A “should see” report in regards to the present state of the startup world was simply launched.
However the report is lengthy and detailed.
So right now, I’ll share the one factor I realized from the report that may assist you to make you some huge cash.
That is my #1 Funding Rule for 2026.
Introducing Mike Maples, Jr.
To set the stage right here, let me introduce you to Mike Maples, Jr.
Maples is the co-founder of a wildly profitable venture-capital agency referred to as Floodgate.
Mike has been on Forbes’ “Midas Listing” a whopping eight occasions due to his golden contact with startup investments. His offers embrace mega-hits like Twitter, Clover Well being, Okta, Bazaarvoice, and Demandforce.
Moreover, earlier than changing into an investor, Mike was founding father of two startups that went public: Tivoli Methods (IPO TIVS, acquired by IBM) and Motive (IPO MOTV, acquired by Alcatel-Lucent).
In different phrases, Maples is aware of a factor or two about startups and startup investing.
In one in every of his most essential social-media posts, he chimed in about one thing that’s close to and expensive to my coronary heart:
Not overpaying for seed-stage startup investments.
As he wrote:
To elucidate what he means on this publish, let me begin originally — with the “10x rule.”
The “10x Your Cash” Rule
After I first launched Crowdability, I did a deep analysis undertaking.
My purpose was to determine a confirmed course of for choosing profitable startup investments.
Over the course of a yr or so, I sat down with greater than three dozen of probably the most profitable startup buyers within the nation. On the time, these buyers had collectively backed greater than 1,080 startups, and generated a number of billion {dollars} in income.
Progressively, these professionals revealed dozens of instruments and “methods” to determine profitable investments.
However of all their methods, one has been probably the most helpful by far:
The best way to determine the investments that may return 10x your cash.
Go together with the Odds
In case you didn’t know, startup buyers earn their income in two principal methods:
- The startup goes public in an Preliminary Public Providing (IPO).
- The startup will get acquired.
IPOs can result in large income for startup buyers, however they occur occasionally.
Essentially the most frequent manner for startup buyers to earn their income is thru an acquisition — in different phrases, when a startup is taken over by one other firm.
To place the numbers in perspective: in 2025, there have been about 200 U.S. IPOs. However throughout the identical time-frame, there have been about 10,000 important takeovers.
Given this knowledge, how can we stack the chances in our favor? Let’s have a look.
“Each Battle is Gained Earlier than It’s Ever Fought”
To reply this query, let me inform you about one of many buyers I met throughout my startup-research undertaking.
Earlier than this gentleman grew to become a enterprise capitalist, he was a high-ranking army officer.
As he peppered our conversations with references to “storming the seashores of Normandy” and “the Battle of Little Spherical Prime,” he typically talked about a specific expression:
“Each battle is gained earlier than it’s ever fought.”
As these phrases relate to investing, right here’s what he meant:
Sure actions you are taking earlier than you make an funding can decide your final success. And some of the essential of those actions is that this:
Filtering out investments based mostly on their valuation!
The Significance of Valuation
Valuation is one other manner of claiming “market cap.” It’s the whole worth of an organization. For public firms, we are saying market cap. For startups, we are saying valuation.
And right here’s the factor:
Regardless of what you learn within the press about big-ticket takeovers — like Fb shopping for WhatsApp for $19 billion — the gross sales worth for many startups is lower than $100 million.
The truth is, in accordance with PricewaterhouseCoopers and Thomson Reuters, the vast majority of acquisitions happen below $50 million.
So, in case your purpose is to earn 10x your cash on a startup that may get acquired for $50 million, how do you “win this battle”?
Easy: make investments at valuations of $5 million or much less!
For those who make investments at valuations which can be greater than $5 million, you may very effectively be overpaying on your funding.
Why is that this rule so essential right now?
Nicely, now we are able to revisit the “should see” report I discussed earlier…
New Analysis Report from Carta
Carta is a tech firm that serves startups, buyers, and legislation corporations. Primarily, it serves as a “supply of fact” for startup possession, serving to startups handle their journey from early-stage startup right through a sale or IPO.
As keeper of the “fact,” it has entry to a treasure chest of details about what’s taking place within the startup world.
And because it simply revealed in its “State of Seed 2025” report, the median valuation for a seed spherical in 2025 was $20 million.
$20 million!
As you simply realized, in the event you make investments at valuations greater than $5 million, you may very effectively be overpaying on your funding.
This $20 million valuation took place partly due to the recognition (and potential profitability) of AI startups. So in some methods, it is smart. However except there’s a corresponding enhance in “exit” valuations, paying a excessive worth once you make your funding is a dropping technique.
It’s essential be “choosy” about your investments!
Exceptions To Each Rule
Clearly, there are exceptions.
For instance, in case you have an knowledgeable to information you, you may all the time take into account investing in startups — like SpaceX or Anthropic — which can be extra extremely valued.
In any case, many buyers thought of firms like Fb or Airbnb “wildly overvalued” once they have been price $10 million, $100 million, even $1 billion. Now they’re price tons of of billions, even trillions.
However once you’re simply getting began as an early-stage investor — particularly in the event you’re doing so by yourself, with out steering — limiting your investments to startups which can be valued at $5 million or so is wise. It provides you the best possibilities of doubtlessly incomes 10x your cash.
That’s what Mike Maples’ tweet is all about:
Don’t overpay on your startup investments!
And now, with valuations rising, that’s my #1 Funding Rule for 2026.
Comfortable Investing,
Founder
Crowdability.com