Adam Besvinick on Pre-Seed Investing and Raising a Small Fund

Adam Besvinick believes venture winners will adapt and offer founders something distinctive. The Looking Glass Capital founder discusses his pre-seed strategy, fundraising and the changing market with Harry Stebbings.

Besvinick began learning about venture on Twitter in 2009 and sent hundreds of cold emails while trying to move from traditional finance. Persistent outreach led to work with Chris Sacca at Lowercase Capital during business school.

Sacca taught him to respect founders and protect an investor’s reputation. Besvinick argues reputation is more directly controllable than a track record and can compound through references and deal flow. He distinguishes reputation with founders from relationships with other investors, while valuing both.

Early in his career, he could not understand why investors preferred seeing and passing on an eventual winner to never seeing it. Experience changed his mind: being in the relevant flow provides a chance to invest. Stebbings counters that seeing every deal is unnecessary if one is focused on enough great opportunities.

The Looking Glass name alludes to Lewis Carroll and the suspension of disbelief required for pre-product, pre-revenue investing. Besvinick says the cons often outnumber the pros in an early-stage investment analysis, yet he had made 27 investments in nearly three years.

His second fund targeted $20 million, compared with a first fund slightly above $8.5 million. He planned to increase initial checks from roughly $300,000–$400,000 to $400,000–$500,000 and invest in about 30 companies instead of 24, while keeping the same early entry point.

Stebbings questions whether 24 investments provide enough diversification for a pre-seed fund. Besvinick says ownership must be sufficient for a $1 billion outcome to return the fund. He reports about 4% average entry ownership and models 60–65% lifetime dilution; these are assumptions, not realized performance.

He estimates that approximately 0.86% ownership at a $1 billion exit would return the roughly $8.6 million first fund, before considering other costs or proceeds allocation. He also says 60% dilution would leave about 1.7% and a roughly two-times fund outcome. Using exactly 4% and 60% yields 1.6%; his figures are approximate hypothetical gross calculations, not cash returned.

Besvinick reports an average first-fund entry valuation of $9.1 million post-money. He aims to be among the first investors to commit, often before larger multistage firms enter; he gives examples of $6 million, $8 million and $11 million caps in the second fund. These are his account of particular deals, not a market-wide price.

He says he was the first fund to say yes, lead or co-lead in 14 of 24 first-fund investments. Ten or eleven had at least one Bay Area founder and four or five were in New York; others were spread across several North American technology hubs.

Stebbings questions the difficulty of raising a $20 million fund: it may be too small for many institutions and too large to fill easily with individual checks. Besvinick acknowledges the challenge but wants an incremental step that lets LPs underwrite a modest increase in check size and ownership, while building a firm over decades.

His prospective LPs include smaller funds of funds, family offices and wealthy individuals. He estimates that many institutional allocators have a floor around $40–$50 million for fund size; this is his experience, not a universal rule.

A first-fund lesson was to have subscription documents ready: he started conversations before they existed and some investors moved faster than expected. His current data room includes an investment memo for every deal, LP updates, a deck, investment statements and legal documents.

Stebbings worries too much material can overwhelm LPs. Besvinick prefers making information available rather than drip-feeding it, but says a first-time manager may need only a deck, basic track record and founder and investor references. He sends a deck ahead if needed, though he does not usually walk through it on a call.

He does not require pre-seed founders to produce financial forecasts. If they do, a model can show how they think about business drivers and levers, but he expects the numbers and even the business to change; a spreadsheet can be made to say almost anything.

Stebbings asks how to evaluate a founder without revenue, cohorts or a prior relationship. Besvinick looks for motivation, the origin story and why this person is unusually suited to the problem. His “mission-driven” criterion means commitment to the business, not necessarily a social mission.

His themes include healthcare, climate, education and tools for small businesses. He believes those difficult, sometimes regulated markets can attract resilient founders with relevant operating or personal experience. This is his selection hypothesis, not proof that a founder in such a market will succeed.

On fund one, almost every LP either knew him personally or was introduced by someone who had committed. He reports more than 80 LPs and hundreds of meetings, with checks ranging from $10,000–$25,000 individuals to a family office representing 10% of fund two.

The first fund was mostly individuals, with one corporate investor; fund two had more wealthy individuals, family offices and newer funds of funds. Besvinick says individual risk preferences and check sizes surprised him in both directions, making wealth a poor basis for predicting a commitment.

His nominal minimum was $100,000 in fund one and $250,000 in fund two, but he made many exceptions for people with valuable networks or relevant support. Stebbings agrees that strategic value can matter more than the size of a check.

Creating urgency is difficult because LPs can detect a bluff and may not follow a proposed deadline. Besvinick prefers consistent updates on investments, co-investors, progress and portfolio markups to demonstrate genuine momentum. Markups are changes in valuation, not realized cash distributions.

He began fundraising in January 2020, paused during the initial COVID disruption and resumed in June. He now thinks he waited too long for the first close by seeking 50–60% of the target. His rule of thumb is to close at half the minimum viable fund size, then invest as if the fund will only reach that minimum.

