2026-07-24 03:00:45
When we started Homebrew in 2012/2013 the conventional wisdom was that early stage funds hold 20-50% of their total capital for follow-on pro rata. Mostly to ‘double down’ on their winners [offense!] and sometimes to help bridge promising companies to their next financing or maintain ownership in pay-to-plays [defense!]. This ‘best practice’ was based on a few core assumptions/truths about the way the venture industry used to work.
In the year of our lord 2026, and having now lived in the early stage venture world for 13+ years, I’m calling bullshit on basically every piece of this.
Ok, so am I saying early stage funds of modest size ($100m or less) should *never* follow on? NO, I’m saying you should minimize reserves so that you are not thinking about it as a second pool of dollars to only use for second checks. Instead evaluate any pro rata opportunity vs a net new investment, and assume you will not use a significant amount of your fund capital for follow-on. Get more shots on goal, so to speak, and see if you can catch more true outliers.
But HUNTER,
WHAT ABOUT DILUTION? If exits for winners are truly bigger than ever, your dilution won’t matter as much from a fund model perspective -AND- the wild growth in early stage valuations means you will be taking LESS dilution than has historically been.
WHAT ABOUT COMPANIES I REALLY REALLY BELIEVE IN? Three answers:
a) You believe in them equal to the market. The round is likely fairly priced and you think there’s real growth ahead – not ‘risk adjusted’ stage specific multiple, but another 50x, 100x from here? Do your pro rata from the fund.
b) You believe in them less than the market does. That is, you’re excited but the financing terms are CRAZY. Don’t do your pro rata and/or do a SPV/take money from one of the many firms that now exist to back your winners. And then if the financing trend continues to exceed your confidence, think about some secondary selling from your fund over time. These options are also a new phenomena that historical ‘best practices’ didn’t consider.
c) You believe in them way more than the market does. Great, double down, maybe even ahead of a round. This is where getting a few hundred thousand or couple million more can make a real different in preserving/increasing ownership ahead of an inflection in their valuation curve. You just need to be correct 
WHAT ABOUT WHAT MY LPs EXPECT TO SEE IN MY FUND MODEL? That’s why I’m writing this – show them the post. And make sure you can recycle – one way to ‘solve’ the reserves question is by getting to 100%+ invested. We got to 120%+ in each of the first two Homebrew funds!!
[i’m sure there are some typos here and i’ll edit as you point them out or ideas/concepts i should expand on]
My friends have saved $13,000+ since I posted this link!
A friend told me this was jarring to see on a VC blog – what am I shilling for an Junova? Well, I’m not being paid and I’m not an investor in the product. I just think it’s brilliant and effective and I like the idea of using AI to “fight” against big business pricing models. ¯\_(ツ)_/¯
Tip DON’T LET AIRLINE RIP YOU OFF ESPECIALLY AS OIL PRICES CLIMB: I’m using Junova to track purchased airline tickets and auto-reclaim credit if the price drops. It was started by a friend and so far has recouped $3000+ of American and United credits for me. Their business model is: service is no cost, but if they successfully get you credit, they charge 20% of the value to your credit card. If you use this referral link, your first $25 of fees (ie $125 of flight credit) is free. Let me know how it works for you!
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2026-07-22 05:09:42
“Wired, Tired, Expired” was a fun feature of Wired Magazine back in the day. It would take a general concept and give you three variations – one that was ‘of the moment,’ one that was recently popular but long in the tooth, and one which needed to have a stake put through its heart.
Well, I don’t have any of the first two categories for you but here are three EXPIRED concepts
Non-Technical [as in, ‘He’s a non-technical product manager’]. Online resources, code school, and the ‘no code’ movement all started taking chips off this monument, but AI has felled it completely. Non-technical is now merely a choice, and a very bad one. Sure there may still be gaps in proficiency, experience, and training – I’m not making the case that engineering as a discipline is disappearing any time soon – but the idea that anyone is your company is ‘non-technical’ is on them and on you, not part of a job spec. And some of the best startups aren’t just looking for technically inclined hires, they’re helping their entire org chart use AI tooling [like Ambrook – financial tools for farming and the real world – here’s a post describing the effort and the curriculum developed].
Unicorn. A sharp concept when it was originally coined to represent the rarity of startups with a $1b+ valuation, it now poisons our entire way of thinking about success. A paper mark that incentivizes some founders to strive for a near-meaningless financial benchmark given to you by an investor who has equal motivation to be ‘in Unicorns.’ Media that whether it’s the pace of the job, or the will of their editors, or their own lack of experience in the tech world, uses the threshold as proxy for quality and relevancy. And the attempts to assign names to $10b, $100b, etc companies MegaDecaDragons, is just so square. Back to focus on the product and the company and the business model. Not the interim valuation.
Oversubscribed. The tiny hill I continue to die upon until style guides and LLMs begin to advise against the description (of a funding round or VC fund raise). As I’ve written previously, it’s meaningless and manufactured (will let you click through for the full rant).
