In April 2020, NextView VC launched its debut accelerator in the thick of the pandemic, while historical incubators like Y Combinator and 500 Startups were similarly rethinking their independent strategies. Key tweaks like making batches fully remote and scrapping the cohort model gave us a peek at how some of the most active pre-seed and seed investors were rethinking their jobs.
Fast-forward perhaps too many months, NextView partner Melody Koh tells me the accelerator is launching its third cohort with some key tweaks, again signaling some interesting changes for the seed-stage startup scene.
The first big change is that NextView is growing its check size from $200,000 for an 8% ownership stake to $400,000 for a 10% ownership stake. Big check sizes in this economy are anything but surprising, but Koh’s perspective is that the cash will “arm companies with just a little bit more ammunition that can really set them up.” Beyond market pressure, the firm realized they were the only funding sources for a lot of cohort startups — which meant they had to make larger initial investments to truly get these companies to follow on funding.
“It just provides a little bit more flexibility and the ability for teams to really experiment and execute and kind of get to the next stage of the milestones that this market now is looking for,” she added. So far, more than 50% of the NextView accelerator alumni identify as underrepresented founders and come from cities including Miami, Seattle, Boston, Birmingham, San Diego and New York.
Considering its distributed format, the firm has had to update its mentorship. This time around, it is pairing each of its six to eight batch startups with a primary partner for weekly meetings and a secondary for monthly meetings. The former will give the company a more on-going resource while they’re in the weeds and is a result of feedback NextView has seen from previous cohorts. The more involved partnership model could bring startup founders more activation energy when they need it most.
And finally, the firm is doubling down on its no demo day rule. Part of the argument here is that the idea of an annual, flashy event may no longer be necessary for founders to land coveted attention.
“We don’t feel like the artificial kind of deadlines, and the demo day date format is the best use of your time,” Koh said. “The way we engage with every company is … ‘OK each of you has a different set of milestones that make sense for you,’ so we don’t really focus on demo day as the right way to expend their energy or our energy.”
NextView isn’t alone in rethinking demo days and its broader investing strategy. Firms like Contrary Capital and startups like Launch House are similarly looking for smarter ways to land deals and propel startups.
Even in a world where capital is a commodity, investors are preparing — perhaps even more so — to find innovative ways to make their cash even more worth it to founders. “Value add” chatter can be cringey at times, but to me it just signals that an emerging class of investors are figuring out what they’re best at (beyond spotting ambitious founders). That’s fun to see, and even something as small as a tweak on accelerator format can give us something to think about.
For my full take on this topic, check out my TechCrunch+ column: Startup accelerators’ definition of ‘value add’ is due for a refresh.
In the rest of this newsletter, we’ll dig into CES 2022 trends, a fintech startup with a contrarian view on CAC and a feature on the future of Black Girls Code. As always, you can follow my thoughts on Twitter @nmasc_ or listen to me and my friends on Equity.