An Uplifting Win

I was very pleased to see that “This is Us” was nominated for 11 Emmy’s and that Sterling Brown won the award for Best Actor in a drama series.

This is Us was my favorite show in the last year and I’ve been encouraging my friends to watch it for a while. I enjoyed it more than House of Cards, GoT, Westworld, Big Little Lies, and whole host of other great shows. And believe me, I love myself a good thriller or dystopian fiction.

It was strangely unique in a very odd way – mainly because it was so different by being so uplifting. Kudos to the writers and actors for pulling it off in a way that was entertaining and not nearly as corny as it could have been. But it made me kind of wonder what it says about modern culture that a show can be counter-cultural by Continue reading "An Uplifting Win"

Seeds and Pre-Seeds: History is Repeating Itself

As the atomization of seed has become more mature, it is increasingly clear that history is repeating itself.

What I mean is that the things that played when seed VC became institutionalized is beginning to happen in the pre-seed market. And the words I am hearing from seed investors are nearly identical to the things I heard from series A and B investors 7-10 years ago.

For example:

  • “Adverse selection”.  Some seed investors think that companies that raise pre-seeds are often flawed. There must be some adverse selection if they are raising small amounts of capital at those prices. Conversely, there is a belief that there is no way a fund can invest in good companies at low prices and at such an early stage. That’s exactly what lifecycle funds said 7-10 years ago.
  • “More traction”.  Increasingly, you hear seed investors that want to see more traction prior to a Continue reading "Seeds and Pre-Seeds: History is Repeating Itself"

Seeds and Pre-Seeds: History is Repeating Itself

As the atomization of seed has become more mature, it is increasingly clear that history is repeating itself.

What I mean is that the things that played when seed VC became institutionalized is beginning to happen in the pre-seed market. And the words I am hearing from seed investors are nearly identical to the things I heard from series A and B investors 7-10 years ago.

For example:

  • “Adverse selection”.  Some seed investors think that companies that raise pre-seeds are often flawed. There must be some adverse selection if they are raising small amounts of capital at those prices. Conversely, there is a belief that there is no way a fund can invest in good companies at low prices and at such an early stage. That’s exactly what lifecycle funds said 7-10 years ago.
  • “More traction”.  Increasingly, you hear seed investors that want to see more traction prior to a Continue reading "Seeds and Pre-Seeds: History is Repeating Itself"

Splitting vs. Expanding the Pie: Thoughts on the New Early-Stage VCs in Boston

Recently, I’ve been spending a fair bit of time with a number of the new early-stage investors in Boston. There are a lot of new folks in the space. Just last week, Axios announced that Stephen Marcus is raising a fund called Riot Ventures and Term Sheet announced that Nilanjana Bhowmik from Longworth will be joining Converge. In addition to these firms, others that have launched relatively recently include:
  • Hyperplane
  • First Star Ventures (FKA Procyon)
  • The Engine
  • E14 Fund
  • Underscore.VC
  • Pillar
  • Glasswing Ventures
  • Tectonic Ventures
As more early-stage investors emerge in Boston, some folks have asked me whether I feel any discomfort around the many new “competitors” on the scene. While this is a rational question, I think it assumes a bit of a “split the pie” vs. “expand the pie” mentality — and I’m a firm believer in expanding the pie. Seven years ago, NextView came onto the Continue reading "Splitting vs. Expanding the Pie: Thoughts on the New Early-Stage VCs in Boston"

What Are Your Valuation Expectations?

One question I know investors sometimes ask founders is “what are your valuation expectations for this round?” It’s a tricky question to answer because you kind of can’t win either way.

If you say something that is around market, you are somewhat negotiating against yourself.  Why anchor yourself low when the market drives the price and you might be able to position yourself for a better deal?

If you say something too high, it may scare some investors away prematurely. All investors will pass at some price, but it’s more likely that an investor will stretch on price once they are emotionally bought-in on an investment vs. up front in the beginning.  Throwing out a price that is too high too early can also signal that you have unrealistic expectations.

