Rashmi Melgiri

I’ve spoken to over 2 dozen MDs at PE firms I can confidently say that the arb of figuring out how to implement Vertical AI at portfolio companies is very real right now It will fundamentally change underwriting for those who can do it predictably and unlock generational returns. Most are aware they need to act. Very few have.

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Every hire, product feature, and GTM experiment is a capital allocation decision, most teams just don’t call it that. I’m kicking off a 3-part series on capital allocation for founders, operators, and finance leaders with a simple question: ➡️ Will the next $1 you deploy become worth more than $1? Series overview Part 1: defines the core concept + the math Part 2: where capital goes + how to measure whether it’s working Part 3: AIMS framework for communicating allocation decisions to management teams and your board Part 1 (attached here) lays the practical foundation: 🔹 The $1 invested test and ROIIC vs. hurdle rates (scoreboard vs. decision lens) 🔹 A lightweight “investment brief” to evaluate bets (GROW / BUILD / BUY) 🔹 The small metric toolkit that translates finance into operating decisions (NPV / payback / ROIIC / incremental margin) 🔹 Early-stage proxies when DCF inputs are unknowable (burn multiple + revenue quality) 🔹 Operator “vital signs” to spot drift early (profit engine, leverage, cash conversion, optics) Series Roadmap ✔️ This series (Parts 1–3): breadth-first. shared, lightweight framework to define value creation, choose decision-grade metrics, and communicate tradeoffs clearly ✔️ Next series: depth-first. momentum drivers + operational decisions that need near real-time measurement to spot drift early and course-correct fast Read Part 1 here and Part 2 and 3 on substack. Next Series will be out next week. 💰 What’s one bet you’re funding right now, and how will you prove it’s working?

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Boards are supposed to help founders. Over the past 19 years, I've watched many trap them instead. As companies scale, many boards turn from insight to oversight and stop doing what founders actually need: Help making big, hard decisions. Early boards tend to be small, the board members are close to the business and highly invested in it. They argue from first principles. They help founders think. Later-stage boards often look more impressive on paper - they have more independent directors, committees and process. Somewhere along the way, collective problem solving gets replaced with oversight. The board shifts from helping the CEO make better decisions to monitoring decisions that have already been made. Strategy discussions get safer, real debate gets rarer and meetings become more about risk management than judgment. This usually coincides with the introduction of more professional board members. For better or worse, they often optimize for governance, optics, and liability management. That’s their job. But it’s not always what the company needs in moments of real uncertainty. Then, CEOs stop using them as thought partners. That’s a problem. So what should founders do? A few principles that help: • Keep the board as small as you can for as long as you can • Add directors for new insight they bring, not what boxes they check • Treat board seats like senior hires, not trophies • Design meetings for debate rather than reporting • Be explicit about when you want input vs approval Good boards should improve decision-making. If your board isn’t making you think harder, it’s probably not doing its job.