Ok, what jargon do you hate?
My friends have saved $13,000+ since I posted this link!
Tip DON’T LET AIRLINE RIP YOU OFF ESPECIALLY AS OIL PRICES CLIMB: I’m using Junova to track purchased airline tickets and auto-reclaim credit if the price drops. It was started by a friend and so far has recouped $3000+ of American and United credits for me. Their business model is: service is no cost, but if they successfully get you credit, they charge 20% of the value to your credit card. If you use this referral link, your first $25 of fees (ie $125 of flight credit) is free. Let me know how it works for you!
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2026-07-15 07:05:27
“But what will weigh on you the most is just how bad it will feel until you find product market fit. It feels like pushing a boulder uphill while wondering whether the boulder wants to move at all.” This is how Sam Gerstenzang describes the pain of finding Product Market Fit within a startup. I liked the post and it includes a few tips, from a founder’s POV, on navigating the idea maze. Still, as I read it, the sadist in me wanted to push the bar even higher and talk a bit about false PMF, which can sometimes be an even worse situation than no PMF (because you’re ramping up spend and activity, essentially running, with increasing speed, in a straight line towards a cliff.
False PMF #1: It’ll Get You 0-1 but not 1-10. A smart team in a big enough market can almost always will themselves to Series A metrics if that’s their sole goal. But that doesn’t make a company more valuable – if anything it creates a local maxima that might be mirage. The ‘let’s just raise more capital and then fix everything about our business’ is a trap – for your team, for your investors, and for yourself. So if your judge PMF merely by “numbers go up” but you know you’re not selling a specific product to a similar group of customers, who themselves are representative of a larger opportunity, it’s not PMF.
False PMF #2: You’re Giving It Away For Free. Revenue is often not the important metric early on, and pricing is usually a series of experiments. But my strong opinion is that while it’s a perfectly valid option to DELAY revenue strategically, if you’re merely avoiding the litmus test of “would someone pay for this” because you’re afraid the answer is NO, then you don’t concretely have PMF. I know there are a bunch of exceptions here and my words apply less to some consumer or open source products, but I’m a strong believer in front loading business model testing – to your benefit, not because you’re starting to manage to a revenue curve.
False PMF #3: Your Bucket is Leaky AF. I’ve seen founders convince themselves (and investors) that they have PMF because user count is going up. But when you dive in the engagement and retention just ain’t there – either you’re counting ‘customers/actives’ too liberally, or good at generating signups/pilots/whatever, but can’t get folks to retain and use. ‘Good faith’ versions of this mistake used to be more common because logging, data analysis, etc were harder to implement in young startups. Less so these days.
As Sam notes, “I’m still not sure I can help find others find product market fit – it remains the single hardest problem in startups.” And I agree. Much of the support we do with startups is helping them prioritize hypotheses/experiments, articulating what positive PMF might look like for their idea, and ultimately trying to find GREAT PMF, not just MAYBE GOOD ENOUGH.
My friends have saved $12,500+ since I posted this link!
Tip DON’T LET AIRLINE RIP YOU OFF ESPECIALLY AS OIL PRICES CLIMB: I’m using Junova to track purchased airline tickets I’ve taking and auto-reclaim credit if the price drops. It was started by a friend and so far has recouped $2500+ of American and United credits for me. Their business model is: service is no cost, but if they successfully get you credit, they charge 20% of the value to your credit card. If you use this referral link, your first $25 of fees (ie $125 of flight credit) is free. Let me know how it works for you!
2026-06-29 21:47:34
Susan Wojcicki, Om Malik – both people I was fortunate enough to call a friend. Both died too early.
Susan almost two years ago. Om just a few days.
See the outpouring of love and respect for them as humans?
See how people can be wildly successful but also kind, giving, approachable?
They were role models in life. And role models ongoing.
Against a backdrop of an industry that feels like its moral compass is spinning right now.
Find the next Susans and Oms in our community and celebrate them when they’re alive too.
2026-06-26 04:41:34
“Here’s how we did it” is one of my favorite phrases to hear in a healthy startup ecosystem. Collaborative learning benefits everyone and the startup which initiates the discussion gets the potential benefit of the smartest folks *outside* of the company improving the work.
Ambrook, a startup building financial tools for ground level independent American businesses, starting with farming and agriculture, recently spent six weeks helping everyone on the team get comfortable enough with AI tooling to begin automating some of their individual workflows. Ambrook has been a technology-forward team from its origins so this wasn’t about “how does AI change our company” but rather “we want the company to take this journey together” and see constant learning as a career opportunity, not a career threat.
I’ve written before how Ambrook is ‘legible to talent’ – doing the things which attract colleagues who want to live professionally at the intersection of excellence and meaning (oh yes, they’re hiring) – so it didn’t surprise that this was their approach, but the text from CEO Mackenzie Burnett that said “hey, we’re open sourcing this” was unexpected (and delightful).
