What does NFX mean?
Network Effects, where “every new user makes the product work better for all users.” Network effects power the largest digital technology companies, particularly networks and marketplaces. They are at the core of the most disruptive businesses. Our goal is to help our companies develop their own network effects and grow to scale.
Why is NFX a Guild?
A Guild is “a closed group sharing semi-secret information for professional gain” which we think well describes what we’re doing.
Where is the NFX Program held?
San Francisco Bay Area. Specifically, Palo Alto and the SOMA area of SF. For Israeli companies there is a two week pre-program in Israel, held in Hertzeliya.
Why do companies join NFX?
To change the trajectory of their companies. To increase their valuations. To get access to the top level capital and people in the Bay Area. To get access to the inside tactics and approaches that make networks and marketplaces win their markets. To speed up. To join a select group of entrepreneurs working on similar challenges in similar businesses.
How is NFX different from accelerators?
First, NFX only accepts businesses that seek to build network effects -- typically, these are networks and marketplaces. That means that the intention is to have the collective knowledge about the specific challenges you face in your business to be the highest of any place you can find in the world. Not only can the Partners and mentors be more helpful because they know more about your specific business, but the other classmates and alumni can be more helpful as well.
Second, NFX purposefully works with companies in different stages, from three-person teams with no product or revenue, to 150 person teams with over $50M in revenue. This allows NFX to see around corners for your company and get access to different types of approaches and insights to help you change the trajectory or your company.
Third, NFX is not an open application process, it's invitation only.
Fourth, NFX has Partners who have done it themselves many times before, in different phases of the business cycle, in many different verticals. For networks and marketplaces, you will be hard pressed to find better support, advice and network anywhere. More on the
background of the Partners.
Does NFX help me raise my next round of financing?
Absolutely. The NFX Conference at the end of the program gives you the opportunity to present to ten's of top investors in one shot. More importantly, we have been building and advising your type of companies in the Bay Area for over 15 years, and have built a network that will get your company to the top branded investors as well as to investors that will best understand and support your business. Collectively, the Partners and Advisors to NFX have been through hundreds of financings collectively and bring that experience to your next financing.
Why does NFX focus on network effect businesses (i.e. networks, marketplaces and platforms)?
The first reason is simple: these are the types of businesses we love and have been focused on for over a decade. The first company we started in 1999 did NOT have network effects, and while we sold it for $110M in 2004, we learned the lesson that to build a large and impactful company, you really want network effects on your side. Starting in 2002, we began our focus on networks and marketplaces (and platforms). Since then, we've developed a lot of knowledge around these types of companies, and because of our focus, we grow that knowledge with every company we work with.
The second reason is more practical: these network effect companies produce most of the biggest outliers in the tech world: Facebook, Microsoft, SalesForce, PayPal, eBay, SnapChat, LinkedIn, Twitter, Google, Uber, etc. Increasingly, Apple is designing their products with network effects (iOS and iTunes). In fact, depending on how you measure it, perhaps less than 10% of startups have network effects designed in to their products, yet those companies with a powerful network effect make up more than 2/3 of the combined market caps of tech companies worldwide.
Third, network effect businesses are defensible. They are very hard to attack and kill. Which makes them more valuable certainly, but on a practical level, it also means that as an entrepreneur, you can sleep at night, knowing your company will still be there in the morning.
Fourth, these companies tend to be ones that make you proud. They become important companies. To set up a network effect, you typically have to be doing good things for a wide group of people. Then, once the network effect is set up, you have the time to let your best instincts come out in terms of how you can impact the world positively, and you have the staying power to make fewer compromises.
Who should apply to NFX?
You should fit three criteria: 1) Teams with a network effects business - typically a Network or a Marketplace – or teams that WANT to have a network effects company. It is OK if you have not yet 'cracked' your network effects yet - this is what NFX helps doing. 2) Teams of two or more that have worked together before. Teams should have solid interpersonal skills among them to survive ups and downs. 3) Teams that are willing to live permanently in the SF Bay Area upon raising a sizable round of funding.
