Q&A

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. You can read about network effects and defensibility in startups here: https://techcrunch.com/2016/09/15/defensibility-creates-the-most-value-for-founders. We believe that nearly every business looking to create significant value – which is derived from its defensibility – can benefit by embedding network effects in its core.

Why is NFX Guild a Guild?    A Guild is “a closed group sharing semi-secret information for professional gain” which we think well describes what we’re doing. Guild companies are not only helped by the NFX GUILD Guild Partners and Advisors, but also greatly helped by each other throughout and after the program.

Where is the NFX Guild Program held?    Palo Alto. For Israeli companies there is a pre-program in Israel, held in Hertzeliya.

Why do companies join NFX Guild?    To change their trajectory. To increase their valuations. To speed up. To get confidential access to a select group of top entrepreneurs working on similar challenges in similar businesses. To get the best start up training in the world. 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 startups win their markets.

How is NFX Guild different from accelerators?    First, NFX Guild only accepts businesses that seek to embed network effects into their business. That means that the intention is for our 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 Guild is different in that it is building a powerful set of products and tools that give Founders unfair advantages. NFX Guild companies have unique access to these tools.

Third, NFX Guild has a deep and engaged Alumni network that supports and promotes each other like no other network.

Fourth, NFX Guild purposefully works with companies in different stages, from three-person teams with no product or revenue, to 100 person teams with over $10 millions in revenue. This allows you 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.

Fifth, NFX Guild is not an open application process, it's invitation only. You need to be recommended by one of our scouts in order to apply. This allows us to ensure the teams entering the program are the top entrepreneurs in the eco system.

Sixth, NFX Guild has Partners and Alumni mentors who have done it themselves many times before, in different phases of the business cycle, in many different verticals. Specifically for embedding network effects into your business, you will be hard pressed to find better support, advice and network anywhere. More on the background of the Partners and Companies.

What if I don’t have Network Effect in my business?    Not a problem. We specialize in helping companies add network effects to their businesses. As long as you understand the importance and want to learn how to create defensibility in your business, you can approach our scouts, get a code and apply. Many companies joined the Guild without network effects in their business and finished the program with far more defensible businesses.

Is NFX Guild limited to Consumer and SMB businesses?    No. As the innovation catches up with the ‘slower’ verticals, we are focused more and more on finding the best teams in fields like Enterprise, Fintech, Healthcare and Government tech. We believe the same principles, tools and network effect that helped our companies succeed in the consumer and SMB space will now assist other companies succeed in these verticals.

Is NFX Guild limited to Internet and Mobile software companies?    No. Many Guild companies are building on the new tech platforms such as AR, VR, AI, IoT, Blockchain, 3D printing, synthetic biology and robotics. We excited about the opportunities they present for creating new huge application companies with network effects in their core. If your company has a big idea for one of these new platforms, you’ll feel right at home.

Does NFX Guild help me raise my next round of financing?    Yes. The NFX Guild Conference and Demo Day at the end of the program gives you the opportunity to present to hundreds of top investors in one shot and get media coverage. It’s attended by Silicon Valley’s top VCs and angels and companies usually take tens of relevant fundraising meetings following the conference. 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 in front the top branded investors as well as to investors that will best understand and support your business. Collectively, the Partners and Advisors to NFX Guild have been through hundreds of financings and bring that experience to your next financing.

Why does NFX Guild focus on businesses that want to embed network effects?    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 2004, we began our focus on networks, marketplaces and market-networks. 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. We now believe nearly every company in each field can embed network effects in its core to defend its position and create value.

The second reason is more practical: these network effect companies produce the biggest returns 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, less than 20% of startups have network effects designed in to their products, yet those companies make up more than 60% of the combined market caps of all tech companies worldwide.

Third, network effect businesses are defensible. They are very hard to attack and kill. At a day to day practical level, this defensibility makes them better for entrepreneurs to run. It’s easier to sleep at night knowing your business will be there in the morning. It’s easier to hire top talent. It’s easier to raise capital.

Fourth, companies with network effects 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 Guild?    First, you need to be able to get an application code from a Scout. Then you should fit three criteria: 1) Teams with a big product vision who have already or seek to embed network effects into their businesses. 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 spend a the 3-month program in the SF bay area.

