Korva is a scroll of the internet’s best ideas.
Pre-seed investing means betting on people
Why metrics fail early
Later-stage investing runs on known quantities: growth metrics, early adopters, and the question of how big the market is. At the earliest stage none of that exists. There are no customers and no revenue, and a team with no track record on the new project gives an investor nothing to measure.
What investors watch instead
What remains is the small stuff that shows how someone operates: how they talk to customers, recruit employees, go after investors, and ship product, and whether they are concise or verbose. Those habits get projected across the lifetime of a company to ask whether it could become one of the best. Much of the call comes down to binary questions: whether the founders are magical, whether anyone would go work for them, and whether the space could be massive.
Why the price is lower
The money side is lopsided too. At inception more founders want to build than there is capital available, while at Series A and beyond there is more capital than good ideas. That imbalance lets an early investor pay a much lower price, and it explains why almost nobody invites a hundred people into an office, works with them every day, and then puts half a million dollars behind a team before anything is figured out.
Why does early-stage money come cheaper than later rounds?
Price follows the balance between buyers and sellers, and at the earliest stage investors face a long line of founders with few rivals for each deal. Later rounds have measurable growth, which draws many funds into a bidding contest. The same logic applies in auctions generally: more bidders with the same information push the price up. Seed-stage valuations are commonly a small fraction of Series A valuations for this reason.
How do investors judge founders who have no track record?
Researchers who study hiring have long found that work samples predict performance better than interviews. Psychologists Frank Schmidt and John Hunter reported this in a widely cited 1998 review of selection methods. Watching someone do the actual job for weeks is the closest thing to a work sample an investor can get. It reveals habits that a pitch meeting hides, like how a person handles a setback or a disagreement.
Why do early investors rely on yes-or-no questions?
Venture returns are dominated by a few outsized winners, a pattern often called the power law. An investor gains little from a company that is merely decent, so the useful question is whether this one could become huge. That turns a fuzzy judgment into a few sharp tests, such as whether the market is massive and whether talented people would join. Funds that expect most investments to fail are built around finding the rare one that does not.
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