The lesson is to identify the kind of LP who understands the strategy and ask for specific introductions. Unlike VCs, LPs can be less publicly visible, but a clear description of the right partner makes it easier for an existing relationship to help.

Besvinick calls his approach an institutional style applied to a small pre-seed fund: concentrated relative to many peers, with target check sizes and average ownership. His earlier work among conservative credit investors at Anchorage encouraged risk awareness and guardrails, even though pre-seed outcomes remain highly uncertain.

Stebbings challenges the discipline, citing small exceptions such as BeReal, Linear and Remote among his best investments on paper. Besvinick says rules make the reason for an exception clear. He recounts honoring a commitment when a round grew beyond his usual valuation range because he still believed in the team.

He does not assume receiving his preferred allocation means adverse selection. His strategy is to commit early, help set terms and then introduce founders to complementary investors. That is also how he seeks to earn a meaningful place on the cap table.

A lead need not always write the largest check, in his view: it can catalyze a round, help set terms, support the founder and bring in subsequent investors. He says he was largest in only one of the 14 first-fund rounds in which he was first yes, lead or co-lead, and cannot always offer a large follow-on check from a small fund.

He says other firms have joined rounds after his commitment without changing the terms. His typical example is a $1.5 million–$2 million round at a $6 million–$10 million post-money valuation; winning a $300,000–$500,000 allocation is his responsibility to earn with the founder.

Thematic focus lets him offer relevant founder references, possible customer or partner connections and credibility in cold outreach. He says he maintains a list of investors by stage, sector and check size and shares a curated list with founders when helping build a syndicate.

He expects a substantial loss ratio in early-stage investing: perhaps 40–50% of companies returning zero or less than the investment after eight to ten years, with most returns from 20–30% of the portfolio. These are projections, not results for fund one.

Each investment memo lists risks and possible mitigants. Looking back at companies that worried him in 2023, he says he had identified the risks but expected them to be mitigated; in some cases they had not been. He acknowledges other surprises can emerge over a longer career.

Stebbings questions thematic investing when pre-seed companies often pivot. Besvinick, a solo GP and employee, says his bandwidth makes focus essential. Themes help others know when to send him a deal and give founders a reason to approach him; he says he responds even to cold inbound that is not a fit.

He thinks founders often make fundraising lists too narrow, overlooking specialized investors who could bring useful relationships. He also advises evaluating the individual partner, not just the fund brand: interests, personality and internal dynamics affect the relationship.

Both speakers criticize large seed rounds led by multistage funds, though Besvinick notes labels can obscure what actually happened. He says some experienced founders deliberately raise smaller rounds to preserve room for error and reduce the pressure created by a high initial valuation.

He reports nine of 24 first-fund companies had raised since the start of the fourth quarter: six priced up rounds and three SAFEs with higher caps. He attributes their ability to raise in part to sensible initial valuations. Those financing terms are not the same as realized investment returns.

Stebbings offers the counterargument that raising more gives founders runway for repeated attempts at product-market fit. Besvinick says spending as if one raised less requires unusual discipline. His own rule of thumb is roughly 24 months of gross burn at the initial raise, anticipating some overspending; this is a strategy choice, not a guarantee of finding fit.

Asked to choose between a large multistage offer and a specialist pre-seed offer, he says founders should do what is best for them. A small-fund check can represent a meaningful share of the fund and more investor attention, a point he acknowledges using when competing for allocations.

Besvinick predicts a split between smaller specialized funds and very large firms, with undifferentiated managers in the middle struggling. He hopes specialization improves returns but acknowledges venture feedback loops are long and ten years may not settle the question. His own thematic fund gives him a commercial stake in this view.

In quick fire he names Boldstart, Benchmark and Lux’s growth fund as firms he admires, noting prior co-investment with Boldstart. He has become less worried about signaling from a particular early investor and more focused on reliable partners, ethical alignment and clean terms in a difficult fundraising market.

He criticizes the pace and valuations of 2020–22 and says the subsequent pullback makes it hard for founders to know what milestones investors now expect. Stebbings counters that more diligence is a return to normal. Besvinick clarifies that “unfair” was the wrong word: his concern is the whiplash and uncertainty, not diligence itself.

He advises portfolio founders to model extending runway, growing revenue faster than expenses and reducing burn so they are not dependent on an immediate venture round. He says he had worked through cash scenarios into 2025 with several founders; those dates are specific to the 2023 conversation.

Stebbings argues seed pricing remained relatively resilient while later stages were much weaker, a differing view from Besvinick’s account of the funding slowdown. Besvinick would like a more transparent and consistent fundraising process and acknowledges the difficulty of changing an industry with long feedback loops.

Looking five years ahead, Besvinick hopes to invest a third fund in the $40 million–$50 million range with a similar 27–30 company portfolio and thematic focus. This is a 2023 ambition, not evidence of a subsequent fundraise.