Crystal Balls vs. Calculators

By Josh Kopelman

First Round
Jun 26, 2015 · 1 min read

There’s been a lot of conversation about the state of our industry lately. Some people caution that we’re in a “risk bubble” while others argue that we’re not. Still others declare that something is “rotting under Silicon Valley.”

At First Round, when asked if we’re in a bubble, our answer is, “We don’t know.” We don’t have a crystal ball. But we do have a calculator. And as an investor, we know that there are just two numbers that drive all returns: the entry price (the price of the stock when you invest) and the exit price (the price of the stock when you sell). In our last quarterly letter to our institutional limited partners, we shared some of our thoughts on entry and exit prices — and how they might impact returns for the venture asset class in general. While our letter is clearly focused on the seed market (which is where we invest), the trends are equally applicable to all stages of venture investing.

Given the public conversation that’s occurring about the health of the market right now, we thought it would be helpful to publish our letter — and we do so here, completely unedited. While we don’t anticipate making our future LP communications public, we did want to add our voice to this important discussion.

You can also view it here.

To learn more about First Round’s approach to seed stage investing, go to

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