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Five Categories with Corona Tailwinds

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Life has been turned upside down in the span of days. A week ago, I thought I’d be travelling for my first business school spring break — not cooped up in my Boston apartment. I thought I’d be heading to my sister-in-law’s wedding this weekend — now it has been postponed.

The Due Diligence Hierarchy of Pain

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When a founder is raising money, he/she should expect that any serious investor will conduct some level of due diligence before getting to yes. This could look somewhat different depending on the maturity of the business. Seed stage companies will mostly face questions around the team and market.

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The Midas List Then and Now

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In a few months, we are likely to see the annual Forbes Midas list of top performing early stage VC investors.

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Building the Best Seed VC Syndicate in 2020: Navigating “Leaders” & “Fillers”

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In previous blog posts I’ve written about the two main approaches to building a seed round syndicate – the subscription method (where an entrepreneur presets a structure with a convertible note or SAFE and recruits investors who subscribe to the round, all without a term-driving lead investor) and a term-driving lead investor approach. The former is most common post-accelerators (typically YC), but is much more rare in attracting intuitional seed investors in other contexts (though it can be productive in pre-seed for angels). Since we started NextView, though, given a number of factors a lot has changed in the past decade for entrepreneurs on how to best put together an institutional seed round with the second approach. The first reason is that seed round sizes have gotten larger, doubling over the past ten years with the average growing from $1.1 to $2.4M , now the upper bounds of seed round size we’ve seen as large as $5M+! That trend has been coupled with a proliferation of institutional seed venture capital firms. Although there is in theory more dollars of capacity in rounds now given that they’re larger, the leading seed VC firms have been raising increasingly larger funds and thus require larger checks to implement their strategy as they drive for specific ownership % targets. The result is that seed rounds have become more competitive, in particular for the ability of larger firms to lead the round with meaningful $1M+ checks. Whereas it used to be commonplace for up to 3 or even more firms to fairly evenly split a seed round with all parties being fairly content, now there is a much more interest in taking half or even more of the round by a lead, crowding out the others that would take a parity role. The result of this context is a strong bifurcation of seed players in the ecosystem: those larger “Leader” seed funds which have a bias or even requirement to lead rounds. What then remains is the “Fillers” whose explicit desire is NOT to lead rounds, but rather slip into a syndicate once the lead, structure, and terms have all been established. There is often room for these filler investors even in a competitive round because the other lead firms who vied for but didn’t win the pole position slot often won’t want to participate at a lower dollar level because an investment with this profile doesn’t fit their ownership or board seat model. But more importantly, very often the filler syndicate partners can bring something very distinct to the table: domain expertise, specific relationships, diverse perspectives, and/or specific value-add services that the lead. This bifurcation of seed syndicate roles affects how Founders should approach fundraising strategy. My partner Rob likes to talk about “ big rocks first.” In other words, a seed VC fundraising pipeline should be sorted into two waves, the first of whom are firms who will drive with conviction to lead, and then the second comprised who will fill in capital later. Sometimes It can be often challenging to discern from a VC firm’s website their approach to leading/not-leading and their actual typical check size. But a Founder’s best source of fundraising information is peer Founder/CEOs who have recently gone through a similar process. Once a lead firm has been established, then it becomes a process of assembling puzzle pieces. There are a broad set of considerations to take into account including check size, involvement post-financing, geography, sector focus, follow-on capital, prestige, fund structure, and of course interpersonal dynamics… all of these I discussed previously in an older post. The goal here is to be deliberate about who else to include (assuming the Founder has the luxury of multiple options) – each seed syndicate player should bring something strong and very specific to the table. Especially beyond the lead VC, the syndicate should be a well-rounded composition of firms, not a composition of well-rounded firms. Fundraising is still challenging for most seed founders… I don’t know why it begins with “fun.” But the dynamics of today’s seed market require that prior to embarking on a fundraising journey Founders should research & prioritize the first wave of outreach to firms only to those who can get in front of the parade & lead the round. It goes slowly until it goes fast , as once a lead is in place the rest of the syndicate can be rounded out with additional groups with complementary strengths. The post Building the Best Seed VC Syndicate in 2020: Navigating “Leaders” & “Fillers” appeared first on NextView Ventures. Fundraising

Building Healthy Innovation Ecosystems for Your Projects

Speaker: Nick Noreña, Innovation Coach and Advisor, Kromatic

In this webinar, Nick Noreña will walk through an Innovation Ecosystem Model that he and his team at Kromatic have developed to help investors, heads of product, teachers, and executives understand how they can best support innovation in their own ecosystem. He'll also go over metrics we can use to measure the health of our ecosystems as we build more resources for innovators.

What’s the Deal with Seed Funds Waiting for Traction?

