Greylock this week announced a $500 million fund dedicated to seed rounds, raising eyebrows as well as questions on Twitter about whether traditional seed VCs will be left out in the cold.
Between the lines: The seed market is bifurcating, but the barbell isn't necessarily a threat to smaller investors.
Get market news worthy of your time with Axios Markets. Subscribe for free.
"What is still crushingly relevant is why an entrepreneur will select an investor to be on their cap table," says Sapphire Ventures' Beezer Clarkson. "And that is becoming more competitive every day."
Big money: Greylock's news comes on the heels of Andreessen Horowitz announcing a $400 million seed fund last month.
"The size of the vehicles matters, and then based on the size, the expectations for the winners goes up exponentially," Haystack founder Semil Shah explains.
Outsized return expectations mean larger seed funds will mostly focus on hotter and more obvious deals, where having a larger checkbook is an effective way to win. It’s the Tiger Global strategy, but at the seed stage (and likely anticipating that Tiger and its peers will be doing seeds soon).
"If you're trying to hunt for contrarian, non-obvious founders, nothing has changed," Hustle Fund co-founder Eric Bahn says.
Yes, but: There’s the potential for a negative signal if a large VC firm that led a startup’s seed round later declines to back its Series A round. Plus, there is the ever-present valuation creep.
Some VCs also warn that these new big funds won't mean more capital for entrepreneurs who are historically overlooked. They'll still face the same challenges in getting funded, unfortunately.
The bottom line: Venture capital doesn't evolve as fast as tech, but it does evolve.
More from Axios: Sign up to get the latest market trends with Axios Markets. Subscribe for free