Table of Contents
David Tisch of Box Group reveals why most VCs are wrong about seed investing, how to build collaborative relationships that last decades, and why betting on people beats market analysis every single time at the earliest stages.
Key Takeaways
- Box Group has successfully scaled collaborative seed investing while most firms move to larger, concentrated bets to grow their AUM
- Seed investing is fundamentally about backing people, not markets—you're betting someone can lead thousands of amazing employees based on a 30-minute meeting
- The collaborative approach works because every company needs the same thing: follow-on capital, making fundraising help the most scalable value-add
- Most venture capital consists of three distinct businesses: seed (dart throwing), Series A-B (still an art), and growth (spreadsheet jockeying)
- Individual VC decision-making beats committee consensus because belief in something specific drives the best outcomes
- The power law is so extreme that being right about stack-ranking your top 25 investments versus the next 25 is nearly impossible
- Geographic concentration still matters enormously—the Bay Area has unmatched depth of talent for scaling to 10,000+ employees
- Building long-term relationships requires consistency over decades, not constantly evolving your model to chase market trends
The Myth of Moving Upmarket: Why Most VCs Are Wrong About Scale
Here's the conventional wisdom about venture capital: you start small doing collaborative seed deals, then "graduate" to writing bigger checks, owning more equity, and leading rounds. It's treated like a natural evolution—bigger funds, higher concentrations, later stages. Almost everyone follows this path.
David Tisch of Box Group never did. For fifteen years, he's built one of the most successful seed-focused firms by staying exactly where most people think you can't scale: collaborative seed investing.
"I think first off, the word venture capital captures so many different types of businesses," Tisch explains. "To me there's like three stages of VC. There's seed, there's A and a little bit of series B, and then there's B and later. And B and later is a finance job for the most part."
The reason most people don't stay at seed isn't because it doesn't work—it's because it's messy. "I think seed is just a mess. And I think it's a happy mess for me. I love doing this." While later-stage investing offers the stability of concentrated portfolios and board seats where you can "take credit for the company's success," seed requires comfort with uncertainty on a massive scale.
The traditional model assumes you need to move upmarket to scale assets under management (AUM), which drives fee streams and allows firms to grow. But Tisch discovered something counterintuitive: if your primary goal is investing in the best companies rather than optimizing your business model, staying collaborative actually increases your access to the best deals.
"If I need to own a certain percentage of a company to invest, then it's pick me or the other firm that needs that percentage. And it's a winner-take-all model." When your business model conflicts with investing in the best companies, the business model should bend, not your access to great founders.
People Over Everything: The Art of Seed Investing
At seed stage, traditional metrics largely don't exist. There's no revenue to analyze, no established market traction, no proven business model. What you're really doing is something much harder: predicting whether a person can build and lead a massive organization based on very limited information.
"What we do is we meet somebody and we think, can this person lead a group of people, and a group of people is a hundred people, a thousand people," Tisch describes. "You think about the scaled tech companies today—there are tens of thousands of people that work there. And you're meeting somebody when it's just one, two people and you're trying to figure out, can this person lead a thousand people?"
The framework is deceptively simple but incredibly difficult to execute: find great people working on something that matters if it works. But the "great people" part requires a kind of judgment that can't be reduced to spreadsheets or committee decisions.
"You have to find people that you are excited to invest in, and that's it," Tisch says. "When you look at a story like Clay, we were fortunate enough to meet Kareem 15, 14 years ago. I invested in his first company and Nikolai. We were fortunate to back their second company in Clay, and it's a seven-year overnight success that is just at the beginning of their journey."
This people-first approach becomes even more important when you consider the timeline mismatch between venture returns and founder journeys. "When you're backing somebody right out of college who's 22 and you talk about 15 years, 15 years ago for a college student is they were five, right? These are insane timelines."
The Power Law Reality: Why Stack-Ranking Is Impossible
One of the most honest insights from Tisch concerns something most VCs won't admit: even the best investors can't reliably differentiate between their top prospects and near-misses.
"I don't think that anybody can stack rank their portfolio properly early in the lifecycle of a company," he admits. "It's an egotistical statement to claim that you know the winner from the second that you see it."
This reality drives Box Group's approach of investing in more companies rather than trying to concentrate around their highest-conviction bets. But it's not spray-and-pray investing—it's recognizing the limits of early-stage prediction while maintaining high standards.
