Casado argues that while VCs preach non-consensus investing, later-stage funding rounds become increasingly consensus-driven as check sizes grow. Startups that are too far off-consensus risk being unable to secure the necessary follow-on capital to survive and scale.

In early fundraising rounds, the "signal" from having a top-tier investor on the cap table is more valuable than optimizing for a slightly higher valuation. This signal builds credibility that makes subsequent fundraising rounds significantly easier, a long-term benefit many founders overlook.

The Jeeves founder strategically includes potential leads for his next funding round in his current round, even for a small check. This gives them an insider's view of the company's progress, building trust and making it easier to secure their lead investment in the subsequent round.

Small funds and solo GPs can gain an edge by not reserving capital for follow-on rounds. This strategy enforces discipline, avoids cognitive biases like sunk cost, and recognizes that the skill set for pre-seed diligence is fundamentally different from that required for later-stage investments.

To avoid confirmation bias and make disciplined capital allocation decisions, investors should treat every follow-on opportunity in a portfolio company as if it were a brand-new deal. This involves a full 're-underwriting' process, assessing the current state and future potential without prejudice from past involvement.

With Series A rounds ballooning to $30-40M, a venture firm must write $25-30M checks to lead. Factoring in portfolio construction of ~20 companies and necessary follow-on reserves, the minimum viable fund size for a dedicated Series A strategy has escalated to nearly one billion dollars. Smaller funds can no longer compete at this stage.

When a credible, external VC leads a follow-on round at what seems like a high price, it provides a strong signal of validation. This should prompt existing investors to overcome their anchoring bias and increase their own investment.

While multi-stage funds offer deep pockets, securing a new lead investor for later rounds is often strategically better. It provides external validation of the company's valuation, brings fresh perspectives to the board, and adds another powerful, committed firm to the cap table, mitigating signaling risk from the inside investor.

The decision for an early-stage VC fund to maintain a reserve strategy is highly debatable. A fund should only reserve capital for follow-on rounds if it possesses a distinct information advantage, such as deep operational involvement that provides superior insight into a company's unit economics.