Latest news with #PrecursorVentures
Yahoo
16 hours ago
- Business
- Yahoo
The new math: why seed investors are selling their winners earlier
Charles Hudson had just closed his fifth fund several months ago – $66 million for Precursor Ventures – when one of his limited partners asked him to run an exercise. What would have happened, the LP wondered, if Hudson had sold all his portfolio companies at Series A? What about Series B? Or Series C? The question wasn't academic. After two decades in venture capital, Hudson has been watching the math of seed investing change, maybe permanently. LPs who've previously been patient with seven-to-eight-year hold periods are suddenly asking questions about interim liquidity. 'Seven or eight years feels like a really long time' to LPs right now, says Hudson, even though 'it's always been seven or eight years.' The reason: a steady stream of venture returns in recent years — returns that made long hold periods acceptable — has largely dried up. Coupled with the availability of other, more liquid investment options, many backers of very early-stage VC are demanding a new approach. The analysis his LP requested revealed an uncomfortable truth, says Hudson. Selling everything at the Series A stage didn't work; the compounding effect of staying in the best companies outweighed any benefits from cutting losses early. But Series B was different. 'You could have a north of 3x fund if you sold everything at the B,' Hudson discovered. 'And I'm like, 'Well, that's pretty good.'' Beyond pretty good, that realization is reshaping how Hudson thinks about portfolio management in 2025. Though now a veteran investor – Hudson has spent 22 years in VC between Precursor, an eight-year run at Uncork Capital and another four years at In-Q-Tel earlier in his career – he says investors in very young companies are being forced to think like private equity managers, optimizing for cash returns alongside the home runs that, if they're lucky, define their careers. It's not an easy mental change to make. 'The companies where there's the most secondary interest are also the set of companies where I have the greatest expectations for the future,' says Hudson. It's not just Hudson; his thinking about secondary sales reflects broader pressures reshaping the venture ecosystem. Hans Swildens is the founder of Industry Ventures, a San Francisco-based fund of funds and direct investment firm with stakes in 700 venture firms, and he told Techrunch in April that venture funds are 'starting to get savvier about what they need to do to generate liquidity.' In fact, Swildens is seeing venture funds hire full-time staff members specifically to pursue alternative liquidity options, with some seed managers dedicating months to 'manufacturing liquidity from their funds.' Though this reshuffling of priorities extends far beyond any single fund, the pressure is particularly acute for smaller funds like Precursor, a traditional seed-stage fund that prides itself on backing unconventional founders like Laura Modi of ByHeart baby formula (a solo founder in a regulated industry with no prior experience) and Doktor Gerson of Rad AI (whose previous startup had failed). While firms with mega-funds like Sequoia and General Catalyst can afford to wait for $25 billion outcomes, smaller funds need to be more tactical about when and how they harvest returns. Perhaps nowhere is the shift more visible than in Hudson's relationships with limited partners. University endowments, once the most coveted LPs in venture, are now grappling with unforeseen challenges from the Trump administration. Harvard, of course, is the poster child here, with federal investigations into its admissions practices, threats to research funding tied to compliance issues, and ongoing scrutiny of its substantial endowment amid calls for universities to increase their annual spending requirements or face taxation. Hudson says that based on his conversations with LPs inside these organizations, they've never believed more in the power of venture, yet they've also never felt more hesitant about making 10- to 15-year illiquid commitments. The result is a more complex LP base with competing needs. Some want 'as much money back as soon as possible, even if that's a suboptimal outcome in the long term,' says Hudson. Others prefer that Hudson 'hold everything to maturity, because that's what's going to maximize my returns.' Navigating these demands requires the kind of portfolio management sophistication that seed investors haven't traditionally needed, which Hudson views with some ambivalence. Venture, he says, is starting to feel a lot less like an art and something that 'feels a lot more like some of these other sub-asset classes in finance.' Hudson isn't without hope, he adds, but he is clear-eyed about what's changing on the ground, as well as the opportunities those changes create. As funds grow larger and deploy more capital, they're becoming necessarily more algorithmic, looking for 'companies in these categories, with founders from these schools with these academic backgrounds who worked at these companies,' he says. The approach works for deploying large amounts of capital efficiently, but it misses the 'weird and wonderful' companies that have defined Hudson's best returns and kept Precursor in the game. 'If you're going to hire people just off a resume screener tool,' he says, 'you're going to miss people who maybe have really relevant experiences that the algorithm doesn't catch.' You can hear our full interview with Hudson via TechCrunch's StrictlyVC Download podcast. New episodes come out every Tuesday.