The examples are everywhere once you look for them. Cursor pivoted significantly from its original idea. Clay took seven years to find its product-market fit. These are now among Box Group's best investments, but predicting their success trajectory a year in would have been nearly impossible.
"There's going to be things that you had immense conviction in going in. There's going to be companies that you were really excited about one, three, five years in that just don't end up working," Tisch notes. "And those get swept under the rug, and instead it's like, here, look at this new shiny object."
The honest approach is accepting that you'll be wrong most of the time, but the winners will be so much better than expected that the overall portfolio math works. "If you fund something seven years ago, nobody remembers that. They're able to refocus on the thing you funded yesterday because today AI matters and seven years ago it didn't."
Collaborative Investing: The Art of Not Competing
Box Group's collaborative approach seems almost counterintuitive in a competitive industry. Rather than fighting for ownership and control, they've built relationships across the entire funding ecosystem. The key insight? Every company needs the same thing eventually: more capital.
"It's the only thing that everybody in our entire portfolio is going to need to do the same—get more money," Tisch explains. "So it's our responsibility from a help founder standpoint to know where that money lives and to help them achieve getting that money."
This creates a virtuous cycle. By helping companies successfully raise follow-on rounds, Box Group builds relationships with later-stage investors. Those relationships compound over time, leading to more deal flow and better outcomes for portfolio companies.
But collaboration doesn't mean being passive. "I don't think it means that we accept being bullied. I don't think it accepts us getting crammed down in every round. I think what we have to do is build currency of our own that we bring to the market."
That currency comes from consistently finding companies before the market recognizes them and building a reputation for adding value without drama. "As long as you aren't bothering people constantly with 'pick us, not them,' it's instead 'pick us and them.' I think you can build authentic relationships in this industry."
The Decision-Making Advantage: Why Committees Kill Conviction
One of Box Group's structural advantages is how they make investment decisions. Unlike many firms with committees and voting processes, everyone at Box Group can individually decide to invest in a company.
"Everybody at Box Group can make a decision. We don't have voting. We don't have a committee. We're not trying to do consensus investing," Tisch explains. "The brand new person at the firm who's maybe never done venture before can say yes to a deal."
This matters more than it might seem. Investment committees often create incentive structures that prioritize politics over conviction. "You hear about within the big firms somebody negging someone else's deal or 'I really love this deal, but I'm not sure I can get it through the firm.' That feels like you're removing the essence of the job, which is somebody believing in something."
The downside is that you need to hire for taste rather than trying to teach it. "I don't think you can train for it. I don't think you can teach it," Tisch admits. But the upside is that when someone has conviction about a founder or company, they can act on it immediately without political considerations.
The Help Paradox: Why Less Can Be More
Perhaps the most contrarian aspect of Box Group's approach is their philosophy about helping portfolio companies. While most VCs promise extensive operational support and platform services, Tisch believes much of this is counterproductive.
"I don't believe that VCs are magical company builders. I don't think that VCs are able to magically make companies great. I think instead VCs make a great investment and take credit for it."
The problem with overselling help is that it often becomes a distraction. "If all you're getting is inbound ideas—the founder wakes up and goes to sleep thinking about their thing constantly. The investor is like eight seconds during the day, 'I have an idea. I came up with a great idea.'"
This creates a negative dynamic where founders feel pressure to engage with advice from people who have a "diversified portfolio of other things that they are thinking about and external interests." The founder starts wondering if their investor is doubting them.
Instead, Box Group focuses on the one type of help that every company actually needs: raising money. "Box Group is great at helping companies raise money because it's the only thing that every company we invest in needs to do."
The philosophy extends to their positioning with founders: "We don't want to be your best investor. We want to be your favorite investor. And favorite investor means you like us because we talk to you like humans and we don't mislead you. We ideally underpromise and overdeliver."
Geographic Reality: Why the Bay Area Still Wins at Scale
Despite being based in New York, Box Group invests heavily in Bay Area companies. This isn't coastal bias—it's math.
"I think if you don't invest in the Bay Area, you are cutting off the majority of value creation historically in this industry," Tisch states bluntly. "From Box Group fund one, which was 2010 through '13, the majority of companies in that fund were in the Bay Area."
The reason isn't that other cities can't produce great companies—it's about scaling them. "I don't think your hometown of St. Louis is capable of having a hundred great tech companies. I do, but it's probably capable of one, right? Or two or five."
