#nextview

Over the weekend, Silicon Valley leader Marc Andreessen broke his usual silence and gave some advice to Silicon Valley: It’s time to build. The famed investor urged CEOs, entrepreneurs and investors alike to welcome new companies into their circles.

The blog postdetails high-flying pieces of advice that could each land in a unique angle depending on where you sit. But as venture capitalists…

NextView Events Teams Up with Foundation For Grieving Children

Orlando, Fla. (PRWEB) March 24, 2015

NextView Events, an Orlando-based, global corporate meeting planning and exhibit booth management company, is partnering with the Foundation for Grieving Children Inc. (F4GC), a national group based in Altamonte Springs, Fla.

NextView Events will offer its meeting and event planning services to F4CG, which was founded in 2004. It is the first national…

In starting NextView, one of the things I was looking forward to doing was crafting our own decision-making process for the firm.

Making wise decisions is very important in venture (duh) and being able to balance speed, collaboration, and diligence is easier said than done.  Luckily, my partners and I have worked at four different venture funds, and were able to draw from the experiences of:

Small and large partnerships

Single-office and bi-coastal partnerships

Multi-stage and multi-sector firms

First time funds and heritage funds

Highly structured and loosely structured firms

I believe that we are at an advantage in that we are a small team of three equal partners, have only one office, and are very focused both from a stage and sector perspective.  We’ve developed a process that fits this context, and it will probably continue to evolve as we gather more data on the efficacy of this approach. 

We want to share some of the details of our process so that entrepreneurs that meet us know what to expect, can interpret our actions clearly, and can keep us honest if we stray too far from this.  This should continue to evolve over time, but we’ve been doing a variation of this for the past 12 months, and I think it’s been working well.

Basic Process

We aren’t entirely rigid in our process of evaluating an investment opportunity, but we do try to be efficient and transparent in our intentions.  Below are the basic steps to expect if an entrepreneur is talking to us about a potential investment, although they may not happen in exactly this order. 

First Meeting: At least one of us meets an entrepreneur and hears about their project.  It is often a formal pitch, but it could also look fairly different (an open ended discussion, a demo, phone call, etc)

First Partner Discussion: We talk about the potential investments on each of our radars as a team.  We set aside time once a week to do this, but if an opportunity is moving quickly, we will call an ad-hoc meeting or call (not too difficult with a team of 3).

Blink Vote: This is a minor innovation that we developed to create more efficiency and to help each partner better focus their time. Whichever partners have seen the company will describe it to the team in enough detail to develop a reasonable opinion of the opportunity.  Sometimes, a deck will be circulated beforehand.  Based on this shallow level of information, we will do a “blink vote” to share our gut instincts with one another.  I’ll discuss our voting methodology further below, but the basic purpose here is to gauge the team’s enthusiasm for the company, so that the person advocating for the investment knows where everyone stands and what risks need to be addressed.  The goal of this is for the person advocating for the investment to really be able to “speak for the firm” when representing our interest in a deal.  What you don’t want is for an investor to tell an entrepreneur “I love this” and then hear later “but I couldn’t get my partnership over the hump”.  We want entrepreneurs to know that whatever message they get from one partner incorporates the sentiment of the entire firm.

 Due Diligence: Based on this vote, the partner who is leading the investment internally will decide whether or not to engage in due diligence.  The other partners will support this process, but there is one person who is primarily responsible.  We’ll also discuss as a team what diligence needs to be done and what risks need to be investigated for us to move forward with an investment. During this time, an investment memo is created. This memo summarizes the opportunity, the work that has been done, the risks, and other important components of the investment.

Meeting the Partners: As a small firm, it’s less important for us to do formal “partner meetings” in the classic sense.  It is important for us to have each partner hear the story and get to know all the teams we invest in.  This may look like a partner meeting pitch, it could be 2 separate meetings with the partners individually, or something in between. 

 Final Decision: At some point, if the lead partner is interested in pursuing the investment, we will do a final vote.  Based on this vote, the partner will try to commit to the investment and/or proceed to negotiate the final details of the deal.  If there is a material change during this time, the partnership may revisit the final decision.