TechCrunch
17 hours ago
- Business
- TechCrunch
VC Charles Hudson on the new LP timeline
In this episode of Strictly VC Download, TechCrunch editor-in-chief Connie Loizos and StrictlyVC's Alex Gove sit down with Charles Hudson, Founder and Managing Partner of Precursor Ventures, to discuss the fundamental shifts reshaping early-stage venture capital. Charles opens up about the challenges of raising his $66 million fifth fund in 2024's difficult fundraising environment, where LPs are increasingly grappling with longer liquidity timelines for seed-stage investments. They also get into how Precursor is systematically exploring secondary liquidity strategies, including fascinating analysis around what would have happened if Precursor had sold all its positions at the Series A, B, or C stages. Not last, the three dive into the venture industry's institutionalization and the 'taste' needed to find exceptional founders who don't fit algorithmic screens. StrictlyVC Download posts every Tuesday. Subscribe on Apple, Spotify, or wherever you listen to podcasts to be alerted when new episodes drop.
TechCrunch
17 hours ago
- Business
- TechCrunch
The new math: why seed investors are selling their winners earlier
Charles Hudson had just closed his fifth fund several months ago – $66 million for Precursor Ventures – when one of his limited partners asked him to run an exercise. What would have happened, the LP wondered, if Hudson had sold all his portfolio companies at Series A? What about Series B? Or Series C? The question wasn't academic. After two decades in venture capital, Hudson has been watching the math of seed investing change, maybe permanently. LPs who've previously been patient with seven-to-eight-year hold periods are suddenly asking questions about interim liquidity. 'Seven or eight years feels like a really long time' to LPs right now, says Hudson, even though 'it's always been seven or eight years.' The reason: a steady stream of venture returns in recent years — returns that made long hold periods acceptable — has largely dried up. Coupled with the availability of other, more liquid investment options, many backers of very early-stage VC are demanding a new approach. The analysis his LP requested revealed an uncomfortable truth, says Hudson. Selling everything at the Series A stage didn't work; the compounding effect of staying in the best companies outweighed any benefits from cutting losses early. But Series B was different. 'You could have a north of 3x fund if you sold everything at the B,' Hudson discovered. 'And I'm like, 'Well, that's pretty good.'' Beyond pretty good, that realization is reshaping how Hudson thinks about portfolio management in 2025. Though now a veteran investor – Hudson has spent 22 years in VC between Precursor, an eight-year run at Uncork Capital and another four years at In-Q-Tel earlier in his career – he says investors in very young companies are being forced to think like private equity managers, optimizing for cash returns alongside the home runs that, if they're lucky, define their careers. It's not an easy mental change to make. 'The companies where there's the most secondary interest are also the set of companies where I have the greatest expectations for the future,' says Hudson. It's not just Hudson; his thinking about secondary sales reflects broader pressures reshaping the venture ecosystem. Hans Swildens is the founder of Industry Ventures, a San Francisco-based fund of funds and direct investment firm with stakes in 700 venture firms, told Techrunch in April that venture funds are 'starting to get savvier about what they need to do to generate liquidity.' He's seeing venture funds hire full-time staff members specifically to pursue alternative liquidity options, with some seed managers dedicating months to 'manufacturing liquidity from their funds.' Though this reshuffling of priorities extends far beyond any single fund, the pressure is particularly acute for smaller funds like Precursor, a traditional seed-stage fund that prides itself on backing unconventional founders like Laura Modi of ByHeart baby formula (a solo founder in a regulated industry with no prior experience) and Doktor Gerson of Rad AI (whose previous startup had failed). While firms with mega-funds like Sequoia and General Catalyst can afford