James Currier
Image: Christopher Michel / Flickr

Protocol Pipeline: VC fundraising is ‘medieval.’ Can it be both fast and fair?

Protocol Pipeline

Hello, and welcome to Protocol Pipeline! I'm Biz Carson, Protocol's venture capital and startup reporter, and this is my new weekly column about that community. Thank you to everyone who read the first edition and sent feedback. This is week two, and if you like what you see, sign up to get this in your inbox.

Anyway, on with business. This week: FAST deal-making, Bill Gurley bows out, and the famous VC who is cosplaying as a Sherlock Holmes character on Clubhouse.


  • Benchmark's Bill Gurley is taking a step back from actively investing, but don't expect him to sit out. Benchmark has always had a bit of "Logan's Run'' about it, where investors turn 50 and move on. But First Round's Rob Hayes told me that he thinks Gurley will have a next act: "He's got too much energy and too much raw intellect to not have an outsized impact somewhere.
  • "You don't want startups totally cut out from this, but the politics are tricky," one Democratic legislative aide told Protocol's Emily Birnbaum about PPP. As the goal posts keep moving on stimulus loans and eligibility, lawmakers' desire to step up for startups is waning as the backlash continues. Few lawmakers want to be seen as leading a Silicon Valley bailout, the aide said: "It's tricky to introduce a bill and be publicly tied to that effort."
  • VC Twitter was abuzz with two things in the last week: Clubhouse FOMO and Marc Andreessen's "It's Time to Build" essay. Then the two collided and brains exploded Wednesday night when Andreessen signed in to Clubhouse under a Sherlock-related pseudonym, "Mycroft Amsterdam."
  • If you want to get an investment from Sequoia, try to name your company so that it rhymes with Zoom, Loom, Noom, or Xoom. (There's even a Zūm.)

Biz on biz

S(p)eed Dating

There's a lot of talk about how startups are being forced to adapt and experiment with new business models amid COVID-19. In stark contrast, I hear more about venture capitalists falling back on their old networks and pattern-matching right now than I do about new innovations within VC firms.

  • Much of the venture industry is still "medieval" and "archaic" and unchanged after 50 years, NFX's James Currier told me. "It's hard. You get normed real quick."
  • "We're trying to avoid that," he added. He's been thinking about how to apply software to venture for many years, and his firm — started as an accelerator before becoming more of a traditional VC — is sticking its neck out amid the pandemic.

NFX's new FAST program launched last week, and it is … shall we say, rather different than your regular seed fundraising process. It's giving founders transparent deal terms and a decision in nine days — and, perhaps most surprising, it promises no ghosting.

  • "When I was a founder, you never knew where you were. You weren't getting the emails back. You didn't understand the timeline," said Currier, who founded Tickle, Wonderhill, IronPearl and Jiff. "This attempts to give founders that, so they know where they stand at every moment." (Founders seem to already like the feedback.)
  • NFX was thinking about FAST before coronavirus, but pulled its launch forward to this month after the pandemic hit startups hard. Currier has seen both founders starting companies and those trying to extend their runways applying for a slice of FAST's $20 million, which is first-come, first-serve until May 22.

But is nine days enough to make a sound judgement on spending the next seven to 10 years working with someone? NFX has a team of 16 to sort through the applications and conduct due diligence, but a lot of seed-stage investing is about picking the right person.

  • "Right now our solution is just lots of Zoom calls," Currier said.
  • Nine days may sound fast, but it's also close to market speed for some firms, Andrew Parker pointed out. First Round's Josh Kopelman said onstage at the Upfront Summit that his firm is averaging nine days, too.

So far, it hasn't closed a deal but Currier is expecting the program to double NFX's normal deal rate of investing in 15 companies a year. The bigger goal? Making this the "new normal" when it comes to transparency in venture investing.

  • "I think that if we could make this type of an SLA the new normal for more VCs, I think that would be good for founders and good for the whole ecosystem," Currier said. "The amount of time that founders take raising money is just too much."
Entrepreneurs are already noticing, too: "Saw the future of startup ecosystem from @NFX — Literally a chill down the spine moment," tweeted Alex Kwon.

