The Past, Present, and Future of Pre-Seed | Charles Hudson, Precursor
Charles Hudson started Precursor Ventures in 2015, and helped create pre-seed as a category.
Ten years and hundreds of Day 0 checks later, few investors have backed as many first-time founders, making him the perfect person to talk through the state of the category today.
We talk about why this is the hardest moment for pre-seed/seed investing he can remember, why sitting out of bubbles can be more dangerous than joining, how he hands his junior team real money to make their own bets, and urgency and “the last $250k effect”.
Thank you to Numeral, Flex, Amplitude, and Merge for supporting this episode.
Numeral: The end-to-end platform for sales tax and compliance https://www.numeral.com
Flex: Get premium banking and a net 60 day credit card at 0% APY https://home.flex.one/referral/bananacapital
Amplitude: AI analytics, all you have to do is ask https://www.amplitude.com
Merge: Every modal. One API. Total control. Check out Merge’s Agent Handler. merge.dev/turner
Timestamps:
(0:00) Is Pre-Seed dead?
(4:15) Do round names matter anymore?
(12:27) Multi-stage signaling risk doesn’t exist
(16:42) Smart LP’s love multi-stage funds
(22:03) Is the traditional Seed model broken?
(26:31) Velocity of capital deployment drives all incentives
(30:30) How to compete with megafunds at early stage
(34:24) Megafunds have Seed funds in a vice-grip
(38:34) “The best Series A’s are all expensive"
(39:33) Are we doing 2021 all over again?
(41:53) It’s safer to participate in bubbles than sit out
(47:35) Price you pay is everything
(50:22) The system incentivizes an addiction to consensus
(55:22) High valuation + high CapEx grows AUM
(59:56) How Precursor actually invests today
(1:01:32) Precursor’s Principal investor program
(1:05:56) Deciding when to selling your winners
(1:10:53) Raising as a pre-consensus founder
(1:12:39) What Charles looks for in founders
(1:17:20) What it’s actually like to start a fund
(1:20:56) Misconceptions of first-time fund managers
(1:26:22) 300+ LP meetings to raise Precursor Fund 1
(1:29:24) The single tweak to his pitch that raised the fund
(1:31:54) Precursor’s evolution over time
(1:34:57) The second desert of venture capital
(1:37:34) The last $250k effect
Referenced
Precursor: https://precursorvc.com/
a16z’s State of Markets report https://x.com/TurnerNovak/status/2015830796393742599?s=20
Follow Charles
Twitter: https://x.com/chudson
LinkedIn: https://www.linkedin.com/in/chudson
Charles Substack: https://chudson.substack.com/
Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak
Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/
Precursor Ventures’ Charles Hudson & Jason give candid feedback on startup pitches at Founder University | E1212
Jason & Charles Hudson from Precursor Ventures take 8 pitches from founders and give feedback on how the pitches were structured (13:10) and their business models (38:48). Pod Notes: http://bit.ly/twist1212
Everything you need to know about Pre-Seed (with Charles Hudson of Precursor Ventures)
Charles Hudson of Precursor Ventures joins us to illuminate everything Pre-Seed -- not just what it is and how founders/companies should navigate it, but also and more deeply:
How he came into this corner of the venture world
How he started Precursor as a solo GP and raised his first/subsequent funds, and what that journey was like
How he manages the firm, its overall strategy, and especially portfolio construction within this relatively new asset class (spoiler: it's different!)
Sponsors:
Sierra: https://bit.ly/acquiredsierra
Note: we recorded this episode in the days right before it became clear that the coronavirus was going to become a major global crisis. While the world has obviously changed since, nothing in this episode is fundamentally different and -- if anything -- Pre-Seed rounds are going to be more relevant for entrepreneurs and investors going forward as valuations and check-sizes contract. We hope you enjoy and find the discussion as useful and illuminating as we did!
20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures
Charles Hudson is the Managing Partner with Precursor Ventures, an early-stage venture capital firm focused on first check investments in strong teams developing innovative hardware and software products and services. Prior to founding Precursor, Charles was a Partner with SoftTech VC, one of the most active seed stage investors in Internet and mobile startups. Prior to SoftTech, Hudson spent time at Google, IronPort Systems, and In-Q-Tel. In Today's Episode You Will Learn: 1.) How did Charles made his way into VC from working with the CIA? What were Charles biggest takeaways from his operational experience?
2.) Why have we seen the rise of the solo GP fund? What tools and services can be used by solo GPs to make their lives easier?
3.) Chris Sacca said, 'you have to be a moron to launch a solo VC fund'. What does Charles think about this and what was it about Precursor that made him want to leave SoftTech?
4.) How does Charles' market requirements change now as a pre seed investor, a 100m exit is excellent. Do you you still need unicorns?
5.) How does Charles look to differentiate with Precursor in the sea of emerging VC funds? What is the most important thing for him about pr-seed investing?
6.) What is Charles' vision for Precursor? What would success look like for him?
Items Mentioned In Today's Episode:
Charles' Fave Book: Alec Ross: Industries of The Future
Charles' Fave Blog: The Information
As always you can follow The Twenty Minute VC, Harry and Charles on Twitter here!
If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Instagram here! The Twenty Minute VC is brought to you by Leesa, the Warby Parker or TOMS shoes of the mattress industry. Lees have done away with the terrible mattress showroom buying experience by creating a luxury premium foam mattress that is order completely online and ships for free to your doorstep. The 10 inch mattress comes in all sizes and is engineered with 3 unique foam layers for a universal, adaptive feel, including 2 inches of memory foam and 2 inches of a really cool latex foam called Avena, design to keep you cool. All Leesa mattresses are 100% US or UK made and for every 10 mattresses they sell, they donate one to a shelter. Go to Leesa.com/VC and enter the promo code VC75 to get $75 off!
Episode 74: Charles Hudson
Charles Hudson is founder of Precursor Ventures and a partner at SoftTech VC. This episode is about startup investing We talk about what makes a great investor, how Charles evaluates founders, how he raised a fund, advice to aspiring investors and more. We also talk about his past experiences at the CIA, Google, diversity in tech, the events business, and much more. Edited by @alexkontis Lavish Praise to @chudson Constructive Criticism to @eriktorenberg