For the first time, I’m going to unpack the various reasons why I shut down Seedscout. This will be the first in a series of postmortems, each exploring a different dynamic that made the company, as it was set up, nearly impossible to succeed.
For those new to my story: Seedscout was a platform where founders could request introductions to investors. Investors could accept or decline those requests. If accepted, the founder got the intro. If declined, they were notified, and nothing more.
We charged money for intro requests. Founders could purchase them, and then whatever happened, happened. To keep a high signal and strong filter, we started pricing at $100/month. The idea was to ensure only founders with real traction or strong positioning would sign up. It worked well for some, and for others, it didn’t work at all.
There’s more to share in future posts, but in this one, I want to highlight why Seedscout was probably doomed from the beginning—without me even realizing it.
When you try to build a company that supports founders on the venture track, you enter a bit of a “damned if you do, damned if you don’t” situation. Why? Because 99.9% of founders won’t build anything that creates massive equity value. 0.1% will. If you charge any amount of cash to the 99.9%, they won’t get the outcome they want—despite trying hard and often paying more than they should. They walk away frustrated, no matter how strong the offering.
If you charge cash to the 0.1%, no matter how high the price, it’ll never reflect the true value you helped create. The biggest problem? No one knows who’s in the 99.9% and who’s in the 0.1% in the beginning—but every founder believes they’re in the latter. If they didn’t, they’d never have the audacity to try raising venture capital in the first place.
It’s a tough conundrum. If you charge all founders cash, you make a little—but risk pushing away the few who go on to create the most value. And if you do get a few top-decile founders to pay, years later they might be worth tens of millions… and you’ll have made $0–$2,000 from them in subscription fees, wondering why you didn’t ask for equity upfront.
But if you charge equity across the board, you can’t sustain operations—unless you already come from wealth, have a separate income stream, or are a VC with management fees.
This is why Seedscout was such a difficult model to crack. Despite my best efforts and full brainpower, I couldn’t solve this. I did throw a Hail Mary in 2022 to try to break the “law of social capital physics” I describe above—and it actually worked, for a short time. But ironically, that same move is what ultimately killed the company.
I’ll share that story in a future post :)
If this resonated, please give it a heart or reply. I’m trying to get a sense of what’s landing with you all and what’s not. Thanks 🙏
I loved Seedscout (of course I'm a founder)! Though I'm wondering if there's a bit of a dichotomy here. While I understand your desire to optimise or even hyper optimise seedscout from a success pov. As any founder will tell you there's usually one one thing that separates success from failure, luck. Yet there's an implication perhaps in the way you've written this thats a some part of later success could be attributable to Seedscout? Given the very many ways things could and do go wrong and generally how long that journey takes (your 99%) and how few (1%) make it, are you perhaps suffering from that marketing/VC/consultant/human cognitive bias, attribution error?
If I follow your in the article logic Seedscout helped 99% of customers fail? Now I'm sure thats not what happened but I do wonder if in your understandable obsession with the 1% you missed the real market the 99%?
I'm also thinking of your article about Y combinator when I write this and how there's an implicit decision there about the road to be taken and the ones not taken and the consequences?
This post is so true I don't now where to start.
Thanks for sharing, looking forward to the next part.
Steph