Here’s the latest super-sized seed fund

"This is a golden age in startups like we've never seen before," said NFX's Pete Flint. His firm just raised a $450 million fund for seed investments.

NFX partners

NFX partners are hunting for more startups to fund.

Photo: NFX

There's a bifurcation happening in seed funding, where the big, multi-stage firms are raising larger and larger seed funds to compete on dollars and the seed funds are becoming more specialized to compete on expertise. NFX is hoping to win over founders by doing both.

The venture capital firm plans to announce a new $450 million fund Tuesday as the arms race in seed funding continues. The fund size puts it as one of the largest out there, beating out Andreessen Horowitz's $400 million seed-specific fund announced in August and just short of Greylock's $500 million reserve announced in September.

"There's funds trying to be the world's best at the seed, and the world's best at the [series] A, and the world's best at the [series] B. They're all our friends and they're great people, but they're doing a lot of stuff," said NFX general partner Pete Flint. "We only want to be the world's best at the seed, that is our singular focus and we have no other business model so we're going to make it work."

NFX started in 2015 with a focus on placing seed investments in startups driven by network effects (hence the name). Its bets include now-public companies like DoorDash, Poshmark, Lyft and Twist Bioscience. The goal with the new fund is not only to double down on network-effects businesses, but to continue to grow its own flywheel of startups helping each other as part of its portfolio. The firm said it expects to invest in an additional 70 companies with the new cash.

The fund size will help NFX compete with heavyweights like Greylock and a16z when it comes to dollars, but Flint thinks the firm also has an advantage in the seed specialist side. The rise of investor-operators has also put pressure on seed funds as founders are choosing to take money from solo capitalists and fellow CEOs over traditional venture firms. "The founders are going to investor-operators and everyone knows that," serial entrepreneur Hiten Shah had previously told Protocol.

Flint likes to consider his team as part of that category, but with an institution behind it and a sole focus on its investments. The NFX team includes former operators like Flint, who co-founded Trulia, and James Currier, who has founded four different companies. Israel-based general partner Gigi Levy-Weiss is a two-time CEO.

"I think founders are absolutely right that they should be looking for investor-operators," Flint said. "I also think that this job is a pretty serious job as well. Having someone who is leading a round, but also leading a company is probably not a great idea."

As part of the firm's third fund, it's also adding Omri Amirav-Drory as a general partner. It had previously signed on Morgan Beller, one of the creators of the Facebook-backed Libra cryptocurrency project (now known as Diem).

While NFX is more of a generalist firm, Flint said that it will be leaning into Beller's crypto expertise and Amirav-Drory's background as founder of NFX-backed Genome Compiler to invest more in the intersection of biology and tech.

With the new fund, NFX isn't changing investment strategies beyond rounding out the expertise on the team, Flint said. The firm wants to continue to be the first institutional check into a company and lead the rounds, whether it's at the pre-seed or seed funding level, although where exactly that level is in a fast-moving market that's seeing the price of seed rounds explode is hard to know. "We could put a number on it but I think it'll probably be out of date next week," Flint joked.

"I'd say it was clear as of six months ago that you'd see pre-seeds at a sub-$10 million valuation," he added. "But I think there's this really gray area between what pre-seed and seed is right now, and, frankly, I think that's okay."

While seed rounds may be larger today (and potentially still ballooning in size), Flint said the decision to go bigger with a fund isn't a reaction to the price of rounds, but the size of the opportunity for startups right now.

"This is a golden age in startups like we've never seen before. It seems COVID [created] this sort of societal change that, really, startups like to operate in and fill the unmet needs that happen today," Flint said. "Talent is coming out of these big companies and then you're seeing capital come to match that activity."

Climate

2- and 3-wheelers dominate oil displacement by EVs

Increasingly widespread EV adoption is starting to displace the use of oil, but there's still a lot of work to do.

More electric mopeds on the road could be an oil demand game-changer.

Photo: Humphrey Muleba/Unsplash

Electric vehicles are starting to make a serious dent in oil use.

Last year, EVs displaced roughly 1.5 million barrels per day, according to a new analysis from BloombergNEF. That is more than double the share EVs displaced in 2015. The majority of the displacement is coming from an unlikely source.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Sponsored Content

Foursquare data story: leveraging location data for site selection

We take a closer look at points of interest and foot traffic patterns to demonstrate how location data can be leveraged to inform better site selecti­on strategies.

Imagine: You’re the leader of a real estate team at a restaurant brand looking to open a new location in Manhattan. You have two options you’re evaluating: one site in SoHo, and another site in the Flatiron neighborhood. Which do you choose?

Keep Reading Show less
Enterprise

The limits of AI and automation for digital accessibility

AI and automated software that promises to make the web more accessible abounds, but people with disabilities and those who regularly test for digital accessibility problems say it can only go so far.

The everyday obstacles blocking people with disabilities from a satisfying digital experience are immense.

Image: alexsl/Getty Images

“It’s a lot to listen to a robot all day long,” said Tina Pinedo, communications director at Disability Rights Oregon, a group that works to promote and defend the rights of people with disabilities.

But listening to a machine is exactly what many people with visual impairments do while using screen reading tools to accomplish everyday online tasks such as paying bills or ordering groceries from an ecommerce site.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Fintech

The crypto crash's violence shocked Circle's CEO

Jeremy Allaire remains upbeat about stablecoins despite the UST wipeout, he told Protocol in an interview.

Allaire said what really caught him by surprise was “how fast the death spiral happened and how violent of a value destruction it was.”

Photo: Heidi Gutman/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images

Circle CEO Jeremy Allaire said he saw the UST meltdown coming about six months ago, long before the stablecoin crash rocked the crypto world.

“This was a house of cards,” he told Protocol. “It was very clear that it was unsustainable and that there would be a very high risk of a death spiral.”

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

A DTC baby formula startup is caught in the center of a supply chain crisis

After weeks of “unprecedented growth,” Bobbie co-founder Laura Modi made a hard decision: to not accept any more new customers.

Parents unable to track down formula in stores have been turning to Facebook groups, homemade formula recipes and Bobbie, a 4-year-old subscription baby formula company.

Photo: JIM WATSON/AFP via Getty Images

The ongoing baby formula shortage has taken a toll on parents throughout the U.S. Laura Modi, co-founder of formula startup Bobbie, said she’s been “wearing the hat of a mom way more than that of a CEO” in recent weeks.

“It's scary to be a parent right now, with the uncertainty of knowing you can’t find your formula,” Modi told Protocol.

Keep Reading Show less
Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

Latest Stories
Bulletins