NextView Ventures announced its second fund this morning via Rob Go’s blog. The fund will continue to focus on what the firm has stated as its mission since its formation four years ago: seed and early-stage investments in technology and Internet startups.
Last week, I sat down with all three NextView partners, David Beisel, Lee Hower, and Rob Go, as well as NextView’s director of platform Jay Acunzo, for a discussion of the firm’s initial formation, vision for the future, and perspective on key issues facing the Boston entrepreneur community.
The new fund, which was only anecdotally alluded to during our chat, is smaller than the funds raised by many venture firms aiming to provide later-stage rounds to companies. With the new $40 million round, NextView can continue with what the company was established to do in the first place—help visionary and creative entrepreneurs get their ideas and startups off the ground.
During our discussion, the unique personalities of each partner shone through and highlighted how Go, Hower, and Beisel mesh so well and have quickly gained the admiration of many companies in Boston.
Here are the highlights:
The formation of the firm
“At the time that we started, there were relatively few seed stage firms here on the East Coast,” Hower said. “All three of us had been entrepreneurs and operators in companies/startups, and then all three of us were at large VC firms. We saw in Silicon Valley the rise in seed VCs, not just to do venture capital with a smaller fund, but because the kinds of companies, software and Internet-enabled businesses, just don’t need that type of capital to start out.”
He added: “We saw that there were relatively few people doing that in Boston. All three of us were at points in our careers where we had aspirations to start a fund, we knew each other, and we had the right type of backgrounds. We saw the market opportunity and started NextView.”
Over the firm’s history, investments have included BookBub, Boundless, CustomMade, Plastiq, Objective Logistics, Swipely, TaskRabbit, and InsightSquared. The firm has had some exits from its first round as well, including RentJuice, which was acquired by Zillow; Hyperpublic, which was acquired by Groupon; and Twitter acquisition TapCommerce. In Go’s blog post, he mentioned that the firm has a more than 70 percent “hit rate” of its seed companies raising series A rounds, “even in the depths of the ‘Series A Crunch’.”
A single focus
“We are a one product company,” said Go. “Our product is a highly-engaged seed stage investment, and that says a few things that makes us distinctive.”
“For one,” he said, “we don’t make that many investments. As a team, we make something like two to four investments per year, per person. And we are highly focused and engaged with those companies to help those businesses, which is something impossible to do when you are making dozens and dozens of investments.”
“Because of that, we often lead the investments we take part in.”
Go continued: “All we do is seed stage investment, which has been interesting because there is a little bit of a ‘meme’ out there that seed stage investors are going later and later. You see these seed investments, but they are pretty big rounds with companies that have significant revenue already. Is that really a seed investment?”
“We’ve been pretty happy that a big chunk of the companies we invest in are pre-product companies, and that is pretty unusual,” Go said. “That’s something that we are pretty committed to continue to do. The whole point of this was true seed investment, first money in, highly engaged. And we are sticking with that, it’s become what NextView is all about. It’s pretty much the same as when we started, but its more refined.”
NextView has one interesting practice that you don’t often see with venture capital firms—they don’t split up the companies they invest in by partner. Meaning, unlike other firms, one company isn’t a “Rob Go company” and another a “Beisel company.” Although each partner does lead an investment, each partner thinks of (and treats) each portfolio company as if it is their own.
As Beisel said, “It’s not a Lone Ranger model…We joke that when we work with entrepreneurs, it’s buy one, get two free.”
Not following a set VC playbook
To a man, Hower, Go, and Beisel said they wanted to create a completely new and different type of venture firm.
Part of that included an “offsite” when they first formed the firm. They went to the White Mountains in New Hampshire and hiked Wildcat for a day. As Go puts it, “During that offsite, we asked each other ‘What are we all about?’ and ‘How is it going to be part of how we do things?’”
“We decided that we were going to have these core values and these operating ethos.” They explained that this has included using key words and phrases like “blank canvas” and “golazo” over and over in their communications.
Another was heavily relying on their past experiences to inform NextView’s future.
“The three of us came from three different places,” Beisel said, “so there was more of a playbook that you could read from.”
“Looking back four years out, we could take the best things that we learned from our experiences at three different firms. We had a blank canvas of how we wanted to do this and take a best practice from one of the three worlds, or, if we didn’t like any of those, we could make it up ourseleves. So we’ve tried to operationalize and take the best of all worlds,”Beisel explained.
“And when you don’t have a playbook,” he said, “it’s informed by how we’ve engaged with the community differently. I think that all three of us share the idea that as venture capitalists we are not just part of the community, but we are contributors to it. That’s something we saw in contrast to the firms that had been around for decades and decades and we could take a fresh approach to what we were doing.”
As a unit, NextView has already achieved a notable amount of success in fulfilling its mission. And it appears the new NextView II fund will help the firm to keep on its path for years to come.