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20VC · 3 min · Oct 22, 2026

High seed prices and smaller allocations can weaken seed returns

Jason Lemkin argues that high entry prices and shrinking allocations make seed returns harder, even when a startup later becomes valuable. The panel says recent late-stage value creation has further tilted the return math.

Jason Lemkin

Founder & managing director, SaaStr Fund

Founded SaaStr and runs SaaStr Fund, backing early SaaS winners like Algolia, Talkdesk and RevenueCat.

  • Harry Stebbings, Host · Founder, 20VC

    Built a venture firm on his podcast; its third fund closed at $400M.

About this segment

Jason Lemkin argues that high entry prices and shrinking allocations make seed returns harder, even when a startup later becomes valuable. The panel says recent late-stage value creation has further tilted the return math.

From “The New VC Game | CoreWeave Sell-Off Creates Panic | Revenue Multiples Out of Control”, Oct 22, 2026. Watch the full episode

“the entry prices are so high and the ownership typically is lower unless the seed fund is very large”
Jason Lemkinat 8:25 · 20VC8:25

Takeaways

  1. Seed rounds at $50M–$100M can limit upside.
  2. Later investors may shrink early funds’ allocations.
  3. A valuable company may still make little difference to a small check.
Watch 3:18 from 7:37

In this episode

Full episode
  1. 0:48Strong growth no longer guarantees a venture term sheet5:07

  2. 7:37High seed prices and smaller allocations can weaken seed returns3:18

  3. One more moment in the full episode
Up next · All-InQuantum-safe security needs to start before quantum computers arrive6:20

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

  1. 7:49

    We have to have so many billion dollar positions, positions, gains to even be playing at this game. It's just math. It's just the maths. To take the other side of the argument, actually, to talk about seed, which is your role, Jason, you probably, I'm assuming you would agree that from a multiple perspective, it's going to be far easier for the best seed investor to generate a 5x net fund than it's going to be for someone who's writing billion-dollar checks into things.

  2. 8:31

    No, it's harder. It's much harder. Because unless you really do the Roger Ehrenberg find something in Antarctica, right, the entry prices are so high and the ownership typically is lower unless the seed fund is very large that actually and all these valors are cutting my pro ratas rory how am i going to make it up on the back end with my spvs and my triple i can't make any 5x is so much easier i'll do it at 1 billion in town and we'll raise it 5 billion next week and i'll take the rest of the year off the entry price 50 million 100 million seeds you you can't make money just to add to that not only can you not make money you can't make money even worse because they're a multi-stage product for those big players in terms of they're the ones who lead them and they crush your allocation so not only does the price go way higher but your allocation goes way lower and

  3. 9:20

    You have three to five hundred K at best. And I've got this and I've got this in a company that is going now to 18 billion. It still doesn't move the fucking needle, Rory. Because what? You only got 300 K in the deal? Because you have 300 K in and it's at a hundred million price. That doesn't move the needle. No, that I would agree. And so not only do you have a way higher price, but you have a way lower check going in.

  4. 9:44

    Look, over time, in a rational capital world, the return multiple from early stage investing should be higher than growth, just logically over an extended period of time, because otherwise, why would you do it? I agree. But would you not say for the first time ever that we're actually going to see that inverted? I totally agree. I think the last five years are going to be clearly inverted. It's clearly going to be. I mean, look, someone said it. It was a very good line. He said The aggregate market cap of SpaceX, Anthropic, and OpenAI went from around $400 billion three years ago to something like $5 billion, $4 or $5 billion today.

  5. 10:18

    That means, sorry, trillion. I'd have changed billion in such trillion, $400 billion to $5 trillion, right? So you've got $4 trillion plus of value created in the late-stage business. Nothing else matters. And if your theory is there's going to be 10 more of them next year, then you're right, that's all you do. And if your theory is that was amazing, but it's probably not going to be a run rate business, then you make different bets.

  6. 10:40

    We will go back to schedule, which is, are we starting to see a crack in the AI trade?