/Tech1d ago

AI Seed Funds Face Toughest Odds in Venture, Chapter One Warns

178558226.2K

#1619

Original post

Jeff Morris Jr.@jmj#1619inTech

Notes from Chapter One Investment Committee (June 23th, 2026):

We're testing a format where we share some of the key topics from our IC. A few things we got into today:

An AI seed fund might be the hardest strategy in venture today When I started Chapter One in 2019, a well-known seed investor gave us the data. The best seed fund in the world had an 8% hit rate on fund-returners. The second-best, 5% - one in twenty bets returns the entire fund. Which means even they needed 20 companies just to return the fund once.

So when LPs ask for concentration and a fund answers with 20 names, all AI, that's not concentration. That's the minimum number of shots required.

And those numbers come from simpler markets before AI. The picking is now harder and portfolios are more correlated at the same time.

1:44 PM · Jun 23, 2026 · 7.7K Views

Sentiment

Sentiment building, check back later.

Cluster Engagement

Digg Deeper

No Digg Deeper questions have been answered for this story yet.

Posts from X

Most Activity

VIEWS18.5KBOOKMARKS56LIKES48RETWEETS4REPLIES9

Jeff Morris Jr.@jmj

Most underrated category right now: marketplaces. The AI-native version especially where bot does intake, human expert does the work. The bot's the front door & the human's the reason you stay.

VCs have largely forgotten about marketplaces as an investable category with the exception of data labeling co's like Mercor.

Jeff Morris Jr.@jmj

Notes from Chapter One Investment Committee (June 23th, 2026):

We're testing a format where we share some of the key topics from our IC. A few things we got into today:

So when LPs ask for concentration and a fund answers with 20 names, all AI, that's not concentration. That's the minimum number of shots required.

And those numbers come from simpler markets before AI. The picking is now harder and portfolios are more correlated at the same time.

1d18.5K4856

Jeff Morris Jr.@jmj

Seed pricing has stopped being about the company. One early check from a known name sets the floor and the whole round prices off it. With the huge number of firms out there today, easy to get an early bid at a high price that sets off the entire round.

The common fundraising strategy we're seeing is for a founder to set a valuation & get a high net worth investor to commit on a SAFE.

Voila! You have your valuation. This isn't always the right strategy, to be clear, as leads or co-leads can always reset the price.

1d3831

Jeff Morris Jr.@jmj

A pass-along deal from another VC is a yellow flag, not a gift. If a VC send you a deal they're not investing in, always ask why they didn't do it themselves. The best VC friendships are reciprocal.

When I first started my career, my entire calendar was filled with recurring meetings with other investors. That list has become much smaller over the years.

1d3112

CryptoSwiftie@BilalRocksTS

@jmj The real question is whether 20 shots in AI even gives you 20 independent outcomes. Looks more like one bet with 20 expressions.

1d2