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I sent a tweet out last week that elicited quite a few responses from both founders and investors: seed funds that don’t invest pre-traction =. — Rob Go (@robgo) November 4, 2019. I could hear the internet nodding in violent agreement. I thought I’d share a few additional thoughts on what may be driving this. First – there are a lot of seed investors out there that don’t actually want to invest in seed. What they really want to do is be a venture capitalist.

Four Tricky VC Questions and How To Handle Them

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During the course of a fundraise, founders are likely to encounter a few questions from VC’s that seem awkward or even a bit unfair.

Denouement

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Like many things in life, the VC/startup ecosystem is one of cycles. Looking back over the last decade it’s remarkable to see how the emphasis has shifted across cycles and what the overarching narrative was.

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Pros and Cons of Hiring a Remote Employee

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Throughout human history, our working environments have gone through several huge shifts. From hunters and gatherers to farmers and traders, from farmers to industry factory workers, and from factory workers to the modern day office employee.

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Are MBA Founders More Diverse?

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Original research on gender diversity and fundraising amongst HBS founders. Historically, there has been a general bias against MBA founders — a skepticism around their grit and hustle.

Repeat Founders and the Risk of a False Positive

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A number of blog posts recently have mentioned this, but we seem to be experiencing a rise in repeat founders starting new businesses and raising seed capital.

Pitch Deck Month: The “Ask” Slide

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*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *. Here we are, at (one of) the final slides.

How is the VC Asset Class Doing?

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One of my more popular posts in recent years was a long write-up on how VC’s get measured. It occurred to me that about 2 years has transpired since that original post and I thought I’d write a follow-up.

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Which Markets Are the Most And Least Served by Seed Investors?

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About a year ago, my partner David Beisel talked about how seed fundraising is no longer a local game , and that the best entrepreneurs seek out the best investors for them outside of their home market.

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Meet Summer: Our Portfolio Company Changing The Student Loan Landscape

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Student loan is a generational crisis – there are 45 million borrowers in the U.S. on the hook for $1.6 trillion in student loan debt, tripled in the last 10 years. When we think about money in the context of everyday living for the next generation of consumers, it’s impossible to ignore the weight of the student loan burden. . Unlike many other aspects of personal finance, student loan is incredibly complex.

Our Investment in Ten Little

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Last week, one of our most recent portfolio companies, Ten Little , came out of stealth and announced its public launch. . Ten Little was started by Fatma Collins and Julie Rogers , a platform that aims to make finding the perfect fit for your child easy, starting with shoes.

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Pitch Deck Month: The Team Slide

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*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *.

Pitch Deck Month: The “Where Are You Going?” Slide

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*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *. So you’ve covered the “who”, “what”, “why”, & “when”. Now it’s time to discuss the “where”.

Pitch Deck Month: The “Can You Be The Best?” Slide

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*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *.

20/20/20 – Harley Earl: Design Icon, Seer of Our Autonomous Vehicle Future

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Over the course of 2020, we are highlighting 20 innovators and entrepreneurs from the 20th century whose work continues to shape our everyday lives in the 21st century. . Unless you are a student of design or an aficionado of cars, you may not know the name Harley Earl.

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Pre-Seed Rounds Aren’t Going Away, But Pre-Seed Funds Are

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Over the past few years, “pre-seed” as a distinct category has emerged within the early stage fundraising landscape. To some degree the best way to describe a pre-seed round is that you know it when you see it, as the definition is squishy… but most pre-seed rounds are characterized as relatively small ($750K or less), early in company formation (pre-product), and typically followed by a larger “seed” round ($1M-$3M) within 12 months.

Friday Fun-isms: “Avoid Swiss Army Knives”

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An inevitable question that founders face is “how is your product different?” Whether it’s asked explicitly or not, most investors that you speak to have probably seen or heard of a company that does something pretty similar to yours.

The Road Less Traveled: Non-Standard Early Stage Funding Paths

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As the seed stage that atomized and series A rounds have become larger and more traction based, the paths to series A have changed. The baseline path to series A has tends to look something like this: Raise $0?—?$500K

Why We Invested in Marlo

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Meetings can suck. I know that you’ve been there. Stuck in a meeting which wasn’t productive. Not for you, and not for many (or even all) of the participants. Sometimes it’s a standing small-group meeting, an obligatory gathering that’s on everyone’s work calendar merely intended for reporting and not actually deciding. Sometimes it’s an all-hands-on-deck meeting requiring a large group to attend, but what’s going to be discussed isn’t relevant for everyone.

Raising a Series A Away From Home

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This is a post about raising a Series A from an investor that is not based in your home city. Let me preface this by saying that if all things were equal, you would probably prefer to have a local series A investor.