If you don’t answer the question you risk seeming evasive or unable to answer questions directly.

What I’d probably Continue reading "What Are Your Valuation Expectations?"

What We Talk About When We Talk About Companies

A big chunk of our time as VC is spent on internal discussions about companies we are looking at.   We believe strongly that when making investment decisions, it’s important to score opportunities quantitatively but make decisions based on conviction. What this means is that we take quite a few votes and measurements from each team member when we evaluate a potential investment. We take two formal votes about the overall opportunity, and also score prospective companies on a few different qualitative dimensions. However, the final decision is not based on an algorithm, but by the conviction of the team member that is advocating for the investment. Given this, why do we bother with tracking and analyzing this data? There are three reasons. First, it allows us to be explicit and clear with each other about how we see an opportunity. Second, it allows us to spot our tendencies and biases over Continue reading "What We Talk About When We Talk About Companies"

Boxes vs. Conveyor Belts

Commerce businesses are notoriously difficult for a number of reasons.  Multiples in this category are usually pretty low, due to low margins, capital intensity, and competitive rivalry.  Also, Amazon has made it such that consumers are accustomed to fast, free shipping, great service, free returns, and other things that are super costly to deliver on (and certainly tough to deliver on better than Amazon).  Some companies may be able to escape this sort of valuation pressure for some time, but most companies end up coming down to earth eventually. And sometimes, coming down to earth happens in dramatic fashion, as was the case with companies like Fab, One Kings Lane, Nastygal, and maybe some others out there right now. When thinking about commerce businesses, I find it helpful to ask the following question. Is this company sending boxes of stuff, or are they sending a conveyer belt? Box companies struggle Continue reading "Boxes vs. Conveyor Belts"

Welcoming Ginny Mineo to the NextView Team!

Our entire team at NextView is very pleased to announce that Ginny Mineo will be joining us as Director of Platform. Ginny comes to us from HubSpot, where she had a tremendous impact on the company in a variety of ways. Most recently, she led the team responsible for growing their successful podcast audience and expanding the company’s presence on emerging channels like Medium.  Although Ginny is new to the team, she has many connections to the NextView family, as she started her career at our portfolio company Shareaholic, and worked closely with both Jay Acunzo (our first head of platform) and Joe Chernov (the VP of Marketing at our portfolio company Insight Squared).  Needless to say, she received rave reviews from everyone we spoke to about her. Additionally, Jay will be transitioning over to a new role with us as a Creative In Residence. In this role, he will Continue reading "Welcoming Ginny Mineo to the NextView Team!"

How Important Is The Idea?

I was on a panel last week with some friends in the VC and angel ecosystem. One thing that gets repeated often (that I generally agree with) is that ideas are a dime a dozen. As investors, we tend to value the grit and tenacity of a founder and their commitment to solving a problem more than the particular idea. The typical sound-bite from this type of discussion is something like “Having the right idea is not that important.” But this does not sit entirely well with me. I’ve seen lots of terrific entrepreneurial teams pound their heads against a brick wall because they had the wrong idea. Even founders who are very scrappy and nimble can sometimes struggle to find the right opportunity for them to pursue. As an investor, I do know that chances are, any idea I invest in is going to change substantially during the life of Continue reading "How Important Is The Idea?"

Should Your Have A Lifecycle VC In Your Seed Round?

Although seed investing has become increasingly the domain of specialized seed funds, large lifecycle VC’s continue to participate as well.  In the last three investments I’ve made, there has either been a lifecycle VC involved or one was interested but didn’t end up being part of the syndicate.

There has been a bunch written about the signalling risks associated with large VCs investing in seeds.  It logically makes sense that this risk exists, but some data suggests that the effect isn’t as strong as one might think.  I think the answer is that there are two approaches to seed investments by large VC’s, and the implications are different for each.  There is also a large gray zone in the middle that many companies end up falling into.