How much of the 3-month program do I need to be in SF Bay Area?    We think being here physically for the curriculum and to interact and share with the other Guild founders is critical. For that reason, we favor accepting companies either already in the SF Bay Area or in Israel but willing to move here. While we do not require your company to fully relocate to the SF Bay Area, the more the company is in the Bay Area throughout the program – the better. We have found that in order to get real value out of the program, you should spend at least half of the program in the Bay Area, mostly at the beginning, middle, and end. The rest of the time we will work with you remotely over Skype and you will be able to see most curriculum sessions online.

How do I obtain an invitation code to apply?    NFX Guild is an invitation only program for elite entrepreneurs. All of the portfolio companies have been recommended to the program via Scouts who are typically influential technology executives, founders and investors who are connected with the Guild Partners. Guild Alumni are also Scouts and have invitation codes to give to top teams. We count on them to be able to judge the types of people that will fit the NFX Guild program. Looking at the people who worked with us, those who invest in our companies and the Guild Alumni is a good place to start looking for your invitation code.

Why this ‘game’ of needing a code?    It’s not a game. We take our selection criteria very seriously and found out that if we keep application open we will get thousands of applicants – which will mean we will be busy superficially screening applications instead of being able to dive into studying them seriously and conducting multiple interviews. Using this method, our scouts do the initial filtering for us and we can deep-dive into each application.

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?    Office hours are held in Palo Alto. For the Israeli pre-program, office hours will be held in Hertzeliya. As entrepreneurs also need to travel, many office hours will be also conducted online using Skype or similar tools.

What goes on at Weekly Class Lunches?    The Class Lunches are held from 10 am - 3 pm in Palo Alto. There will be talks by the Guild Partners, talks by A-level speakers, you will connect with Advisors, and report on your progress to the Class and get advice from other Guild members.

What are the dates of the next NFX Guild Program?    Application deadline is April 4, 2017. The program starts May 22, 2017. The end of the program is the NFX Guild Conference where each company presents, which takes place on September 13, 2017.

How does application work?    Application is invitation only and the deadline is October 12, 2016. 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 an hour to complete. Be sure to upload a video, even if you’ve met a Partner face to face.

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. Pre-Seed are companies that have raised less than US$1.5M from outside investors. Post Seed are companies that have raised less than $4M. Post-A are companies that have raised over US$4M. For companies that are between $2.2M - $4M 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 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 Guild program?    $120K for pre and post seed companies. $40k for post-A companies. We give less to the Post A companies because they don’t need the capital. . It’s also true that iAngels will offer your company $100K SAFE with a $6M cap if you get into the program.

Where does that capital come from?    NFX Guild Fund 1 LP, which is a investment fund made up of capital from the three NFX Guild Partners as well as CRV , Greylock , Shasta and Mayfield

How much equity does my company give to NFX Guild for the investment and program?    7% for Pre-Seed companies. 5% for Post-Seed companies. 3% for Post A companies. The amount and type of equity will vary by company, but it's typically common stock.

When I take investment from NFX Guild and join a class, who is buying the equity in my company?    NFX Guild 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, Pete Flint, Stan Chudnovsky, and Gigi Levy Weiss, and they will be the ones you interface with going forward.

What is the additional investment from iAngels?    iAngels is a leading crowdfunding platform which offers each NFX Guild W17 company an immediate investment of $100k (on top and with no connection to the $120k NFX Guild investment). The investment is in the form of a SAFE with a 20% discount on the company’s next round and a $6m cap. This investment is an option open to the NFX Guild W17 companies but is in no way an obligation.

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 Guild program?    Up to five people 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 Guild 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 in the world outside of Silicon Valley. Gigi Levy Weiss, one of the three NFX Guild partners, lives in Israel and is a leading investor in the Israeli market. We expect Israeli companies that join NFX Guild will establish their world headquarters in the Bay Area either before or following their NFX Guild program upon funding.

Can teams from other countries apply?    Definitely. We have in the Guild great European and Asian teams and we welcome all top entrepreneurs globally as long as they want to build a global business and are willing to attend the program in the SF Bay Area.

What about accommodation and working spaces for non-local teams?    For those teams moving to the Bay Area for the program, NFX Guild can assist in finding good value accommodations and office space, for which you will need to pay from the money provided to you by NFX Guild. This is not a must – teams can source their own accommodation and office space.

What if I have more questions?    info@NFX.com