and find people that have done this before.”
Watch On YouTube
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