Will Multi-Stage Funds Eat Seed?

Multi-stage funds are increasingly writing seed cheques. The implication is that specialist seed investing is becoming obsolete. I'm not sure that's right – and I wanted to understand why.

The narrative is familiar. Andreessen is doing pre-seed. General Catalyst has a dedicated early programme. Lightspeed, Accel, Sequoia – everyone's moving down-market. They have the capital, the brand, and the implied promise of follow-on.

What's happening is not a simple land grab. It's an incentive mismatch that looks like convergence on the surface but behaves very differently underneath.

Understanding that distinction matters if you're trying to build a durable seed practice – or choose who to take money from.

The Bear Case

Let me steelman the argument for multi-stage dominance, because it's not wrong. It's just incomplete.

Start with the one-stop shop. A founder raising from Sequoia at seed gets more than a cheque. They get an implied path to Series A. No need to re-pitch, no need to build new relationships, no signalling risk from switching investors. For a time-starved founder, that's genuinely valuable.

Then there's the brand halo. Having a16z on your cap table opens doors with customers, recruits, and downstream investors. First-time founders without their own track record lean on their investor's reputation. That's not irrational – it's leverage.

Reserves matter too. Multi-stage funds can double down on their winners. A seed specialist with a $50M fund might have $500K in reserves for follow-ons. A multi-stage firm can write a $20M Series A cheque without blinking. When your seed investor can't protect their pro rata, you get diluted.

And price insensitivity is real. What's a $10M seed to a $10B fund? A rounding error. They can afford to pay up for access to the best founders. Seed specialists operating on tighter margins can't always compete.

Multi-stage funds have structural advantages. Anyone who dismisses them is naive.

Where the Model Breaks

Here's the thing. Seed investing is not just about access. It's about attention.

Multi-stage funds are optimised for capital deployment at scale. Their internal processes, partner time allocation, and portfolio construction are built around writing fewer, larger cheques with clear follow-on logic.

Seed is the opposite. It's messy, high-variance, and disproportionately time-intensive. The work is front-loaded. The information is incomplete. The decisions are driven by judgment, not data.

You can allocate capital to seed. You cannot easily reallocate attention.

That tension shows up fast. Early-stage founders want partners who move quickly, engage deeply, and help shape the company before patterns are obvious. When a seed cheque competes internally with a growth round, seed often loses out on attention. Not because people don't care – because incentives don't line up.

The economics tell the same story. A $50M seed fund needs $200M exits to generate meaningful returns. A $10B multi-stage fund needs billion-dollar outcomes or the maths doesn't work. That changes what they fund and how they advise.

When a seed-stage company gets an acquisition offer for $150M, the seed specialist sees a 30x return. Everyone's happy. The multi-stage partner sees an outcome that won't materially move their fund – and may push the founder to swing for something bigger. Sometimes that's the right call. Often it's not. The founder is getting advice optimised for the fund's construction, not their situation.

The Signalling Trap

There's another risk founders underestimate.

If Sequoia leads your seed and doesn't follow on at Series A, you have a problem. Every investor you talk to will ask the same question: "If your own lead passed, why should I be excited?"

Maybe Sequoia passed because they have too many portfolio conflicts. Maybe the partner left. Maybe they just got it wrong. Doesn't matter. The market reads non-follow-on from your lead as negative signal, and you're fighting uphill.

Dedicated seed investors don't create this trap. They're expected to pass the baton at Series A. No signal, no stigma.

Why Specialists Still Win

Benchmark is the cleanest example of this model at scale. Stage-specific. No growth fund. Partners do the work themselves. They've stayed disciplined while generalist firms have sprawled – and they're thriving.

Specialist seed funds win by leaning into what multi-stage funds struggle to do. They make more decisions, faster, with less information. They price risk differently. They spend more time pre-investment and accept that most of that work won't compound linearly.

Crucially, they optimise for ownership at entry, not optionality. That changes behaviour.

A seed fund that knows it must earn its returns in the first cheque develops sharper judgment earlier. It cannot rely on reserves or later rounds to correct mistakes. That pressure is uncomfortable, but it's a source of edge.

In Europe especially, where markets are smaller and categories take longer to form, that early conviction matters.

The Real Risk to Seed Funds

The biggest threat to seed isn't multi-stage competition. It's imitation.

Seed funds that start behaving like scaled-down growth funds lose their advantage. Slower decisions, consensus-heavy ICs, portfolio bloat, timid ownership targets – all of it erodes what makes seed work.

When seed funds try to compete on brand or balance sheet, they fight a battle they can't win.

When they compete on judgment, speed, and founder trust, they still can.

For Founders

If you're raising seed, ask yourself what you actually need.

If you want a logo and an implied Series A, take the multi-stage cheque. Understand the trade-offs: the attention dynamics, the signalling risk, the advice optimised for billion-dollar outcomes.

If you want a partner who will be in the trenches with you – who cares whether your Series A happens because their fund depends on it – go with the seed specialist.

The best seed funds aren't competing with a16z on capital. They're competing on care, hustle, and alignment.

The Bet

The future isn't seed versus multi-stage. It's clarity versus blur.

Multi-stage funds will keep writing seed cheques. That's rational. But they'll remain constrained by attention, incentives, and portfolio gravity.

Seed funds that survive will be the ones that embrace their role fully. Fewer bets, higher ownership, faster decisions, and a willingness to be wrong early.

The edge is not capital. It's conviction formed before certainty exists.

That's not going away.