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Common wisdom in VC says relationships are a long game, but we've all got a 60-second pitch. Here's what I've learned about relationship-building in an inherently transactional industry.   In business and in life, relationships are important to build the right way. Too often, networking feels transactional and impersonal. No small talk, no curiosity. Just straight into pitch mode.   I totally get it. As a new fund manager raising, I understand the urgency. But it still rubs me the wrong way. I genuinely like meeting people, getting to know them, and being helpful whether that’s investing, offering insight, or connecting them with others in my network.   I see this play out constantly at GP/LP events with family offices, FoFs, and other LPs. You spot the GP laser-focused on LP name tags, making a beeline to pitch. I empathize with both sides, being pitched to and trying to raise. But no matter how badly we want to speed it up, trust has its own timeline.   At the end of the day, everyone wants to feel seen and heard: founders, GPs, LPs alike. That’s why I always start with something personal and non-work related when I meet someone new. It lowers the stakes, softens the interaction, and often uncovers a real connection.   For example: Last night, I was talking to someone from the exact kind of shop every VC is pitching. They mentioned living in Boston. I immediately lit up and asked where (my mom’s side of the family is from there). We went into the usual "so what do you do" and when it was my turn, I said I’m a GP at a new VC firm in NYC and shared a bit about our thesis. Tension hung in the air as, which I found out after the fact, they were waiting for the "ask" of either intros or capital.   When they gently mentioned that our fund might be too small for their VC allocation, I jumped in to clarify we’re targeting different types of LPs where the check sizes make more sense and that's not what this was about. I was genuinely curious about their work on secondaries and learning more about that segment of the market. That changed everything.   Their face lit up, posture relaxed, and the passion came through. We ended up talking for over 30 minutes, discussing the effects of secondaries on the alternative asset market. We exchanged contact info at the end. They said, “Let me know if there’s any way I can be helpful.” I offered the same.   Who knows what may happen in the future. But I walked away with two things I know for sure:   1️⃣ I learned a lot about the current state of the secondaries market from someone who's been deep in it for 5+ years. 2️⃣ I made a meaningful connection with a sharp, kind person I’d gladly reach out to again.   Relationships are a long game. But they’re also full of surprises because you never know what may happen or not happen down the road.   What I do know is that the more genuine you are when building relationships, the more likely things come full circle. #DaringVentures #AuthenticNetworking #GP #LP

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VC schedules, and thoughts on being a VC noob. -- VC schedules to know -- Most venture capital firms hold partner meetings on Mondays. This is typically when the investment committee votes on new investments and other key decisions. Savvy founders learn the exact timing and may need to provide additional data over the weekend to stay in motion. It is also well known that many venture capitalists observe a “European summer,” with August often being light or fully off. Similarly, the winter holidays reduce activity across much of December. That said, data from Carta shows a meaningful year-end push to close deals in December, followed by a flurry of activity in January. Founders should be cautious about kicking off fundraising during these slower periods. You do not want a raise to go stale and fall apart. VCs talk to each other, the industry is highly interconnected. -- I’m a mid career Noob! -- I am an “emerging manager,” effectively a new VC, less than three years in. In venture capital, the timeline is long. On my Linkedin you'll see I have two roles at Blitzscaling: Limited Partner means I put money into a fund, but have no decision making ability, and General Partner means I'm actively finding startups, bringing them to the partnership, and funding. As a General Partner, you are often considered an emerging manager for close to a decade, as it takes years for a fund to fully mature and establish a VC track record. Investing is a long game, but the upside can be extraordinary. Fortunately, I entered this role with a positive angel track record from my own bank account, which is often a good idea to have as a VC. When I learn a new VC concept or term, I’m an AI first, I’ll link to my post a few days ago in the comments, I totally live for constant growth and learning, if you’re not growing you’re dying. Fun fact: Many/most start their VC career in their 40s, as they need to have enough tech and biz cycles, a broad enough network, resources, and a platform to stand upon. As we end the year, I'm sharing more career thoughts, and productivity thoughts, rather than industry trends and market maps and frameworks and forecasts. I wrote all of this by hand myself, but used AI to edit some of it.

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Trying something new this week - a studio industry roundup with my take on what matters. The studio model is no longer an experiment being run in a handful of places. It is infrastructure being built across geographies, sectors, and institutional types. 5️⃣ stories from the past seven days:  1️⃣ OSS Ventures hit a EUR 40M first close on a EUR 75M follow-on fund -- capital raised specifically to back the 30 companies their studio created since 2019. The "build then fund" lifecycle is maturing. B'More Venture Studio with a similar thesis: studio operations first, then dedicated capital to scale what's working.  2️⃣ Delta40 raised $20M from 54 investors across 13 countries to launch Africa's first integrated venture studio and fund. The LP base is almost entirely DFIs and foundations. Impact capital is discovering the studio model as a deployment vehicle, something I seeing across geographies (conversations with Michael Bob Starr and Damias McDonald this week alone) 3️⃣ Start Holdings launched Start.vc out of NYC and Barcelona after a $200M EV infrastructure exit. Another operator-turned-studio-founder. This is the pattern we see quite often in our work at 9point8 -- experienced operators like Jason Goldsmith who've built and exited deciding the studio model is how they want to build next.  4️⃣ UBC HATCH admitted 10 new deep-tech spinouts for Winter 2026 -- mostly climate tech. University venture builders are quietly becoming one of the fastest-growing segments. Follow Evan Allen and Jaimie Testai to keep track of its rapid evolution.  5️⃣ The INVEST Act is advancing through the Senate. If passed, it expands qualifying VC fund size from $10M to $50M and loosens general solicitation rules for accelerator and university events. For studio-funds -- and for folks in the The Venture Studio Forum community tracking policy -- this could be the most significant capital formation legislation since the JOBS Act. If this roundup format is useful, I'll keep it going. What other noteworthy news hit your desk this week, and what stood out to you?

