The Changing Face of Boston VC: A Chat With NextView Ventures’ David Beisel

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seed-stage fund or super-angel group—one that has more Internet-focused experience than most traditional Boston angels. That said, these are young investors (all in their early 30s) who are raising their first fund together, so there is bound to be a learning curve. And it will take time to build up a track record as investors.

Indeed, it’s still very early in the micro-VC game, but I wanted to hear Beisel’s take on how the broader venture industry will evolve. There are two things going on, he says. One is that over the past decade, venture funds have gotten larger, while more recently mid-size VC firms have struggled to raise new funds. “But over the next 10 years, bigger firms will actually raise larger funds,” he says. At the same time, the other big trend is that young Internet startups need much less capital than they used to, as they can rely on pay-as-you-go cloud computing and other efficient infrastructure services.

Beisel thinks there will be an “emerging segment” of micro-VC that is “enduring” and will sit in a sweet spot between the various incubator and accelerator programs (like TechStars, Y Combinator, and MassChallenge) and big venture funds. And, for the record, he does think micro-VC is disruptive to traditional venture capital.

That being said, won’t successful micro-VCs just morph into big VCs down the road? Beisel didn’t exactly say no, but he replied, “We founded the firm to be the best micro-VC firm.” And he pointed out that in venture capital studies covering the last 30 years, “the earlier the stage, the higher the returns.”

More fundamentally, what Beisel’s firm represents is a relatively recent grass-roots approach to investing early in tech entrepreneurs—a strategy that many traditional VCs have adopted as well. “We’re embedded in this ecosystem. We’re not just participants, we’re contributors,” he says. “The days of pitching in Waltham are over.”

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Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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  • Agree totally that the future belongs to having some specialist, in-the-trenches micro-VCs investing in the companies at early stages. And essentially wrote a similar blog praising Project11, a similarly positioned firm: http://bit.ly/eeOYZb You’re also spot on in that the economics don’t work well for a tiny fund on its own…hence the need for the bigger VCs to throw some bones to these micro-VCs to involve them in early stage deals. It’s in everyone’s interest.

    All in all, a terrific and healthy development, one that increases the odds of success for both investors and entrepreneurs. Here’s hoping NextView, FounderCollective, Project11 and other yet-to-be-announced micro-VCs knock it out of the park, and I look forward to reading followup articles on seed capital.