to wait for $25 billion outcomes, smaller funds need to be more tactical about when and how they harvest returns. Perhaps nowhere is the shift more visible than in Hudson's relationships with limited partners. University endowments, once the most coveted LPs in venture, are now grappling with unforeseen challenges from the Trump administration. Harvard, of course, is the poster child here, with federal investigations into its admissions practices, threats to research funding tied to compliance issues, and ongoing scrutiny of its substantial endowment amid calls for universities to increase their annual spending requirements or face taxation. Hudson says that based on his conversations with LPs inside these organizations, they've never believed more in the power of venture, yet they've also never felt more hesitant about making 10- to 15-year illiquid commitments. The result is a more complex LP base with competing needs. Some want 'as much money back as soon as possible, even if that's a suboptimal outcome in the long term,' says Hudson. Others prefer that Hudson 'hold everything to maturity, because that's what's going to maximize my returns.' Navigating these demands requires the kind of portfolio management sophistication that seed investors haven't traditionally needed, which Hudson views with some ambivalence. Venture, he says, is starting to feel a lot less like an art and something that 'feels a lot more like some of these other sub-asset classes in finance.' Hudson isn't without hope, he adds, but he is clear-eyed about what's changing on the ground, as well as the opportunities those changes create. As funds grow larger and deploy more capital, they're becoming necessarily more algorithmic, looking for 'companies in these categories, with founders from these schools with these academic backgrounds who worked at these companies,' he says. The approach works for deploying large amounts of capital efficiently, but it misses the 'weird and wonderful' companies that have defined Hudson's best returns and kept Precursor in the game. 'If you're going to hire people just off a resume screener tool,' he says, 'you're going to miss people who maybe have really relevant experiences that the algorithm doesn't catch.' You can hear our full interview with Hudson via TechCrunch's StrictlyVC Download podcast. New episodes come out every Tuesday.
TechCrunch
a day ago
- Business
- TechCrunch
3 more days to save up to $210 on your TC All Stage pass
The countdown is on — you have just 3 days left to save on your pass to TechCrunch All Stage, happening July 15 in Boston's SoWa Power Station. After Sunday, June 22 at 11:59 p.m. PT, prices go up, and this opportunity to lock in savings disappears. If you're a founder looking to scale, a VC hunting for breakout talent, or an operator ready to level up, this one-day founder summit is built to move you forward — with tactical insights, candid conversations, and high-impact networking from start to finish. Register here to save $210 on your Founder pass and $200 on your Investor pass. Build smarter, connect faster, grow bigger TC All Stage isn't about buzzwords and big stages. It's where builders meet backers and real strategy takes center stage. You'll experience: Actionable sessions on funding strategy, growth-stage scaling, and real-world AI use on funding strategy, growth-stage scaling, and real-world AI use Roundtable discussions that cut through the fluff and get to the hard truths that cut through the fluff and get to the hard truths The live So You Think You Can Pitch competition — with unfiltered investor feedback competition — with unfiltered investor feedback Side Events hosted across Boston — where deeper conversations happen after hours Big names. Real talk. Here's just a sample of the speakers and sessions on tap, but keep checking the full speaker lineup on the event site as big names are being added daily. Charles Hudson (Precursor Ventures) – on what VCs are really evaluating at pre-seed (Precursor Ventures) – on what VCs are really evaluating at pre-seed Cathy Gao (Sapphire Ventures) – on raising a Series C and navigating growth-stage capital (Sapphire Ventures) – on raising a Series C and navigating growth-stage capital Jahanvi Sardana , partner, Index Ventures , partner, Index Ventures Ellen Chisa , partner