A Note From the Redbud VC Team
Welcome to Field Notes, a new corner of the Redbud VC newsletter!
We've always had a bit more to say than fits neatly into our monthly edition. Our team is constantly swapping observations, debating ideas in Slack threads, and forming opinions that don't always have a clear home. So we created one. Field Notes is that home.
Monthly, we’re delivering our thoughts, essays, things we're noticing in the market, lessons from conversations with founders, and the occasional hot take we'll actually put our name on right to your inbox! We're building this with our startup community in mind, especially founders in the early stages. So without further ado — enjoy Edition #1 of Field Notes 📝
Redbud VC invests $250k-$500k in early-stage tech founders. We bring monthly Redbud VC, tech, and economics updates. - We've filtered thousands of sources for our 15k readers, so you don't have to. Enjoy 🥂
When to Raise VC
There is a quiet assumption baked into startup culture: if you are not building a VC-backed unicorn, you are falling short.
Venture capital is not a badge of honor. It is a financing model. When those ideas get tangled, decisions start to optimize for pitch decks rather than for customers.
Most VC companies fail. A handful of wins must carry an entire portfolio. That constraint shapes everything downstream.
Many companies were never suited for venture outcomes. Some markets simply do not support hypergrowth. Forcing a venture-shaped story onto a business that wants to be smaller is how you destroy something that was already working.
The key difference rarely discussed is return expectations. Angel investors can be happy with a 5–10x outcome. That is life-changing money for a founder and a strong return for someone writing smaller checks. Venture funds cannot operate that way. We need 50x outcomes to make the model work. That requirement alone rules out entire categories of otherwise excellent businesses.
A small or focused market can absolutely support a great company. It can generate profit, exits, and real wealth. What it often cannot support is a venture fund’s return profile.
Don’t get these two things confused. It will lead you to waste years of hopping between accelerators, reworking decks, and finding “creative” ways to stretch market size instead of serving your customers.
I am not anti-ambition. I am anti-mismatch. Many people overestimate how necessary or attractive the venture path really is because venture outcomes are the most visible.
Venture capital works when there is a genuine opportunity to unlock a massive market and when capital meaningfully changes the outcome. Angels and bootstrapping work when a business can compound steadily and produce real cash or a reasonable exit without pretending to be something it is not.
The real question is not whether a company could be massive. It is whether the financing path matches the market opportunity it serves or can unlock.
Maniacal Urgency
It’s not my natural rhythm to move fast. I’ve always been more methodical, concentrated on outcomes and behaviors rather than the ‘move fast and break things’ ethos of tech. One of the things I’ve come to appreciate about venture is how it forces urgency. Everything is fast, and those who move quickly win.
For example, founders often ask at the end of a call what the timeline looks like for a decision. It depends on a range of factors, but for us usually averages around three weeks. The incentive is compression in response. Faster responses mean better odds, especially when we’re competing for allocation in a round that’s moving fast.
Speed, in a way, denotes seriousness. This holds true for many things. A quick text back from a friend, response time on an email, and the time it takes for a server to greet your table after sitting down.
The necessity of the maniacal urgency has burned out any laziness in me. It’s made me brutally honest about what’s realistic to accomplish within a given timeframe and how to maintain quality along the way. Spend more time thinking, writing, and talking to founders; waste less time elsewhere.
You don’t have to move to San Francisco to build a great company
One of the things I’ve come to appreciate about venture is how it forces I’d be willing to bet you’ve heard some version of this on Twitter: “Move to San Francisco.”
Apparently, it’s all you need to do to succeed. You move there, breathe in that SF air, and then you sell your company for a hundred bajillion dollars.
Although SF is a great place to build, I think that advice is increasingly wrong. Not just outdated, but actively harmful for many founders.
Here’s why.
The disadvantages of building in San Francisco
$50 coffee. The cost of living forces founders to raise more money earlier than they should.
Inflated valuations (by 104%) make exits harder and compress returns for everyone.
California does not align with QSBS incentives, materially reducing founder outcomes at exit.
Wealth and policy uncertainty create long-term overhang, decreasing network effects as $1T in wealth has left in the last few months.
Pedigree substitutes for understanding. Dense networks increasingly behave like echo chambers. Consensus is rewarded more than originality.
Investor proximity encourages fundraising before validation. It becomes harder to know what is real traction vs. performative momentum.
Talent is abundant but overpriced, transient, and constantly in motion.
Loyalty is harder to build when every team member is being recruited weekly.
The advantages of building away from San Francisco
$5 coffee. Lower burn rates extend runway and learning cycles.
Scrappiness is not optional; it is enforced by the environment.
Founders are forced to validate with customers before pitching investors.
Capital efficiency is built through constraint, not claimed in conversation.
Being underestimated creates asymmetrical upside.
Less competition for talent, and talent is often underpriced relative to output.
Proximity to untapped industries and customers sharpens product decisions.
AI dramatically increases the ROI of selling software into historically slow-moving industries based outside of SF.
Adoption accelerates when the value is 10x instead of marginal.
Less noise from people "playing startup."
Execution > optics.
Geography used to be a moat for capital. It no longer is. You can see this firsthand with companies like EquipmentShare, Columbia, MO-based, who just IPO’d, surpassing a $7B valuation.
But geography is still a moat for cost structure, culture, and customer truth. San Francisco optimizes for access and consensus. Many other places optimize for durability, originality, and economic reality.
That does not mean SF is irrelevant. In fact, SF may have the most opportunity, but the odds of success are on a case-by-case basis. Talent is equally distributed, opportunity is not. But the default advice to “just move to SF” is lazy thinking. You don’t have to be in SF to believe big.
The better question is not where the investors are, but where you have the highest chance of success. That answer, more often than not, is where your gut tells you to be.
Until next time,
Redbud VC
This newsletter is for informational and educational purposes only and should not be considered investment advice. The authors and publishers are not licensed financial advisors.