20VC: Investing Lessons from Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

**David Frankel** (0:00)
I would say reserves and how to do the reserve thing is actually one of the most challenging aspects of venture. Still think of like pro rot as like the original sin against entrepreneurs.
You own your own destiny by minding your monthly burn. I think that DPI could be dead. LPs are looking at this asset class right now, I think, and going, where is the DPI? Those guys were just like a casino. One call to John a tiger, like 20 on 80, no problem.

**Harry Stebbings** (0:28)
This is 20VC with me, Harry Stebbings, and I'm so excited to welcome a dear friend and mentor of mine to the hot seat today. He is one of the great seed investors of our time, David Frankel. David is the founder and managing partner at Founder Collective, the firm with seed checks in Uber, Coupang, Airtable, Whoop, PillPack, and many more billion dollar incredible companies. But before we dive in, this episode is presented by Brex, the financial stack founders can bank on. Brex knows that nearly 40% of startups fail because they run out of cash, so they built a banking experience that takes every dollar further. It's a stark difference from traditional banking options that leave your cash sitting idle while chipping away at it with fees to help you protect your cash and Brex combined the best things about checking, treasury and FDIC insurance in one powerhouse account. You can send and receive money worldwide at lightning speed. You can get 20x the standard FDIC protection through program banks. And you can earn industry leading yield from your first dollar while still being able to access your funds anytime. Brex is a top choice for startups. In fact, it's used by one in every three startups in the US. To join them, visit brex.com/startups. And finally, let's talk about Squarespace. Squarespace is the all-in-one website platform for entrepreneurs to stand out and succeed online. Whether you're just starting out or managing a growing brand, Squarespace makes it easy to create a beautiful website, engage with your audience, and sell anything from products to content, all in one place, all on your terms. What's blown me away is the Squarespace Blueprint AI and SEO tools. It's like crafting your site with a guided system, ensuring it not only reflects your unique style, but also ranks well on search engines, plus their flexible payment options cater to every customer's needs, making transactions smooth and hassle-free. And the Squarespace AI? It's a content wizard helping you whip up text that truly resonates with your brand voice. So if you're ready to get started, head to squarespace.com for a free trial. And when you're ready to launch, go to squarespace.com/20vc to save 10% off your first purchase of a website or domain. And finally, before we dive into the show, I want to recommend a book, The Road to Reinvention, a New York Times bestseller on mastering change. No time to read? Listen to 20VC now, then download the Blinkist app to fit key reads into your schedule. With Blinkist, you can grasp the core ideas of over 7,500 non-fiction books and podcasts in just 15 minutes, covering psychology, marketing, business and more. It's no surprise 8 Blinkist users see themselves as self-optimizers, and 65% say it's essential for business and career growth. Speaking of business, Blinkist is a trusted L&D partner for industry leaders like Amazon, Hyundai and KPMG UK, empowering over 32 million users since 2012 as a 20VC listener. You can enjoy an exclusive 25% discount on Blinkist, that's B-L-I-N-K-I-S-T.
just visit blinkist.com/20vc to claim your discount and transform the way you learn. You have now arrived at your destination. David, I am so excited for this, man. We were literally just saying how much more special it is to it in person. So thank you so much for joining me in person.

**David Frankel** (3:45)
Harry, it's so awesome to be here. I love being here with you in person in London.

**Harry Stebbings** (3:48)
Dude, I want to start on one of my biggest, most pressing concerns actually right now, which is we are seeing these massive seed rounds, like $6 to $10 million. How can traditional seed funds, 50 to 100 million seed funds play in this new world?

**David Frankel** (4:05)
Yeah. I mean, I think you still can. I'm going to appeal to the inner McKinsey consultant in you. I know it exists. But if you think of right, wrong, consensus, non-consensus, you don't have to only do kind of right, non-consensus, but that's where you do do well. And there's lots of ways of still being non-consensual, I think. So, you know, if you think of non-consensus, founders, people who come from less traditional backgrounds, people who come from secondary schools, right, that like mainstream is not going to back. That still very much exists. Frankly, founders who've had who failed, right? You haven't done well. And like, you know, the mainstream is kind of like, wouldn't touch that. Founders who've been orphaned.