Approach #1: Tagging a Deal

This is a strategy where a large, multi-stage VC makes a small, passive investment in a company, usually under $500K.  Usually, the investment Continue reading "Should Your Have A Lifecycle VC In Your Seed Round?"

Should Your Have A Lifecycle VC In Your Seed Round?

Although seed investing has become increasingly the domain of specialized seed funds, large lifecycle VC’s continue to participate as well.  In the last three investments I’ve made, there has either been a lifecycle VC involved or one was interested but didn’t end up being part of the syndicate. There has been a bunch written about the signalling risks associated with large VCs investing in seeds.  It logically makes sense that this risk exists, but some data suggests that the effect isn’t as strong as one might think.  I think the answer is that there are two approaches to seed investments by large VC’s, and the implications are different for each.  There is also a large gray zone in the middle that many companies end up falling into. Approach #1: Tagging a Deal This is a strategy where a large, multi-stage VC makes a small, passive investment in a company, usually under $500K.  Usually, the investment Continue reading "Should Your Have A Lifecycle VC In Your Seed Round?"

Getting A VC Job

I get asked a lot about how to get one’s start in the VC industry. I have a somewhat standard response, but realized that I never put it into a blog post.  So, here it is. FYI – this is tuned towards an individual who is still in the relatively early stages of their career.
There is really only one thing that a VC is thinking about when evaluating a person to add to their their team. The question is: “Is this person going to help me to invest in companies that I otherwise would not have invested in without him/her?” That’s pretty much it. There are a two basic strategies to be this kind of person.
  1. Have domain expertise in an emerging area that the VC cares about and wants to develop more authority and deal flow around.  This requires that you go one or two layers deeper Continue reading "Getting A VC Job"

Things I’m Thinking About As We Approach 2017

I don’t love prediction posts typically, but I suppose this is one of them. I started out writing about a couple things I’ve been observing that I think will end up coming to greater fruition in 2017. Next thing you know, I had a 2017 prediction post ? So, here are three fairly unrelated things I’m thinking about as we approach 2017. 1. New New Media. I’m not really a media investor, but I think 2016 was a year where we have seen a shift in media production and consumption, and I think that will continue into 2017. We are at the tail end of the last new-media wave that was driven largely on social distribution. This was simultaneously great and terrifying. Content could be distributed from anywhere to hundreds of millions of people nearly instantaneously, which is incredibly powerful. We also saw the wave of clickbait and trashy content fill Continue reading "Things I’m Thinking About As We Approach 2017"

Things I’m Thinking About As We Approach 2017

I don’t love prediction posts typically, but I suppose this is one of them. I started out writing about a couple things I’ve been observing that I think will end up coming to greater fruition in 2017. Next thing you know, I had a 2017 prediction post ? So, here are three fairly unrelated things I’m thinking about as we approach 2017. 1. New New Media. I’m not really a media investor, but I think 2016 was a year where we have seen a shift in media production and consumption, and I think that will continue into 2017. We are at the tail end of the last new-media wave that was driven largely on social distribution. This was simultaneously great and terrifying. Content could be distributed from anywhere to hundreds of millions of people nearly instantaneously, which is incredibly powerful. We also saw the wave of clickbait and trashy content fill Continue reading "Things I’m Thinking About As We Approach 2017"

Quick Thoughts on Term Sheets and LOIs

This is something that isn’t that obvious to founders, so I thought I’d write a quick post. When a VC invests in a startup, the two parties usually sign a term sheet that lays out the major terms of the investment round. This is usually followed by several weeks or longer of legal due diligence. 90%+ of term sheets result in a closed deal that is more or less equivalent to what was discussed. We have never signed a term sheet that we did not follow-through on, and that is not at all uncommon in venture investing. In almost all cases, when a term sheet doesn’t result in a deal, it’s because of the investor feels like there was some form of indiscretion on the part of the company, or something catastrophic has happened in the outside world or to the partner or fund itself. In the M&A process, an LOI Continue reading "Quick Thoughts on Term Sheets and LOIs"