How do I obtain an invitation code to apply?
Through NFX Partners or a limited number of our trusted Advisors. We count on them to be able to judge the types of people that will fit the NFX program.
Is there co-working space?
No. We have come to believe that such an extreme level of togetherness reduces each company’s chance of success. Isolation for the teams helps each focus and hone their unique perspective.
Where are Office Hours held?
Two days per week, office hours are held in San Francisco in SOMA near the CalTrain station. Three days per week, office hours are held in downtown Palo Alto, near the Palo Alto Cal Train station. For the Israeli pre-program, office hours will be held in Hertzeliya.
What goes on at Weekly Class Dinners?
The Class Dinners are held most Thursdays during the 3 month program from 4-8 pm in SOMA near the CalTrain station or in downtown Palo Alto. There will be A-level speakers on relevant topics, you can connect with Advisors, and report on your progress to the Class.
What are the dates of the first NFX Program?
Application deadline is April 1, 2015. The program starts Tuesday, June 2nd, 2015. The end of the program is the NFX Conference where each company presents, which takes place on Thursday Sept 17, 2015.
How does application work?
Application is invitation only and the deadline is April 1, 2015. There is rolling admission, so apply early. Go to the Apply page, and enter an invitation code. Once in, you will see instructions for how to apply. The application should only take you a few hours to complete.
What are “Pre-Seed”, “Post-Seed” and “Post-A”?
We currently define the different tiers of companies by how much they have raised from other investors. We’re not sure this is the best method, but it’s what we’re trying, and we'll see how it goes. Pre-Seed are companies that have raised US$0 - US$350K. We define Post-Seed as companies that have raised between US$650K and US$1.5M. We define Post-A as companies that have raised over US$3M. For companies that have raised between these numbers, we will have a conversation with you at the time of your application. Revenues and active users will play a role in making that determination. We will tell you within a week of your application which category we will consider you for and you can decide if you want to continue with your application or not.
How much investment capital does my company get when we join the NFX program?
How much equity does my company give to NFX for the investment and program?
7% for Pre-Seed companies and 5% for Post-Seed companies. For Post-A companies, it's more flexible, and the amount and type will vary by company, but the equity will total approximately 2%. The equity for Pre-Seed and Post-Seed companies is typically common stock. For Post-A companies equity is usually common stock or common options, sometimes advisor shares in common, and sometimes NFX will buy preferred in the last round, depending on the situation.
When I take investment from NFX and join a class, who is buying the equity in my company?
NFX Fund 1 LP will be the owner of the equity, and that's what will be written on your cap table. The Partners in that fund are James Currier, Stan Chudnovsky, and Gigi Levy Weiss, and they will be the ones you interface with going forward.
Do companies that have done an accelerator apply to NFX Guild?
Yes, some of the applicants have been through other accelerators before applying.
How many people on my team can participate in the NFX program?
Up to five per company including the CEO. Note that we want your group to be as consistent and committed as possible so they build the collective knowledge and communication within their team, as well as their communication with the NFX Partners and the members of other teams.
What’s the Israel connection?
Over many years, Stan and James, living in the Bay Area, have enjoyed working with several companies with Israeli founders, as well as traveling in Israel and building relationships with investors, angels and entrepreneurs there. Tel Aviv is one of the most vibrant startup communities outside of Silicon Valley. Gigi Levy Weiss, one of the three NFX partners, lives in Israel and is a leading investor in the Israeli market. We expect Israeli companies that join NFX will establish their world headquarters in the Bay Area either before or following their NFX program upon funding.
What about accommodation and working spaces for non-local teams?
For those teams moving to the Bay Area for the program, NFX has identified access to quality, good value accommodations and office space, for which you will need to pay from the money provided to you by NFX. This is not a must – teams can source their own accommodation and office space.
What if I can't make it for the Summer 2015 class?
You can always apply for NFX Winter 2016. The application opens September 2015 and closes Oct 30th 2015. The NFX W16 program starts the first week of January.
What if I have more questions?
info at nfx.com