at Boldstart Ventures — on building from inception , partner at Boldstart Ventures — on building from inception Charles Hudson , founder and managing partner at Precursor Ventures — on what VCs are really evaluating at pre-seed , founder and managing partner at Precursor Ventures — on what VCs are really evaluating at pre-seed Cathy Gao , partner at Sapphire Ventures — on raising a Series C and beyond , partner at Sapphire Ventures — on raising a Series C and beyond Tiffany Luck , partner at NEA — on how strategy and storytelling shape the perfect pitch , partner at NEA — on how strategy and storytelling shape the perfect pitch Jennifer Neundorfer , co-founder and managing partner at January Ventures — on AI's impact on company building , co-founder and managing partner at January Ventures — on AI's impact on company building Chris Gardner , partner at Underscore VC — on the evolving mix of human and AI product development , partner at Underscore VC — on the evolving mix of human and AI product development Mo Jomaa, partner at CapitalG — on IPO readiness and long-term planning Image Credits:Halo Creative Last chance to save and fuel your startup's scaling Prices go up Sunday, June 22, at 11:59 p.m. PT — don't miss your chance to save. Join founders and investors at every stage in Boston for a full day of growth-focused programming at TechCrunch All Stage. Techcrunch event Save $200+ on your TechCrunch All Stage pass Build smarter. Scale faster. Connect deeper. Join visionaries from Precursor Ventures, NEA, Index Ventures, Underscore VC, and beyond for a day packed with strategies, workshops, and meaningful connections. Save $200+ on your TechCrunch All Stage pass Build smarter. Scale faster. Connect deeper. Join visionaries from Precursor Ventures, NEA, Index Ventures, Underscore VC, and beyond for a day packed with strategies, workshops, and meaningful connections. Boston, MA | REGISTER NOW Make your move while there's still time. Grab your pass before prices go up.
Yahoo
2 days ago
- Business
- Yahoo
At TechCrunch All Stage: VC red flags, founder signals, and pre-seed traps — Charles Hudson will tell you what investors really see
At the pre-seed stage, there's not much for a VC to analyze — no revenue curve, no retention metrics, no CAC. That doesn't mean they're guessing. It means they're watching everything else. At TechCrunch All Stage 2025 on July 15 in Boston, Charles Hudson, managing partner and founder of Precursor Ventures, will walk founders through the subtle, high-stakes signals that matter when data is scarce and the pitch is everything. In his session 'All the Ways You Don't Realize VCs Are Evaluating Your Company at Pre-Seed,' Hudson will pull back the curtain on how investors assess early-stage opportunities and why founders often underestimate the weight of seemingly small choices. Lean into this thought-provoking discussion at TC All Stage, featuring founders and VCs across all stages. Register now to save up to $210 before the June 22, 11:59 p.m. PT deadline. From your choice of co-founder to how you run your fundraising process, everything you do—or don't do—is a signal. Charles Hudson will highlight the common red flags that spook investors before a single term sheet is on the table. For example, mismatched co-founder dynamics can suggest poor hiring instincts. Sloppy outreach? That signals you haven't done the work. These are the unspoken cues that can make or break a round—and most founders never hear about them. Hudson has seen it all. As the founder of Precursor Ventures, he has been one of the earliest believers in breakout startups long before they had the traction to prove themselves. He built his firm to back founders at the riskiest moment, before it was obvious. Before that, as a partner at SoftTech VC, he was deep in the world of mobile infrastructure. He knows the markers of long-term potential, and he is not guessing. He is pattern-matching with purpose. TC All Stage is happening on July 15 in Boston's SoWa Power Station, powered by Fidelity Investments. It's a one-day summit for startup builders who want practical, unfiltered insights from the experts who've done the work. Come for the playbook. Stay for the signal check. Charles Hudson is bringing both. Register now to save up to $210 on your ticket before June 23.