Inside track

  • Craft Ventures' David Sacks has a new way to measure capital efficiency: "The Burn Multiple."
  • Now that the internet has matured, Founders Fund principal John Luttig has some thoughts on what happens "when tailwinds vanish."
  • Facebook's Eric Feng, former founder of Packagd, breaks down "What Apple's App Store reveals about the app economy."
  • Crisis has a way of exacerbating privilege, but diversity can't fall by the wayside, says Jane VC in its state of early-stage startups survey. Spoiler: The 247 (mostly female) startup founders who were surveyed are adapting well, but pessimistic about the future of funding.
  • There are few blog posts that can launch a thousand hot takes, but "It's Time to Build" spawned a multitude: Here's former presidential candidate Andrew Yang on what Andreessen missed, Lux Capital's Bilal Zuberi on how to actually build, Pioneer founder Daniel Gross on what World 2.0 looks like, and Stratechery's Ben Thompson on how the post compares to Andreessen's other seminal essay of software eating the world. (Or you could check out Doug Boneparth's approach if you're supposed to be looking after your kids right now.)

Need to know

  • Palantir saw the pandemic coming, but its IPO plans are up in the air.
  • From Protocol: Here come the Zoom startups.
  • SoftBank-backed Oyo is in trouble after skirting hotel regulations and paying fines.
  • Kleiner Perkins was ahead of the current curve: In 2006, it launched a pandemic fund, and now some of those companies are playing a role in the COVID-19 pandemic.
  • From Protocol: Startups are struggling to get PPP money. Now a Fed rule may freeze them out of loans, too.
  • On this day in VC history: The six partners of Andreessen Horowitz pledged in 2012 to donate half of all income from their venture capital careers to philanthropy.
  • And your weekend reading: Bloomberg Businessweek's feature on Airbnb confirmed that Brian Chesky is wearing pants while on Zoom calls, but also offered a deep dive into what he's doing to try to save his startup. So far, he's found it overwhelming: "You feel like you were T-boned, or like a torpedo has just hit the ship."

Five questions for…

Reach Capital's Shauntel Garvey

What's your quarantine binge watch?

I just got into watching "The Last Dance," the Michael Jordan documentary. I really wish that they would just release it all.

What's your favorite part of a startup's pitch?

I love the vision part, imagining what could be possible. When I meet entrepreneurs, it's kind of like seeing into the future.

What was your first check?

Nearpod. It's a student engagement platform that actually allows teachers to facilitate lots of lessons. As you can imagine, they're taking off right now! I did this deal around 2012, soon after the iPad was launched. The idea was to basically create an operating system for teachers to use iPads in the classroom. Fast-forward to today, it's not that we have iPads in the classrooms, but because we actually have to do remote learning, this is a way to deliver lessons in a remote environment.

(For more from Garvey about what's happening in edtech, check out this Protocol interview with her.)

What's something new you've learned about yourself in the last three months?

I kind of already knew this, but it's just really reinforced how much of an introvert I am. I'm actually already burned out from Zoom calls and Zoom cocktail hours and Zoom happy hours. I've just learned that even in a virtual world that my introvert-ness can kick in.

What's under-hyped and over-hyped right now?

Under-hyped: Jobs in the middle-skills sector. I do think coming out of this people are going to look for pathways into new job sectors, especially ones that are in demand, like health care.

Over-hyped: Delivery. I think once this is over, people are going to really crave to go back to restaurants and especially to support small businesses. I think that a lot of people in this time, including myself, have also found a renewed joy in cooking and making homemade meals, and that's going to be a thing again.

Thanks for reading the second edition of Protocol Pipeline. If you like what you're reading, sign up here to get it in your inbox. Send story tips (and a Clubhouse invite) to biz@protocol.com. I'll be dreaming up my own Sherlock pseudonym until then. Otherwise, stay safe, stay healthy and stay home. See you next week.

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