David Zhou is an investor in emerging managers, an angel investor, a blogger, and the host of the Superclusters podcast. We talked about how LPs can size up emerging managers, how VCs can stand out, portfolio construction, and which of sourcing, picking, and winning is the most important. We also explored:

+ Why David thinks that “access beats picking (then winning)” for most emerging managers—and how check size changes that calculus.

+ Follow-ons: when “all or none” makes sense, how signaling risk compounds past Series B, and why selling by Series C can be clean for seed managers.

+ LP incentives in the wild: marks scrutiny for new managers vs. “ignorance is bliss” for existing ones—plus how TVPI vs. IRR targets shape decisions.

+ The tough-love playbook behind “Dear Emerging Manager” and “Dear LP,” and why sloppy valuation methods and survivorship bias mislead GPs.

+ Differentiation framework: sell the market → the strategy → then you; use “flaws, limitations, restrictions” to confront the elephants in the room.

+ Fund design realities: reserve strategy, fund size vs. dilution (esp. in hard tech), and why some LP minimums are a built-in constraint.

+ Context from fresh market data: median seed at ~$20M and AI capturing a huge share of early deals—what those trends mean for formation and pricing.

+ Plus: Abe Othman’s follow-on finding (funds that never follow on beat always-follow funds 63% of the time) as a jumping-off point for David’s take.

Investing in Startups is a Seaplane Ventures production hosted by Joe Magyer.