VC Neo Raises $150 Million Second Fund to Provide Up to $1.5 Million in Funding for 80 Startups

By Adriaan Brits | Friday, November 26, 2021 | Finance, Startup

Venture capital (VC) company Neo, which also serves as a mentorship community, launched a new $150 million fund to continue supporting business founders and entrepreneurs.

Coworkers looking at a desktop in an office.

Urging Students to Accept Positions at Smaller Startups

Neo’s first fund was made to support early-stage startup companies, with a particular focus on diversity. The VC business has invested 45% of its capital into startup companies led by a female or underrepresented minority Chief Executive Officer, Neo said.

The new fund will maintain the same approach for the most part. The VC business intends to deploy investments of between $500,000 and $1.5 million to around 80 startup companies in the following four years.

Ali Partovi, CEO of Neo, said the majority of the fund’s limited partners (LPs), which participated in the funding closure, are industry experts from the company’s network and community.

“Software engineering is a creative endeavor, and it’s easier to have a high level of creative responsibility at a small company, like joining Google 20 years ago or Facebook 15 years ago. People who are early employees of today’s startups are going to be tomorrow's billionaires,” Partovi said.

In 2021, 75% of students from the community have accepted job positions at startup companies, compared to just 15% in the first year. In addition to helping students, the increase in the number of students willing to work for smaller startups also benefits the VC business, Partovi argued. He believes that statistics are by far the most significant metric to evaluate Neo and that startup companies that are seeking VC funding will notice Neo’s talent pipeline.

Neo connects the top students and startup companies from its network in an online hub, which allows scholars to apply for jobs right away. Through this hub, students gain access to the contact information of industry experts and seek guidance from them.

On the other hand, startup companies are presented with a report about each student, letters of recommendation, and other technical assessments. These allow the companies to easily hire new talent.

“Imagine that you are the founder of a startup, and you're trying to hire engineers. Your options today are so limited. If you go on LinkedIn and cold call people, how do you identify whether they’re strong or not?. These names are basically the top engineers in colleges across North America, so you have a ton of info on them that is private,” Partovi added.

Ramp, a corporate card startup company, and data platform Scale are two multi-billion-dollar companies that have hired talent from Neo’s community. Both startup companies have received business funding through Neo's new fund and Partovi says he intends to invest close to 25% of the new funding on later-stage startup companies.

“The way we think is that the next best thing to being an investor is to help [a company] with recruiting, and maybe that opens the door to investing down the line,” Partovi said.

Summary

Neo, a VC company and mentorship community, announced that it launched a new $150 million fund to continue providing funding for business innovators and high-potential entrepreneurs.


About the Author

Headshot of Adriaan Brits

An analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in advanced analytics and media.

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