Charles HudsonFounder and Managing Partner, Precursor Ventures

Capital Has No Insights #ai #venturecapital #investing

8 Mar 2025 · 1 min

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Charles Hudson (speaker) argues that large venture funds' capital deployment needs enable founders to request very large checks (e.g., $100M), but that capital alone often lacks the insight to make non-working ventures succeed. He cites the maxim "capital has no insights" (attributed to Micah from Founder Collective) and explains his firm's focus on small, sub-$1M pre-seed rounds because constraints (limited capital) force focus and creativity.

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I think the capital deployment needs of really large venture funds create conditions where people who have ambition can go and say, please give me $100 million to go build this thing. And people can say, I can afford to do that for you. Which I think is great for ideas that really do require that amount of money to get started. Something I always attribute to Micah from Founder Collective. I don't know if he actually said this, but I've heard him say it before. He may be the originator, which is that capital has no insights. And I often tell our portfolio company founders, money is great. If you have something that's already working and you want to do more of it, you don't have something that's working. The probability that money will solve that problem for you is very low and in fact might have a negative deleterious impact on the probability you'll find an answer. And this is why I focus so much of our firm's time on these small sub million dollar pre seed rounds. When you only have a million dollars, you can only work on a couple of things with a couple of people. And the pat answer to a lot of things is we can't afford to do that. And I'm a big believer that constraints breed creativity. And I even see it with our portfolio companies.