- Five years after raising its debut fund, NFX has become a prolific early-stage venture firm.
- The firm is noted for its focus on developing software for founders and providing it for free.
- He is now launching a web series on achieving network effects at an early stage of startup.
After selling her education and technology startup in 2014, founder Amy Lin started talking about going to the dark side of startups: venture capital.
She was skeptical. Too many venture capitalists pumped money into companies without having the knowledge to evaluate the technology they financed, she thought. “I never felt like venture capitalists were my people,” Lin said.
But something clicked when a friend introduced him to James Currier and Pete Flint, who were building an invite-only site. throttle for startups in 2017. The program was designed to connect founders with the right mentors and investors through a combination of hands-on training and software. And the two investors wanted to hire a product team to transform the way founders finance themselves.
Lin was asked, “If you’re going to build the VC software stack, what would it look like?” He knew the pains of fundraising, and he had ideas. Intrigued, she accepted a position as product manager.
Five years later, the firm known as NFX, whose name is a play on “network effects“— has done a lot in its short life. It let off the gas soon after Lin’s hire and moved to a more standard venture model. But unlike other companies, it employs about three times as many engineers as investors and provides free software to help the founders raise money and manage their businesses.
With $1.1 billion in assets under management, the company has landed stakes in new startups like DoorDash, Lyft, Poshmark, and Patreon. And while partners “can’t ride on the laurels” of legacy companies, Lin said, they win founders over by offering value, through cloud-based software and content, even before they’ve written a check. .
“Founders reach out to us and say, ‘You guys really build software, you’re just like us.’ When we hear that, it sounds like they want to work with us before we’ve even heard the pitch,” said Flint, general partner.
The star product of the firm is Sign, a database of early-stage investors that allows founders to search by stage, sector, and geography. They can also see the connections you have in common and request an introduction, or “warm introduction,” clearing the way for funding.
In 2019, the firm debuted short link, a web application for sharing slideshows known as “pitch decks” used for fundraising. The software shows which founders opened their decks, how long they spent on each slide, and where they stopped reading. The founders sent more than 40,000 pitches to investors through BriefLink and raised more than $5 billion in total, a spokesperson for the firm said.
These products are free to use and available to any founder inside or outside the company’s portfolio. Signal and BriefLink have more than 100,000 monthly active users between them, Lin said.
A Masterclass in Network Effects
Now, the firm is revealing a new streaming service for founders. The not so originally named service, master class, will launch episodes in which its general partners and guests discuss the ins and outs of entrepreneurship, from fundraising to establishing company culture. It premieres on October 11 with 11 episodes about network effects, a phenomenon that describes a user getting more value from a product as more users join the same network.
“We’ve been thinking about network effects for more than 20 years,” Flint said. Before becoming an investor, he founded Trulia, a website for finding real estate listings and rental properties, and grew it to more than 50 million monthly users. He merged with Zillow in 2015.
NFX plans to add additional “seasons” with new topics and speakers beginning early next year, Lin said. The service is free to use.
Masterclass builds on a strong tradition of helping founders, Flint said. But it also serves the interests of the company. Software like Signal and BriefLink increases company brand awareness, while the streaming service does that and more. He invites founders to sit down with a cup of coffee and listen to their investors for over three hours, giving them a taste of all the guidance and support the company has to offer.
And in a market where startup capital is plentiful, venture capitalists must do more than write checks to compete for the hottest deals.
With Masterclass, NFX asks founders to try before they buy.