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Table of Contents

• VentureStaking® Arenas: The Pre-Seed Venture Fund …

• Part 2 of 4 - Pre-seed is the holy grail for retai …

  • The Nature of Venture

  • The Pre-Seed: Where the game begins

My name is Gerry Hays, Founder & CEO of Doriot® (pronounced “Doe-ree-oh”), named after French-born American U.S. General Georges Doriot, the father of Venture Capital.

I’m also an author (First Time Founders’s Equity Bible), inventor (U.S. patents for ads on t-shirts, coat checking, and VentureStaking® - pending), and 21-year professor of venture capital and entrepreneurial finance at Indiana University.

Democratize Venture is my platform to explore the venture markets and share the insights, strategies, and frameworks I bring into the classroom. It’s where practical advice meets mindset meets execution—for anyone ready to play the startup game.

VentureStaking® Arenas: The Pre-Seed Venture Fund of the Future

Part 1 of 4 - The Setup

Part 2 of 4 - Pre-seed is the holy grail

Part 3 of 4 - Organizing around retail

Part 4 of 4 - The economics of owning an Arena

These are excerpts from the upcoming Doriot® Whitepaper on VentureStaking® Arenas — a new venture platform designed for emerging fund managers seeking a competitive edge.

Part 2 of 4 - Pre-seed is the holy grail for retail investors

Venture capital is a broad term. Most people have heard of it, but for many, it remains a mystery.

At its core, venture capital is about funding the potential to tackle big problems with new solutions - whether that’s a product or a service that changes the game. Projects are led by individuals (and teams) called to devote their professional lives to getting into the arena.

For example, I felt called to solve a problem that I believe is worth solving: 99% of entrepreneurs lack access to organized venture capital to get started, and 99% of investors don’t have an organized way to buy equity in high potential startups at the seed stage where exponential returns are made.

This is a hard problem to solve.

The Nature of Venture

The reason is that the traditional venture game is neither accessible nor winnable without a large checkbook and some form of insider advantage. Here’s the math:

Out of 50 startups, maybe 5 succeed - and the challenge is that nobody, not even the experts, knows which 5. Thus, to win as an investor, bets need to be spread across multiple deals, with the winners doubled down on as they grow into companies that eventually get acquired or go public.

Consider this example: if it were possible to invest $100 in 50 high-potential entrepreneurs at the seed stage in 1994 - for a total of $5,000 - and one of those happen to be Jeff Bezos launching Amazon, that single bet would be worth $38 million today, even if the other 49 failed completely. And even without an Amazon, historical averages show those investments (whatever deals eventually would have won) would likely still double or triple over a decade. That is the power law at work.

The smart money knows this. That’s why billions flow into startups at the Seed stage, once a team has built a product and found traction. From there, Series A and B rounds inject even more billions until an exit.

The puzzle has always been how to make it profitable for non-professional investors to enter the game with the resources they can realistically allocate toward moonshot opportunities. And that means finding a way to organize millions of small investors around a system of venture investing that is both accessible and winnable.

I believe that the way to do do this is at the pre-seed.

The Pre-Seed: Where the game begins

The one thing about venture is that once a startup is discovered to have unlocked something interesting, professional investors pounce. This usually happens at the seed stage, when a startup has a product in market and is demonstrating customer traction.

Thus, attempting to organize small investors around the Seed or Series A stages is an exercise in futility. Small investors have to go earlier — at the moment an entrepreneur first decides to leap, when the bet is on human ambition and an interesting idea.

Backing founders at the beginning creates relationships that often carry forward, giving early supporters a seat at the table in future rounds.

Our data shows there are ~85,000 potential entrepreneurs at any given moment. Some are in college, some are buried inside corporations, all searching for an unlock.

And yes, Y Combinator and others say, “just go build and you’ll be found.” But it’s far more complicated. What about those without the means - family or personal - to take the financial risk? How do we unlock ambition that’s being suppressed by the fear of not being able to pay rent? Wealthy entrepreneurs don’t have to think about it. Everyone else does, creating a moat for founders in the 1% category.

This is where VentureStaking® Arenas come in. They are designed to unearth talent around a mission or geography, invite aspiring entrepreneurs into the Arena, and provide early R&D capital — if the VentureStakers® agree — giving founders enough runway to focus without fear. The premise is simple: come together early, accept that data is limited, and let the entrepreneur demonstrate their capacity to build.

For those who seize the opportunity, make headway, and keep their VentureStakers™ informed, the VentureStakers can then decide whether to double down or throw in the cards. The system allows many small bets across a wide range of talent, while real capital is held back for the moment when winning opportunities raise their seed rounds. This is how everyday investors can gain access to coveted seed deals - by getting there before the professionals.

Pre-seed is where we can organize millions of small-check investors to gain access to the high risk / high return venture asset class.

Next week, I will share why I believe emerging venture funds should start organizing around retail investors, not just institutions and family offices.

Wishing you a focused and fulfilling week,