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The most salient narrative in tech today is the end of software. Public software companies have been pummeled, down 20%+ in the last 3 months. But I think the bear case rests on weak logic. There are 3 main categories of concern driving this narrative: 1. Vibe coding means businesses build their own software 2. AI automates away jobs, and seat licenses plummet 3. AI-native companies take share from legacy incumbents The first one doesn't hold up. The second is too important to dismiss casually, but lacks evidence thus far. The third strikes me as most threatening, but it, too, rests on a flawed logical foundation.   On rolling your own software, customers who choose to build almost always regret it. An internal IT team can build a CRM, but they can't maintain and improve it like a dedicated software company. Anthropic spending 8-figures on Workday for HR software shows that incumbent providers have more to offer than software skeptics realize.   Sure, there's a risk of AI automating away seats (and therefore seat licenses). But this creates opportunity for software incumbents to deliver AI-infused software that allows customers to do just that. Software vendors can easily shift to usage-based or other value-based pricing models. Relatedly, there's a larger fear that AI will trigger massive unemployment among knowledge workers. This deserves to be taken seriously. However, unemployment is currently quite low by historical standards, and current AI is beyond what most considered AGI a few years ago. I think the worriers here are moving the goalposts. The third concern--AI-native companies decimating software incumbents--is the most formidable. 20-25 years ago, Google hoovered up the attention economy by building the dominant consumer Internet product. Could Anthropic or OpenAI do something like this in b2b? It's not my base case, but it's the scenario that goes the farthest with me.   That said, I think there are 2 misunderstandings embedded here.   The first is that only AI startups can use AI tooling to accelerate product velocity. They aren't. The engineers at Shopify and Workday have the same access to Cursor, Claude Code, or open-source AI models.   The second, bigger misunderstanding is that these markets are zero-sum. By definition, technology expands the existing pie. So I disagree with the idea that AI growth will come at the cost of existing software companies. AI will massively expand software spend.   Which brings me to what's hardest to reconcile. If you believe AI-native startups will create major value, you're implicitly underwriting a world with fragmentation and switching costs among knowledge work tools. You can't hold that public software companies are all in the blast radius of Anthropic AND back the Harveys or Open Evidences of the world.   It doesn't add up, as the bull case of one is implicitly the bull case of the other. And while the market is voting like these are opposites, I expect the weighing machine to disagree.