Voting

Not all firms employ a voting process.  I find that it’s helpful to vote because it forces a concrete decision and normalizes feedback.  As mentioned above, we vote twice when evaluating an investment opportunity, once close to the beginning and again near the end.  Our voting process at NextView is highly subjective.  We’ve found that trying to apply too much science to what is fundamentally a subjective science is fruitless and a poor use of time and energy.  Instead, we apply different gradients of sentiment around a particular investment:

I love it

I like it

I support YOU

I hate it

A couple points on these:

 “I support you” means that the partner has legitimate concerns about the opportunity, but trusts the diligence and enthusiasm for his partner to make the right decision and make the investment successful.  An “I support you” can arise for many reasons – concerns about a market size, a mixed gut reaction to the entrepreneur, unfamiliarity with a particular market, etc.

Our partnership does not operate on a pure consensus basis.  Historically, the most successful investments have been the most controversial ones within a partnership.  We’ve seen this ourselves in our own experience and heard about it anecdotally from many other firms.  The bar for proceeding with an investment is 2/3 support (although for a large investment, we do require full support).  However, “support” just means anything better than a “I hate it”.  Although it seems like the bar is low, we take our partners opinions very seriously, and you can believe that we feel a lot of pressure and need a ton of conviction to lead an investment that has 2 “I support you” votes.

We use a language of support at NextView because we think it’s critical that even though we allow for dissent and even though one partner is “leading” an investment, we are all equal owners of all the companies that we invest in.  Even if we make an investment that I voted a “I hate it” on, once the investment is made, I am 100% behind it and will do whatever I can to help the company (and help my partner look like a genius).

A final word on voting – our blink votes are just that.  Blink votes.  Opinions change, and hopefully we are reasonable enough to be persuaded by data.  Our final vote should be much more informed and based on multiple rounds of diligence on the critical challenges identified during the blink vote.  But we use the exact same language in the two votes.

Time Expectations

We designed our process to be diligent but efficient.  The time from first meeting to final decision can be very short, but it can also be long depending on the circumstances.  In either case, we try to be transparent with entrepreneurs why we are taking a longer time – sometimes we need to learn more about a market, or get to know the founder better, or just have to invest more time in diligence. 

Typically, we can get from first meeting to final decision within 2 weeks.  If we push, we can get it done in a few days. But our typical preference is to get to know founders before they are in formal pitch mode (more on that later) so it’s actually hard to really give a good time estimate.  The most recent two investments we made were with entrepreneurs we’ve known for years, and businesses we’ve seen from an initial inkling of an idea many months before formal fundraising began.  

Miscellaneous thoughts:

We have a lot of friendly meetings with entrepreneurs to hear about their projects and provide feedback.  We try to keep these casual, and to the extent we are able, we try to take off our investor hat for a moment and try to speak objectively to these entrepreneurs based on their own best interests.  We will often ask entrepreneurs to “tell us when you are fundraising” at which point, we’ll shift our stance a little bit.  Often, we’ll help the entrepreneur craft their fundraising process and introduce them to other investors. 

Don’t ask us how you scored in our voting.  That’s not something we share with entrepreneurs, and frankly, isn’t important.  We will be straightforward about the internal sentiment on an investment while it is going through our process, and after an investment is made, you have the full support of the partnership.

When Dave, Lee, and I made the decision to start our own firm, we were relatively quiet at first as our plans needed time to crystallize. 

When we did decide to share the news within the entrepreneurial community, the first two people that we spoke to were David Cancel and Brian Shin.  In addition to being friends and terrific entrepreneurs, we really believed that they shared our ethos and desire to build more ambitious companies in our region. 

Shortly after, we firmed up the concept of a NextView "Venture Advisor" and were pleased to have Mike Baker, Nabeel Hyatt, and Niraj and Steven join us in this capacity as well.  

We selected these six entrepreneurs because they are equipped and motivated to help NextView be a great firm and help our portfolio companies to win.  We chose entrepreneurs who are active and engaged in the startup community and can give us honest feedback on how we can better work with the founders we back.  This group also represents deep experience in some of the areas that we are most excited about:

Ecommerce: Niraj and Steven are founders of CSN stores, a profitable, $300M+ ecommerce business that is a top 3 online retailer of home and office goods.  It's an exciting and quickly growing company that incidentally, never raised any outside capital. 

Gaming: Nabeel Hyatt is the founder of Conduit Labs, a social gaming company recently acquired by Zynga.  Nabeel currently serves as the GM of Zynga's rapidly growing Boston Studio. He is a multi-time entrepreneur and also organizes and hosts the Open Coffee Meetup in Cambridge. 

Ad Tech & Mobile: Mike Baker is the CEO of Dataxu, a leading real-time ad optimization platform.  Mike was also the CEO of Enpocket, a mobile advertising firm that was successfully acquired by Nokia. Mike has also been an active angel in the ad-tech space and has also sat on the other side of the table as a Partner at Grand Banks Capital. 

