AI Summary
5 min readA* partners Kevin Hartz and Bennett Siegel discuss their seed-focused venture firm, which they launched five years ago with Gotham. Starting from connections at Ramp and COTU, they've grown to $1 billion AUM across three funds while emphasizing close founder partnerships from inception through growth. In a market dominated by giants, they highlight tradeoffs in fund size, incentives, and early-stage execution.
Small Funds in a Giants' Market
A* stays small—around $450 million per fund—for agility and alignment, avoiding the behavioral shifts larger funds undergo as fees scale. Big funds, charging traditional 2-and-20 despite investing in near-public companies, treat seed as "option value": sprinkling capital across baskets for potential follow-ons, rather than deep partnerships. This crowds the market, inflating seed rounds to 40-50 posts (up from 20-30) and Series A at 250 posts (from 100), with Series B valuations doubling to $500 million-$1 billion.
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What you'll learn
- 1 (00:00) **Intro and AI Software Trends** - Hosts notes rarity of non-AI pitches, teases systems of intelligence/action.
- 2 (00:26) **A Star Backstory** - Kevin and Bennett detail origins via Ramp angel, launch 5 years ago with Gotham, now $1B AUM focused on early-stage partnerships.
- 3 (01:16) **VC Landscape and Fund Sizes** - Discuss Josh Copelman's "venture arrogance score," big funds' challenges despite successes like looming IPOs.
- 4 (02:18) **Big Funds at Seed Incentives** - Explain giants' seed plays as "option value" baskets for follow-on upside vs. boutique deep partnerships.
- 5 (05:51) **Navigating Frothy Markets** - Share 2021 parallels (Tiger/solo GPs), stress long-term help hard to sell in bull markets.
- 6 (07:50) **Seed to Series B Trends** - Valuations doubled (seed 40-50 post, A at 250, B at $500M-$1B); large funds drive changes.
- 7 (08:10) **AI Bubble Optimism** - Predict massive boom like past eras but with carnage; back durable moats over lab copycats.
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Show Notes
Kevin Hartz and Bennett Siegel are co-founders and GPs at A*, a five year old early-stage venture capital firm with $1B in AUM. A* has invested in companies like Notion, Cape, Whop, Paraform, Simile, Krea, Mercor, Watney Robotics, Andera and others.
Kevin is also the co-founder of Eventbrite (NYSE: EB) and co-founder and board member of Xoom, an online money transfer service that IPO’d in 2013 and later acquired by PayPal for $1.1B. Notable investments, primarily at the seed/early stages, include PayPal, Airbnb, Pinterest, Reddit, Anduril, and Palantir among others. Bennett was previously a partner at Coatue building out their venture capital business where he invested in earliest financing rounds for Ramp and Decagon, among other investments.
We discussed how AI is reshaping venture capital, software, and startup building – from the rise of younger founders and AI researcher-led companies to the growing pressure on traditional software businesses. We also covered the changing economics of seed investing, the influx of mega funds into early-stage venture, AI rollups, robotics, and why this may become the biggest technology boom yet.
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Timestamps:
(0:00) Intro
(0:25) The A* Capital story
(1:16) Why big funds went into seed
(7:50) The mother of all bubbles
(10:46) Why founders are getting younger
(13:00) Mapping talent, not markets
(16:31) The rise of AI researcher founders
(19:16) Why seed investing is so hard
(22:54) Concentration and venture returns
(27:34) The AI rollup craze
(31:15) AI vs traditional software
(33:15) Robotics and the future of AI
(35:39) What’s next for A* Capital
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Links:
https://x.com/kevinhartz
https://x.com/BennettSiegel
https://x.com/jaltma
https://www.a-star.co/
https://uncappedpod.com/
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