How VC’s Source

One question I get surprisingly often is “how do you find companies to invest in?”. Surprisingly, this isn’t just an LP kind of question, I actually get this a lot from founders or even just friends who are not directly involved in the startup community.  I did a session with the partners of the Dorm Room Fund a few nights ago, and that was the first question that came up. Sourcing VC investments may seem kind of like black magic, I suppose. Most people realize that we are no longer in the days where VC’s can hang back and just wait for great entrepreneurs to knock on their doors. But it’s such a foreign world to most people that it’s hard to make sense of what a VC does to get in front of the best opportunities. For me, the simple, unifying thought is that the sourcing function of
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Continue reading "How VC’s Source"

Don’t Be Slippery

All investors are allergic to certain things. One of those things for me (and many investors I know) is what I’ll describe as slippery-ness. When we make an investment, we enter into a long term relationship with founders. The business may change. Things may unfold in unexpected ways. But through the journey, you hope that you are working with people that you can trust and have an open dialog with at all times. The majority of founders I speak to seem trustworthy, but occasionally, my spidey sense starts tingling because a founder seems slippery. Some examples of situations that draw this out:
  • Being vague with metrics. I try to to get to crystal clarity around a few metrics in a business. If I find that I am expending too much energy trying to get to the bottom of a particular metric, that’s a major red flag. Sometimes, it’s because things really are that Continue reading "Don’t Be Slippery"

Traction vs. Product

I’ve had a couple conversations with other investors recently around what a seed stage company needs to achieve to raise a series A. This is something we think a lot about given that we are exclusively seed stage investors, and we’ve written a fair bit about it in the past (see here for a data driven post on the seed to series A dynamics in our portfolio). Often, I find that there is a very distinct trade-off that surfaces when thinking about how to best position yourself for your series A: Option 1 is to focus nearly exclusively on some traction metric. For most companies, this means top-line revenue, but in some cases it’s more about numbers of active users or number of customers.  This is in line with the YC adage that “growth solves (nearly) all problems”.  Under this strategy, things get sacrificed in favor of growth. You might do
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Continue reading "Traction vs. Product"

Some Thoughts on Jay’s Side Project “Unthinkable”

I wanted to take moment to share some thoughts on a project you may have seen Jay Acunzo, NextView’s VP of platform,working on over the past few months — a show and related projects under an umbrella called Unthinkable. For those who have followed our firm and our team blogs, you know that the idea of craftsmanship is very important to us. It’s part of our original imagery around craft brewing, and the idea that we are most excited by founders who are looking to do a few things insanely well and have an authentic passion for creating great stuff. It’s part of our own raison d’etre at NextView too. When we brought Jay into NextView three years ago, we were looking for a team member that embodied this idea and more. A big part of his role has been around creating unique, insightful, and helpful content for founders — stuff that stands out above the Continue reading "Some Thoughts on Jay’s Side Project “Unthinkable”"

Choosing Optimism

I just watched the first two episodes of Black Mirror’s season 3 last night. I love the show – it’s totally my flavor of the dystopian fantasy / technology gone wrong genre. But, I find myself a bit tired of the negativity that these shows portray. It’s probably a result of watching this amidst an unbelievably negative and divisive presidential campaign, the social unrest that has raised from wealth disparities, and tons of stuff I’ve been reading recently about the threats of climate change, cyber attacks, the singularity, etc. Pessimism is rampant, and cynicism abounds. I’m not the type who naively thinks that everything is going to work out ok. I think part of it stems from growing up in a third world country, being an immigrant, and living through one more major economic crisis in my lifetime than most of my American counterparts (the Asian economic crisis in 1997), Continue reading "Choosing Optimism"