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Illustration: Annelise Capossela/Axios

Greylock this week announced a $500 million fund dedicated to seed rounds, raising eyebrows as well as questions on Twitter about whether traditional seed VCs will be left out in the cold.

Between the lines: The seed market is bifurcating, but the barbell isn't necessarily a threat to smaller investors.

  • "What is still crushingly relevant is why an entrepreneur will select an investor to be on their cap table," says Sapphire Ventures' Beezer Clarkson. "And that is becoming more competitive every day."

Big money: Greylock's news comes on the heels of Andreessen Horowitz announcing a $400 million seed fund last month.

  • "The size of the vehicles matters, and then based on the size, the expectations for the winners goes up exponentially," Haystack founder Semil Shah explains.
  • Outsized return expectations mean larger seed funds will mostly focus on hotter and more obvious deals, where having a larger checkbook is an effective way to win. It’s the Tiger Global strategy, but at the seed stage (and likely anticipating that Tiger and its peers will be doing seeds soon).
  • "If you're trying to hunt for contrarian, non-obvious founders, nothing has changed," Hustle Fund co-founder Eric Bahn says.

Yes, but: There’s the potential for a negative signal if a large VC firm that led a startup’s seed round later declines to back its Series A round. Plus, there is the ever-present valuation creep.

  • Some VCs also warn that these new big funds won't mean more capital for entrepreneurs who are historically overlooked. They'll still face the same challenges in getting funded, unfortunately.

The bottom line: Venture capital doesn't evolve as fast as tech, but it does evolve.

Go deeper

Dan Primack, author of Pro Rata
Oct 6, 2021 - Economy & Business

Indian crypto exchange CoinSwitch Kuber valued at $1.9 billion

Illustration: Aïda Amer/Axios

CoinSwitch Kuber, an Indian crypto exchange, raised $260 million at a $1.9 billion valuation co-led by Andreessen Horowitz and Coinbase Ventures.

Why it matters: All crypto investments are done against the backdrop of regulatory uncertainty, but the situation is even more fraught in India, where there's been government talk of a total ban on both trading and holding.

Updated 1 hour ago - World

North Korea claims latest missile test new weapon launched from submarine

North Korean state media claims the country's military fired this missile on Tuesday. Photo: Korean Central News Agency

North Korean state media announced that a detected ballistic missile launch off its east coast on Tuesday was a newly developed weapon test-fired from a submarine.

Why it matters: Pyongyang's latest in a series of recent missile launches into the sea happened hours after U.S. officials emphasized their commitment to restart negotiations on North Korea's nuclear weapons program, which have stalled since talks broke down during the Trump administration, AP notes.

3 hours ago - Politics & Policy

Manchin's massive means test

Illustration: Aïda Amer/Axios

Sen. Joe Manchin (D-W.Va.) is offering progressives a trade: He'll vote for their cherished social programs if they accept strict income caps for the recipients, people familiar with the matter tell Axios.

Why it matters: Manchin’s plan to use so-called means-testing for everything from paid family medical leave to elder and disabled care would drastically shrink the size and scope of the programs. It also would bring a key moderate vote to the progressive cause.

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