Doing Due Diligence on Potential Investors

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One of the often neglected parts of fundraising is the process of doing due diligence on potential investors. Raising money is super hard. But assuming success, a moment will come when a founder will have multiple funding options. Partnering with an investor and/or board member is very long term commitment, and I’m always surprised by how little diligence founders do prior to signing up for what could be a 10+ year collaboration.

Chewy S-1: Category Leadership + Conveyor Belt Into Consumers’ Homes

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Chewy has rapidly grown from a startup to a multi-billion commerce company, establishing itself as the leader in pet e-commerce. Chewy sells tens of thousands of products from many 3rd party brands, as well as its own private label brands (though latter remains <10% of sales).

Why Is There So Much Turnover In Venture Capital?

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“I have exciting personal news.”. “I’m I’m thrilled to announce that I’m joining [New Firm] as a Partner where I will continue to invest in great Founders across the industries I care about.”. “I I am pursuing an idea that I’m excited about and and happy to be back on the entrepreneurial path.”. These are literal quotes from social media and email announcements over the past six months from VC Partners moving on to other competitive firms, and, well, just moving on.

Pitch Deck Month: The “Why Does It Matter?” Slide

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*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *.

Pitch Deck Month: “What Do You Do?” Slide

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*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *.

How Decisions Are Made After The Partner Meeting

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In general, VC decision-making can feel like a black box, which can be frustrating for founders who are trying to manage their fundraising process and timeline. It usually involves many meetings over the course of weeks (if not months) with various members of the firm, and the process can look quite different from one firm to another. Regardless, your singular goal is typically to drive towards a “Partner Meeting” where you can pitch the story and vision to the entire investment team.

Pitch Deck Month: Appendix Slides

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*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *. For many pitch decks, the Appendix section is really an afterthought.

Santa As A Service

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I bet many of us are waiting for packages to be delivered around this time of year.

Pitch Deck Month: “Is It Working?” (aka the “Traction” Slide)

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*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *. By now, you’ve described your team and the high level overview of what your company does.

Why Do Consumer IPOs and B2B IPOs Get Treated Differently?

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2019 is off to an exciting start for IPOs of VC-backed startups. In just the last month or so we’ve seen Lyft go public ( my analysis of the company’s S-1 here ) and more recently, Zoom and Pinterest. Zoom is a B2B company Pinterest and Lyft are obviously B2C companies.

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A Conversation with 2020 Presidential Candidate Andrew Yang

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Exploring The Everyday is an interview series exploring interesting individuals or companies who are trying to make an impact on the lives of everyday people. You can learn more about this series here. Universal Basic Income is a hot dinner party topic around the country right now.

“Peace of Mind” Businesses

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One of my first seed investments was in a company that was looking to disrupt the textbook publishing space. The team was terrific, and the premise was to develop a digital textbook product that was 20x cheaper, better, and more convenient than traditional textbooks. The team brought an amazing product to market but the business just didn’t work. The core mistake we made was misclassifying the kind of business we were building.

Nobody Announces Their Seed Round Anymore and That’s a Mistake

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Five years ago, as the mania around seed fundings was accelerating, Founders were very eager to announce their seed round to the world. It marks the beginning of the journey with hard work & the real business success to be accomplished ahead, but a milestone nonetheless.

Building Something vs. Proving Something

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One of the biggest rookie mistakes I see among founders pursuing seed rounds is that they’ve spent too much time building something vs. proving something. Increasingly, seed rounds occur after some sort of pre-seed or at least some period of bootstrapping. During this time, the founding team has probably invested at least some money and a lot of time and energy in moving their company from a concept to something with a bit more meat.

Slack S-1: Will ARPU Drive Long Term Value?

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Slack dropped their S-1 a couple weeks ago. Even before that, we all knew that it was among the most rapidly growing SaaS companies in recent years and a product used (and loved) by millions of people. But now we have a chance to really dig in and understand Slack’s business a bit better.

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Friday Funism: JDCC

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Like other investors, we at NextView have a number of frameworks which we use to evaluate decisions on making new investments. All early stage venture firms essentially look at some weighting of team, market, product, and traction.

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Introducing NextView III and Our Focus on the Everyday Economy

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What will the future hold? It’s a question every VC asks themselves and the entrepreneurs they invest in. Some conclude that certain sectors or technologies — like AI, blockchain, VR — will define the next decade.

Being A Pro

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One of the fun books I read last year was “Paper Tiger” by Tom Coyne. I love to play golf, and Tom did what many golfers dream about – he devoted 100% of his life for 2 years to get as good as he possibly can and tried to make it on a pro tour. The book is a light-hearted, enjoyable read. But one thing that stuck out to me was his description of playing in mini-tour events in Florida.