Here’s Ambrook’s intro blog post on the work – Momentum Month, or Teach a Man to Fish. Authors Dan and Paige describe the how and why of this effort and link to a Google Drive with all the supporting files. As they note, “Six weeks doesn’t make a team fluent in everything. But it has helped us understand the possibilities, and the investment it takes to make that happen. The compounding is just getting started.”
The effort has already resulted in some good discussion within the Homebrew founder community and I hope it’s useful to you as well. Thank you Ambrook for showing and sharing!
My friends have saved $12,500+ since I posted this link!
Tip DON’T LET AIRLINE RIP YOU OFF ESPECIALLY AS OIL PRICES CLIMB: I’m using Junova to track purchased airline tickets I’ve taking and auto-reclaim credit if the price drops. It was started by a friend and so far has recouped $2500+ of American and United credits for me. Their business model is: service is no cost, but if they successfully get you credit, they charge 20% of the value to your credit card. If you use this referral link, your first $25 of fees (ie $125 of flight credit) is free. Let me know how it works for you!
2026-06-22 01:54:08
Father’s Day! A time for Dad to open and close browser tabs…
People-First Hiring: Implementing AI Without Losing Connection [MCJ Newsletter] – Climate-oriented venture firm MCJ published their readout of how AI has been integrated into their talent workflow, which include everything from sourcing founders to helping portfolio companies with hires. I’m a real fan of folks putting their playbooks out there because we’re in a period of such rapid iteration and learning. The MCJ team also notes that:
Not every part of the hiring process benefits from automation, and in some areas, over-reliance on AI risks undermining efficacy in our work. The candidates we most want to connect with founders are paying close attention. They can tell when outreach is too templated, when a process feels automated, and when a company is performing investment in people rather than actually making it.
Spylandia: How a Stretch of Florida Real Estate Has Become a Covert Corridor for Chinese and Russian Spies [Adam Ciralsky/Vanity Fair] – This is a crazy article about the degree of light espionage going on in Florida around the US space and aviation programs (private and public activities). Fake tourists, honeypot traps, residential homes that turn out to be wired up like data centers!
The activity wasn’t confined to the Chinese. An immaculately groomed Russian family—straight out of The Americans—appeared at SpaceX’s Cape Canaveral complex, presenting themselves as tourists. CFIX later learned the same family had surfaced at a SpaceX facility in California under the guise of sightseeing.
Franchise Thinking: On the Sequel Economics of Ideas [Anu Atluru/Working Theorys] – “Your idea gets franchised or it disappears.” Modeling her thinking on current memetics and the way we’re growing more comfortable (culturally, economically) with derivatives of the familiar than radically new. Franchised ideas already have tribal audiences. The opposite of franchise thinking is not contrarianism Anu notes. In fact, ‘contrarian’ has become another type of franchise. I feel like this is not dissimilar from some of Renée DiResta’s work on ‘universe building’ in the world of conspiracy theories, online sub-communities, etc.
Human Error is OK! Machine Madness is a No-No! Why? [Om Malik/Om.co] – “Why are we able to absorb big technology failures when they are blamed on people, but respond so differently when the failures come from machines?” This always drives me crazy, with autonomous vehicles being one prime example of being held to a standard much stricter than we ask of humans. Om got some pushback on this post but I think at least in my example it’s both (a) true and (b) confusing for well-intentioned people who do want to ‘make something better’ but won’t be able to make something perfect. Hold aside the less well-intentioned who believe they shouldn’t have to ever listen to regulators, the public, etc etc.
how to ask for advice (without wasting everyone’s time) [Auren Hoffman/summation] – no notes. just read it.
I make good money. Why do I still feel like this? [Hanna Horvath/Your Brain on Money] – Hanna writes about how the Middle Class was a post-war policy project, not a status quo of our economy. And that as it splits (K Shaped Recovery!) the resulting contrails of anxiety extend beyond “just” those previously in the MC segment.
When you’re experiencing material precarity, the resentment tends to flow toward immigrants, toward the generation that came before you, toward the upper-middle-class “elites”. When you’re experiencing positional precarity, the resentment may flow toward people who “didn’t optimize hard enough,” toward the general sense that nobody appreciates how hard you’re working.
In both cases, the anger moves sideways or downward. It less often moves upward — toward the 0.1% whose effective tax rate is lower than yours, toward the policy choices that make wealth concentration a feature, not a bug. And it almost never turns into the question that actually matters: What would it take for me to move from the labor side of this economy to the ownership side?
Good questions Hanna!
Enjoy your Father’s Day
My friends have saved $12,000+ since I posted this link!
Tip DON’T LET AIRLINE RIP YOU OFF ESPECIALLY AS OIL PRICES CLIMB: I’m using Junova to track purchased airline tickets I’ve taking and auto-reclaim credit if the price drops. It was started by a friend and so far has recouped $2500+ of American and United credits for me. Their business model is: service is no cost, but if they successfully get you credit, they charge 20% of the value to your credit card. If you use this referral link, your first $25 of fees (ie $125 of flight credit) is free. Let me know how it works for you!