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SF VC Takeaway #2: Pricing expectations, performance bars, and what’s actually getting funded. One theme that came up repeatedly in SF was how far pricing expectations and performance bars have shifted, even compared to just a few years ago. A few things investors kept anchoring to: 1️⃣ Median Series A valuations are higher than their 2021 peaks, but fewer of them are getting done. 2️⃣ Capital is being concentrated into fewer and fewer companies (and lots of capital!) 3️⃣ “Good” progress is no longer enough and the bar for standout performance has moved in an AI-native world So what does “top performance” mean right now? One investor told me that top quartile seed companies in their portfolio are going from $0 to $2M in ARR in <12 months. Outside of pure traction numbers, a few other themes that came up to describe "top performance": 📈 Explosive early revenue ramps (or a very credible path to them) 📊 Strong velocity and momentum for 2 quarters in a row, even if the baseline is small. 🚀 Clear signals of category leadership, not just product-market fit. Sometimes shown by either domain expertise, speed of product optimization, or by lack of competition in the category. This creates a counterintuitive dynamic where it can be easier to fund a company with strong pedigrees in a hot space and no traction yet than a company that went from 0 to $1M ARR at what used to be considered a rapid pace. Pricing today is driven by trajectories, not moments in time. We used to say investors invest in lines not points; I think that's more true than ever now because crossing certain milestones doesn't carry as much influence as it once did. Finally, investors still say that valuation matters, but many of them are acting differently. Pace and belief in category-defining companies really sets the price; while slower growth gets scrutinized rather than discounted. One silver lining in the camp of durable growth: Series A rounds are happening so fast that many companies don’t yet have meaningful history of retention data. Large bets are being made on velocity before the durability is proven. Several investors told me the same thing: we may soon swing back to a market where retention, not growth, becomes the defining metric. Let's hope so. I'll share my third SF VC takeaway tomorrow!

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🥾 #bootstrapping as a mindset should be ephemeral, one that requires a deliberate transition away from as a business enters sustained growth Appointing an established auditor is often regarded as a luxury and not part of bootstrapping Audits discipline a business - to be methodical, thorough and deliberate - traits that acquirers often seek in due diligence After all, "What gets inspected, gets respected," Anon We will share the traits of venture businesses sought and respected by MNC acquirers, join us if your business is out of the #bootstrapping mindset #fulfillingpotential #hepmil #oobmil

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Thrilled to announce that Together Fund is investing in Sentra, alongside a16z speedrun! You track results in Jira. Decisions in Notion. Conversations in Slack. But the reasoning, the debates, trade-offs, and context behind why you chose A over B, disappears into what we call "Dark Matter." A decision made in March looks insane by July because no one remembers the constraints that made it smart. I lived this firsthand at Twitter scaling from 800 to 8,000 employees, and at Google while launching AI Overviews to billions at planet scale. The problem isn't process. Process is compensation for something deeper: organizational amnesia. An organization’s "Systems of Record" doesn’t solve this, they encode it. They store what happened, never why. That's why we are investing in Sentra. Sentra is the always-on collective memory that eliminates organizational amnesia by maintaining accurate context for all members and agents, functioning as an operational nervous system. It connects to every channel where work happens, meetings, Slack, email, code commits, docs, calendars, and treats them not as artifacts to search, but as living signals to synthesize. The fleeting and the permanent, unified into a memory that understands. The founding team is built for this: - Jae Gwan Park (CEO): Product-first founder, memory systems research at UofT and MIT - Ashwin Gopinath (CSO): Former MIT professor, created "Reflexion" (NeurIPS 2023), agents that learn from mistakes, 2x founder - Andrey Starenky (CTO): Early Vapi engineer, ex-IBM, built to process enterprise-scale data firehose Together is an operator-led fund. We invest in problems we've lived. This is one of them. Many congrats Jae, Ashwin and Andrey, we are so excited to partner with you! Read the full thesis: https://lnkd.in/gixj9cE4 Book a demo: https://www.sentra.app/ #OrganizationalMemory #AI #Sentra #TogetherFund #a16z #ContextGraphs

