1. Exclusive interview with Ali Partovi, CEO of Neo

Ali is the founder and CEO of Neo, one of the most well-known tech VCs and accelerators. Ali invested in many unicorns, including Airbnb, Dropbox, Facebook, Uber, and Zappos. He also co-founded Code.org with his twin brother.

1) How is Neo different and/or better than other accelerator programs?

Neo Accelerator is uniquely crafted for 20 teams of highly-technical recent grads. Neo's differentiators are:

• an intensive residential bootcamp so founders can focus on work and form meaningful relationships;

• more mentors than startups, so mentors are very accessible and cover a wide range of expertise; 

• a recruiting platform where many startups have hired their best engineers.

• more generous funding terms than any accelerator, including giving every founder a share of the upside in the whole batch.

What we have in common with other great accelerators is an engaged veteran community and world-class founders as mentors.

2) What are the business economics of running an accelerator? 

Our VC fund is raised mostly from tech leaders like Bill Gates, Sheryl Sandberg, Satya Nadella, Reid Hoffman, and others. We invest $625k in each startup and hope to make an outsized return from the big successes. Rather than charging our LPs for the accelerator expenses (e.g. travel, housing, and meals for founders and mentors), we pay those from our funds’ standard management fees – i.e., out of our own pockets. Each mentor is compensated with carry, so they share in the fund’s ultimate profits.

3) Are you making money primarily on the accelerator, on the seed fund, or something else? How can you make money with the accelerator if your minimum blended valuation is $8M for a seed-stage startup?

Neo Accelerator’s funding terms are designed to be at fair market value compared to a typical pre-seed round. The startups we admit often have access to great seed funding alternatives, so we offer competitive terms plus community and mentorship. The accelerator represents less than half of Neo’s early-stage investments; we also lead seed and pre-seed rounds year-round. Also, 2/3rd of our funds are reserved for doubling down on the biggest winners, and we try to bet on founders with the potential to build generational companies.

4) Why Oregon and San Diego, and not the Bay Area?

I live in the Bay Area and love it. Our program brings a curated group of people together for an intensely productive period. There’s magic in taking everybody to a destination for a month without the distractions of a big city. Founders genuinely bond with mentors and each other. We take care of their life, so they can focus on their startups. The result: people forge authentic friendships and become incredibly productive.

5) Has seed become too hard, given you have to compete with investors of all sizes, from megacap funds to angel investors? 

Seed investing is harder than last decade, and the root cause is higher interest rates, which make investing more Darwinian. I’m happy with that – survival of the fittest is good, and Neo has strong competitive advantages. Meanwhile, we’re cooperative with other early-stage investors, as reflected in our funding terms and our platforms, such as the Neo Investor List of transparent investor endorsements. We don't want to succeed alone; we’re building an ecosystem that embraces and helps angels and other funds.

6) How do you see the state of VC today and over the next few years?

Even after interest rates abate, capital will be more scarce than it was at peak. Great teams will always get funded, just with a bit more diligence and saner valuations instead of FOMO and YOLO. My predictions are often wrong, so I focus on what won't change: the importance of betting on extraordinary people and the importance of relationships. Neo revolves around these two beliefs.

7) What assets or asset classes are cheap/expensive today? 

I think early-stage tech startups have remarkably good risk-reward and less exposure to macro volatility, so I'm putting more of my own wealth into Neo than ever before. Other asset classes including late-stage tech are much more exposed to the Fed and to the world’s unpredictability, whereas new technology will grow no matter what.

8) What important truth do very few people agree with you on? 

I believe experience is overrated (and I’ve accumulated 51 years of it!). I like to bet on people’s talent, grit, and growth potential regardless of their age.

9) What valuable companies is nobody building?

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