Why We’re Market-First, Not Technology-First, Investors

My partners and I have been very public and transparent over the past six months about our thematic investing approach — what we call the Everyday Economy. Our philosophy is about backing technology-enabled startups that have the potential to touch millions of end-users, become ingrained in users’ daily lives, or some combination of the two. Often, these startups tend to fall in areas like home, food, appareltransportation — but fitting squarely within a specific vertical isn’t a requirement. 

One ramification, then, is that many of these or businesses may seem odd, and certainly outside of the mold of current mainstream VC-backed companies. Many VCs are technology-first driven in their approach, asking the question: “With this new emerging technology, what are the applications?” “What are the use-cases of augmented reality?” “Where can the blockchain enable new financial structures and contracts?” “Where can artificial intelligence be utilized in the enterprise?”

NextView is not an AR/VR, blockchain, AI — or even ecommerce — fund. We don’t have a technology hammer that’s looking for an opportunity nail.

Instead, we look for large market opportunities first, and very often those come about because of some technology-enabled shift. Markets pull technologies towards solutions.

We look for large markets in which there are opportunities to drive meaningful change. We seek entrepreneurs who see problems in our daily lives and want to solve them — not just incrementally, but dramatically. The business model may be either consumer-facing or business-facing, but if the audacious venture succeeds, the end result is that some aspect of people’s lives will be different than before. 

You can look to our portfolio for some examples. We backed Optimus Ride, an autonomous vehicles startup, not because of its computer vision and AI-driven decision making, but because the ramification of these technologies can radically transform how people move about and experience transportation. We invested in Parsec, a cloud-based gaming startup, not because their quite impressive streaming tech, but because they have the chance to redesign how a large, growing swath of entertainment is consumed. We backed the founders of Pi, not because we were doing a deep dive on magnetic resonance for wireless charging, but because consumer electronics have become so pervasive in our daily lives.

And Everyday Economy companies certainly don’t need to have ground-breaking technology — they just need to use existing, modern technology to gain real efficiencies in scaling their business. For example, NextView-backed managed marketplaces like CarDash and Renoviso provide compelling internet-enabled services to connected customers driven by market opportunity.

Markets, though, aren’t always well defined. In fact, some of the best companies help create and define a new market. But even these are addressing a core market-driven, economic-based human need. In the examples above, it’s very challenging today to define a market size for autonomous vehicles, stream-based gaming, or consumer wireless charging. Yet we believe the world for many people will look different when these companies succeed.

Perhaps the market-driven and tech-driven lenses are in reality two sides of the same coin. But despite the fact that we have startups building upon the foundation from the latest tech advances, we’ve realized that the best companies tend not to be easily categorized and don’t necessarily fit into the standard playbooks. So NextView’s Everyday Economy lens provides a market-driven approach to proactively seeking new portfolio founders that can redesign how we live through technology.