Fundraising

A Behind-the-Scenes Look at Our Recent Seed-Stage VC Investments

Two weeks ago, my partners and I here at NextView Ventures announced our second fund.  And since we will continue to look proactively at new seed-stage tech startups over the next few years, the question becomes: What, then, will these companies look like? Rather than merely speculate, a more interesting exercise is to examine what we’ve actually seed funded at NextView recently as a reflection of our current investment interests.  Actions speak louder than words, after all, and the shape our investment profile will be very similar in the near future.

nextview-ventures-behind-the-scenes

Recent Investment Overview

In the past 18 months at NextView, we’ve made 13 new investments (out of the 36 we’ve made since the inception of the firm back in 2010). We average eight to 10 total new investments per year as a firm, so this frequency is a typical investment pace for us.

As my partner Rob Go has written, our goal is to invest half in consumer web and mobile and half in business-focused ventures. We’ve been remarkably consistent on this dimension as well: five of the recent 13 investments were B2C, five were B2B, and three you could categorize as B2B2C.

Lastly, given our Boston location, it isn’t surprising that seven investments were Boston-based. But we’re also very active in New York, as five of the most recent startups we’ve funded are based in Manhattan (which is 40% of this recent flurry of investments). Furthermore, one of our recent investments was in Silicon Valley, as all three of us have lived and worked there. We opportunistically invest in other geographies across the country as well.

Recent Investment Themes

More interesting, however, is reflecting on what “rhymes” across multiple investments within our portfolio. Typically, these patterns arise out of a combination of approaches by my partners and me: proactive searching for startups in specific categories, reacting to what entrepreneurs pitch, and translating valuable learning from making one investment over to making another.

A few themes which have emerged from our 13 most recent investments:

CONSUMER (B2C)

Physical-World Ecommerce

At NextView, we believe that one of the next steps in ecommerce is facilitating goods and services transactions that involve a “real-world” component to the experience. While all three of our most recent investments built on this foundational idea still remain stealthy, everyone utilizes connected technology to uniquely deliver a service or bundled product. Ecommerce has transcended merely shipping a box to your home — it’s about leveraging mobile plus the internet to create an elegant purchasing experience previously unavailable.

Empowering Content Creators

The internet continues the disintermediation of content creation. Our investments in both BookBub and Change Collective help put power into the hands of authors and experts, allowing them to directly connect with consumers. These two marketing and publishing platforms, respectively, allow for a more intimate relationship between creators and their audience.

The “Internet of Things”

IoT may in fact be a buzzword, but that’s because the underlying phenomenon is real: In perhaps a decade’s time, everything — truly everything — will be connected and measured. Early last year we invested in WHOOP, which provides for 24-hour continuous monitoring of the most essential kind: beat-by-beat heart rate data. And in our current investment pipeline, I’ll only hint that we’re thinking radically different about other “Things.”

BUSINESS-FOCUSED (B2B)

Network Effect B2B

Most often, when people talk about “network effects,” they’re referring to consumer-facing startups. Social networks become more valuable with more users; consumers’ discounts become larger when more people join the coupon; commerce marketplaces benefit from increasing liquidity, and so forth. But network effects can be an integral component of business-focused services as well. For instance, Alignable empowers local businesses, which only grows stronger as more businesses join. Similarly, Emissary is an “expert network platform” — essentially a “network of networks” whose value increases geometrically with additional experts on the system. Finally, productivity mobile calendaring app Sunrise has been adding features which leverage demand-side economies of scale. When the benefits of network effects can be applied to a highly-monetizable business offering, they become extremely powerful for even the earliest-stage startups.

End-User SaaS

This is hardly a unique investment category, but that’s because the shift in how software is purchased and delivered has been so fundamentally transforming. When the purchasing decisions for work software can be made bottoms-up at the individual or group level, rather than top-down from management, committee, or a CIO/CTO’s office away from the front line of the business, the product offering and entire software business can be radically different. Included in our recent investments in this category are both Dunwello (rethinking how employee feedback and reviews are delivered) and a stealthy investment in NYC empowering software engineers.

Step-Function Ad Tech

Ask a VC if they’re an investor in ad tech companies, and you’ll hear a very divisive answer: They’ll either fret that the Lumascape map of the industry is just too darn crowded to sort through or they’ll vehemently argue that there’s money to be made. We believe the latter, provided that the startup is trying to accomplish a step-function change, not just an incremental one. Examples include the current rise of native advertising and the fundamental platform shift to mobile. The former trend helped lead us to invest in TripleLift, while our recent investment in TapCommerce hit a sweet spot for customers on mobile that was anything but incrementally beneficial. TapCommerce was recently acquired by Twitter.

What’s on the Horizon?

The above outline opens a window into the ideas crossing multiple investments within our recent portfolio, as well as where some of the next additions will likely originate.

But we at NextView primarily make our investment decisions based on the people involved, not merely the ideas, as you can see from Rob’s VC decision tree flowchart. We of course try to look ahead at what’s next in the marketplace, but the founders we work with do a better job than we do at that. So I expect the behind-the-scenes look at our next 13 investments to include some of the same themes as above, a number of new ones we’re just beginning to think about now, and a couple we haven’t even identified quite yet.

Our goal at NextView is to help founders give their companies the best possible start. If a founder paints a compelling opportunity, and we can meaningfully contribute during the seed-stage of the company’s journey, then it’s that alignment which becomes the primary guiding factor in our future investment decisions.

As we look to continue to build out portfolio, we encourage you to subscribe to The View From Seed to keep in touch. You can also visit our startup resources page for additional guidance and support.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.