The key constraint is talent depth. "It's not just depth of starting, it's depth of scale. So can you get to a thousand people in almost every city? Probably. Can you get to a hundred? Definitely. Can you get to 10,000? In very few."
This becomes particularly relevant in the AI era. "Now we're in an era of AI, and I think the center of our universe has fully shifted back to San Francisco, where there is more depth of talent. It's not more talent—there are still great people in many different geographies. There are just more of it here."
Box Group's New York base provides other advantages, particularly for certain types of companies. "If you're building in fintech, if you're building in fashion or in adtech, there's a center to the world you're building, and that is in New York." But for developer tools or consumer tech, building in New York means choosing "slightly hard mode."
Why VCs Pass: The Uncomfortable Truth
Most venture capital rejection letters cite market timing, competitive concerns, or strategic fit issues. Tisch believes this is largely fiction designed to spare feelings.
"When you ask a VC why they are passing and you get a series of reasons, I typically think that is very lovely soundbites to make you feel better," he explains. "I think at the end of the day, somebody is passing because it didn't cross the bar. It wasn't good enough."
The real reasons are simpler and harder to communicate: "Most of the time, the team—the VC feels that this team is not good enough for us to invest. Alongside that, it's the market—the idea isn't exciting enough for us to invest."
No one wants to send an email saying "I met you. You're not good enough." But this creates a communication problem where founders get feedback that doesn't help them improve.
The solution is being honest about the nature of the process. "We try to be honest and like, this isn't for us, and that's not it, and it doesn't mean that we're right. We are mostly wrong in most decisions we make."
Even experienced investors misread teams regularly. "We continually, 15 years in, misread teams. And I wish we didn't. I would love to never miss a team, but we do."
The Compounding Effect: Why Holding Matters
One of the most underappreciated aspects of venture returns is how much value gets created after companies go public. This has become more pronounced as public market winners have gotten much larger.
"If you look at Shopify as a VC, it went public at a billion-dollar valuation. Today Shopify is a $120 billion company. That's crazy. In the public markets it compounded 119x. That's a big X," Tisch points out.
This dynamic makes holding onto winners even more important. "Your hope in your career is that you are able to invest at the earliest stage in one of these incredible outlier companies, and then after that you have a series of other really great companies."
The challenge is that most of the value creation happens at the end of the journey, not the beginning. "It is way harder to get to zero to a billion dollars or zero to 10. It's so much harder than 20 to 30, right? There's 10 more billion dollars of value created. And for a VC that invested early, those 10 extra billion are worth just as much as that first extremely hard billion."
This compounds the importance of backing people who can lead organizations through multiple phases of growth. The technical product work that gets a company to product-market fit is completely different from the organizational leadership required to scale to tens of thousands of employees.
Building for the Long Term: Consistency as Strategy
Perhaps the most important insight from Box Group's success is the power of consistency over optimization. While most firms constantly evolve their strategies, Box Group has remained fundamentally the same for fifteen years.
"If we're constantly changing who we are, we misalign with founders," Tisch explains. "If they are signing up for a 15-year journey or a 10-year journey and we are constantly changing who we are as Box Group, suddenly by the time they have another question for us or they're doing something different, we're running a different business."
This consistency extends to team building. Box Group's partners have worked together for years, creating trust and shared judgment that's difficult to replicate. "What's amazing about Box Group is we've all worked together for a long time, and we really like working with each other."
The final north star is ambition that matches the mathematical reality of venture returns. "You have to understand, can this get big? And big is so big it's irrational. Again, back to you're meeting a person and can that person hire, inspire, and manage a thousand great people, 10,000 great people."
But Tisch also recognizes the human element behind the numbers. "The amount of friends that I've made through investing in their company and they had an outcome that wasn't the hundred billion dollar outcome, but they won and they made enough money and they had enough success to fully change their lives—that's the heart of this business."
The balance is holding both truths simultaneously: celebrating life-changing outcomes at any scale while building a business model that requires finding the massive outliers. "Going in, the thing we hold to is, can you squint and see this being one of the most important companies in the world, or in a more realistic way, in the industry that they're going after."
Box Group's success proves that you don't have to choose between staying at seed stage and building a scaled, successful venture firm. You just have to be willing to embrace the mess, back great people, and remain consistent long enough for the power law to work in your favor.
