A “should see” report concerning the present state of the startup world was simply launched.
However the report is lengthy and detailed.
So in the present day, I’ll share the one factor I discovered from the report that may enable 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 known as Floodgate.
Mike has been on Forbes’ “Midas Record” a whopping eight occasions due to his golden contact with startup investments. His offers embody 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 Programs (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 among his most vital social-media posts, he chimed in about one thing that’s close to and pricey to my coronary heart:
Not overpaying for seed-stage startup investments.
As he wrote:
To elucidate what he means on this submit, let me begin originally — with the “10x rule.”
The “10x Your Cash” Rule
After I first launched Crowdability, I did a deep analysis venture.
My purpose was to determine a confirmed course of for choosing profitable startup investments.
Over the course of a 12 months or so, I sat down with greater than three dozen of probably the most profitable startup traders within the nation. On the time, these traders had collectively backed greater than 1,080 startups, and generated a number of billion {dollars} in earnings.
Regularly, these professionals revealed dozens of instruments and “methods” to determine successful investments.
However of all their methods, one has been probably the most invaluable by far:
Easy methods to determine the investments that may return 10x your cash.
Go along with the Odds
In case you didn’t know, startup traders earn their earnings in two important methods:
- The startup goes public in an Preliminary Public Providing (IPO).
- The startup will get acquired.
IPOs can result in huge earnings for startup traders, however they occur occasionally.
Essentially the most frequent approach for startup traders to earn their earnings 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 vital takeovers.
Given this knowledge, how can we stack the percentages in our favor? Let’s have a look.
“Each Battle is Received Earlier than It’s Ever Fought”
To reply this query, let me inform you about one of many traders I met throughout my startup-research venture.
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 High,” 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 vital of those actions is that this:
Filtering out investments based mostly on their valuation!
The Significance of Valuation
Valuation is one other approach of claiming “market cap.” It’s the overall worth of an organization. For public corporations, 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 value for many startups is lower than $100 million.
In truth, in response to PricewaterhouseCoopers and Thomson Reuters, nearly all of acquisitions happen beneath $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 increased than $5 million, you may very effectively be overpaying on your funding.
Why is that this rule so vital in the present day?
Effectively, 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, traders, and legislation corporations. Primarily, it serves as a “supply of fact” for startup possession, serving to startups handle their journey from early-stage startup during 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 discovered, if you happen to make investments at valuations increased than $5 million, you may very effectively be overpaying on your funding.
This $20 million valuation happened partly due to the recognition (and potential profitability) of AI startups. So in some methods, it is sensible. However until there’s a corresponding enhance in “exit” valuations, paying a excessive value once you make your funding is a shedding technique.
It is advisable to be “choosy” about your investments!
Exceptions To Each Rule
Clearly, there are exceptions.
For instance, in case you have an skilled to information you, you may all the time think about investing in startups — like SpaceX or Anthropic — which can be extra extremely valued.
In any case, many traders thought-about corporations like Fb or Airbnb “wildly overvalued” after they have been value $10 million, $100 million, even $1 billion. Now they’re value tons of of billions, even trillions.
However once you’re simply getting began as an early-stage investor — particularly if you happen to’re doing so by yourself, with out steerage — limiting your investments to startups which can be valued at $5 million or so is wise. It provides you the best probabilities of probably 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.
Blissful Investing,
Founder
Crowdability.com
