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:
- First Star Ventures (FKA Procyon)
- The Engine
- E14 Fund
- 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"
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?"
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"
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"
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!"
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?"
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?"