More venture capitalists are going to seed as a way to test out startups, according to Wilson Sonsini partner Caine Moss — giving a small amount of money and then stepping back to see “if these guys can turn the idea into something.”

If the entrepreneur shows enough progress, the VC will do a more conventional Series A round and get more actively involved.

Sometimes this works out well (for the entrepreneur). For example, take WaterCooler, a startup that builds online communities of sports fans and TV shows. It raised $4 million in a Series A funding this way from Canaan Partners. (disclosure: the investor here is Moss’s wife).

But it can backfire if the startup doesn’t show progress and the VC decides to drop the company. One big problem, according to Moss and several others, is that seed investments are not low-risk. They require investors to roll up their sleeves and get heavily involved in companies, and not all VCs are used to doing this — nor do they have time because they’re busy tending their other companies.

“Some of the VCs are very good at it — especially if they’re very familiar with the management teams they’re seeding — but those are exceptions to the rule,” Moss says.

One seed investor, Flywheel Ventures, requires partners to spend 20 hours a week at each of their companies for the first year or 18 months of the investment, said Flywheel founder Trevor Loy. He also warns that enterpreneurs who give away too much of their company too early may find later investors trying to “trump” the seed round with more punitive terms.

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