New Media Analytics and Optimization: Brian Shin is the founder and CEO of Visible Measures, the leading online video measurement solution for advertisers and publishers.  Founded in 2005, the company is creating a new standard for measuring the efficacy and reach of this rapidly evolving space. We typically like "picks and shovels" businesses in emerging mediums. 

Marketing Services: David Cancel is the founder and CEO of Performable, and was previously the Founder and CTO of Compete and a number of other companies. Few folks know more about marketing services than David, and few folks also give as generously of their time to the local startup eco-system. 

It's really an honor to be working with these entrepreneurs.  We benefit as a firm from these relationships by having an expanded network for finding startups and additional expertise to help us evaluate investment opportunities. The companies we work with benefit as well by having access to additional horsepower from entrepreneurs who have done it before and have unique insight into these important sectors. 

We launched the NextView website last week.  It's simple and preliminary, but there were two things we thought were really important to include.

The first was that our "team" page really showed a picture of a "team".  Most VC websites shockingly have a picture of individuals only.  The fact that we are a team is important to us, and even though it's just symbolic, it was important to us to be pictured together. 

The second was to share our ethos with the world. It's a little quirky.  Folks probably saw "Golazo" under "how" and thought WTF???

Some firms have something similar and call it "Operating Principles", "Values", or something similar.  I've blogged before how important I think Culture is to any organization. 

One of the benefits of starting our own firm is that we can be intentional about setting our ethos, rather than inheriting something that already exists.  We talked about this at length when we first decided to work together, and many times after.  We have tried to ingrain our ethos into our everyday vocabulary, as I discussed on my blog about cultural catch phrases.

Our ethos is mostly about how we aspire to behave.  By definition, we will fail to live up to these ideas in many cases.  But just like investors try to figure out what makes an entrepreneur tick, we thought it was important to show the same to entrepreneurs.  And hopefully, entrepreneurs will keep us honest when we don't live up to our stated ethos. 

Earlier this week, NextView Ventures unveiled some additional details about our firm, our ethos, and our activity thus far.

It’s very early, but it’s already been an exciting adventure.  I’m so pleased with my partners and with the entrepreneurs that we are working with.  It’s a real privilege to be a part of what they are building.

My partners Lee and David already shared some of their thoughts about our fund – the opportunity we see and how we are looking to build the firm.  But ultimately, the proof is in the pudding.  What we invest in and how we behave after we invest are the best indicator of what we are all about.  So here is a slice of the portfolio under a few lenses.

We have made 10 investments so far.  7 are announced, 3 are in stealth mode

Of the 10 investments, 6 originated in Boston and 4 in New York.  Of that set, 2 have since established their headquarters in San Francisco. We like to invest close to home so that we can meaningfully impact our companies.  But we also support entrepreneurs’ decision to move to the best location to build their company

 4/10 of the investments were made pre product.  7/10 were made pre revenue. 9/10 were made prior to the company receiving any other outside round of financing.  We like to invest early, and ideally want to be the first institutional investors in a company.  We also are comfortable investing pre-product and pre-traction.  It’s a risk business after all. 

 6/10 of the companies are consumer facing.  As a firm, we are excited about consumer internet, but also invest in some less consumer facing internet-enabled businesses.  It’s a broad market, and it’s still the first inning in the transformation of many different verticals

5 of the companies are led by first-time founders.  The others are led by repeat entrepreneurs or “Tom Brady” entrepreneurs

31 is the average age of these entrepreneurs when they started their companies.  4/10 were under 30.  Historically, some of the best companies have been founded by young, first time entrepreneurs.  We are not worried about backing a 20-something person and like to be involved in helping them shape their companies.  That said, we have also backed more experienced, repeat entrepreneurs who have deep domain expertise and have built significant companies.

 6 entrepreneurs were folks we’ve known for a long time.  3 were introduced to us through our coinvestors.  1 was introduced by a closer advisor to the company.  We think it is crucial for us to be deeply embedded into the startup ecosystem we participate.  Hopefully, we know the entrepreneurs we back for several months or years before.  That way, we can be involved in even the early days in shaping their companies and have an existing relationship prior to a deal being consummated.  We also have a model that allows us to co-exist quite well with other seed stage investors and like-minded institutional investors.  We hope to build a collaborative and strong relationship with many of the best early-stage investors out there