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𝗩𝗘𝗡𝗧𝗨𝗥𝗘 𝗖𝗔𝗥𝗘𝗘𝗥𝗦 𝗗𝗘𝗠𝗬𝗦𝗧𝗜𝗙𝗜𝗘𝗗 𝟱: 𝗧𝗛𝗘 𝗦𝗘𝗖𝗢𝗡𝗗 𝗖𝗔𝗥𝗘𝗘𝗥 𝗩𝗖 Continuing my series on routes into VC Investment Teams (see previous posts in the comments), it’s time for a final group: Second Career VCs (SCVCs). 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗮 𝗦𝗲𝗰𝗼𝗻𝗱 𝗖𝗮𝗿𝗲𝗲𝗿 𝗩𝗖? SCVCs are people who have had a substantial career in another field before turning to Venture. This doesn't include a product manager with five years experience or even a founder of a company that made it to Series B (great backgrounds, but more relevant to my previous post on Operator VCs). Instead, SCVCs typically spent 15-20+ years in another field, even reaching retirement stage, before starting afresh in VC. I’ve seen a variety of SCVCs – some are founders (myself included), others financiers (such as my previous partners Mark Evans and Tim Bunting) and others have had careers in medicine, law or even sports (e.g. Serena Williams’ primary focus is now Serena Ventures). Historically, this was almost the *only* way into venture. Key founders of Kleiner Perkins and Sequoia, for example, were successful, effectively retired operators before they got into venture, first investing their own capital and then adding other people’s money – much like successful Angel-turned-VCs do today. 𝗣𝗿𝗼𝘀 & 𝗖𝗼𝗻𝘀 𝗼𝗳 𝗕𝗲𝗶𝗻𝗴 𝗮 𝗦𝗖𝗩𝗖 ✅Credibility: A successful first career brings instant credibility with founders.  ✅Financial: Some firms require partners to buy into the firm/funds. A previously successful career likely provides the capital to do this. ❌Starting Again: You go directly from respected expert to total noob! It’s a humbling transition. ❌Structure: Many folks in this boat could just choose to invest directly themselves. Being a VC brings more capital and support, but it also brings more structure and bureaucracy. 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 𝗳𝗼𝗿 𝗦𝗲𝗰𝗼𝗻𝗱 𝗖𝗮𝗿𝗲𝗲𝗿 𝗩𝗖𝘀 1️⃣ Unless their previous career was in finance, there will be gaps in a SCVC’s toolkit. SCVCs are unlikely to go back to business school so they need to find a firm where others can balance out their skills. 2️⃣ As with Operator VCs, working in an investment firm is different to most careers and a transition in mentality and work-style is required - more on this in my previous post. 𝗧𝗵𝗼𝘂𝗴𝗵𝘁𝘀 𝗼𝗻 𝗴𝗲𝘁𝘁𝗶𝗻𝗴 𝗶𝗻𝘁𝗼 𝗩𝗖 𝘃𝗶𝗮 𝘁𝗵𝗶𝘀 𝗿𝗼𝘂𝘁𝗲 1️⃣ The world is competitive and it is rare to be sufficiently successful (in a relevant enough field) to be able to get into VC this way. 2️⃣ And, of the few who can do it, many have other attractive options in life: retirement, a portfolio career, becoming an elder statesperson in their existing career, philanthropy, etc. 3️⃣ Once upon a time, VC could be pursued as an ‘active retirement’, alongside long vacations and other pursuits. Today the market is simply too professional, competitive and demanding for this – you’re either in or not, making it a less attractive path for those with the privilege of this option. 

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While there has never been a more exciting time to be a founder building dev tooling or next-gen infra, it has also never been less investable at seed/pre-seed. I'm either really missing something or a lot of my peers are lost. As someone who has not just written, but also SHIPPED, about 75k lines of code in the past 6 months I can tell you that the evolution of how to build products has changed as much in the past year as it did in the entirety of 2007-2017. The complete rise and fail of frameworks, platforms, methodologies, etc... paved over and forgotten... that is of course except for the 1 company that gets a 1000x return from a wildly overvalued hyper-scaler or drunken growth stage investor obsessed with compounding at scale. Imagine a world where any seed investor in trends like Openstack, Hadoop, PaaS, etc all took a full loss on their investment. That's what we're looking at right now. I personally know of over a dozen well-funded seed-stage companies building in these spaces, with years of runway, scrambling to get acquired for a return of capital + several million personally while they're still relevant. If you're not seeing this unfold in front of you, you either aren't paying attention or you're satisfied playing the lottery instead of investing.

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