the growing pack of angels and micro-VCs who are making earlier-stage investments in tech startups (such as Founder Collective, LaunchCapital, CommonAngels, and Project 11 Ventures). They say Beisel, Go, and Hower need to clearly articulate the unique expertise that each of them brings to the table.
Among the other challenges I’ve heard is that NextView has less manpower to find and evaluate startups as compared to larger angel networks or venture firms, and that its deals could be susceptible to the same “clubbiness” you might find at a traditional VC firm. Another issue, raised by skeptics, is how the partners will actually make money, given that their fund is small and the typical fee structure is to pay managing partners a small percentage of the fund annually (plus a percentage of the profits).
Beisel wouldn’t get into specifics of the firm’s expense structure. But he did say, “It isn’t radically different from traditional VC funds. In general, though, smaller funds like ours can provide for closer alignment between [general partners] and [limited partners and fund investors] given the stronger incentive towards capital gains rather than management fees.”
More broadly, Beisel acknowledges that NextView faces some of the same challenges as the overall VC industry—a weak IPO and acquisition market to provide exits, challenges in raising new funds from institutional investors, and so forth. But he contends that he and his partners have unique strengths. “We’ve been entrepreneurs, operators, and investors,” he says. “That mix is really unique in the Boston area.”
And, he says, NextView’s network is enhanced by having brought in an impressive stable of advisors: Niraj Shah and Steven Conine from CSN Stores, Mike Baker from DataXu and Enpocket, Brian Shin from Visible Measures, Nabeel Hyatt from Zynga (Conduit Labs), and David Cancel from Performable. What’s more, he says of his partners, “We’re all digital natives—we’re of the generation where we live and breathe and are embedded in this technology,” from both consumer and business standpoints.
In that regard, NextView strikes me as being more like a Silicon Valley
