Who are NextGen VCs?

A new set of VCs is emerging amidst a sea of transformational changes in the venture capital ecosystem. In light of the Cambrian explosion of startups worldwide, next-generation venture capitalists are launching their own mission-driven VC firms to service overlooked markets, founders, and regions to spark a new wave of innovation in their domains. 

When fundraising for their startups, it can be beneficial for founders to broaden their focus on NextGen VCs who are redefining VC with their founder-friendly and value-add approach. 

NextGen Thesis:

VC Lab powers NextGen VCs and sees that often they are built on and share three common guiding pillars:

  • These VCs are highly networked individuals who are domain experts in the funds' area of focus. 

  • They are ethical investors who emphasize having a positive impact on the world through the companies they back. 

  • They utilize their domain expertise to add value post-investment by forming deep and long-term working relationships with founders.

This new breed of VCs predominantly focuses on early-stage companies and are typically industry experts. Often a part of their thesis is centered around adding value to their portfolio companies by their 'hands-on' synergy approach. 

NextGen VC Strategy

NextGen VCs often have a niche thesis to capture and create value in the market. As well as to help portfolio companies, they can leverage their deep-rooted networks to garner attention to support their ecosystems and domains. 

NextGen VCs are also following an evolving model of venture capital. For example, the use of Venture Partners has become an increasingly popular partnership model for NextGen VCs. Venture Partners are usually experts in their domains and can also provide value add to both the VC and portfolio companies. Furthermore, these VCs are building new vibrant ecosystems and are committing to nurturing innovation in their respective fields.

A Changing Industry

We’re seeing a gradual shift in the type of VCs founders are opting to work with, and NextGen VCs are a perfect fit for the changing preferences of startups and founders. As mentioned earlier, the thesis of NextGen VCs is oriented towards a long-term strategy to partner with founders and add value to their companies through their networks and expertise. Founders are now thinking carefully about the investors in their cap tables and evaluating VCs' value add.

This shift is gradually becoming the norm and founders are looking for more than just capital from VCs. It may be beneficial for founders that are fundraising to look for NextGen qualities in potential investors and take on supportive long-term partners.

Click here for a more comprehensive breakdown of NextGen VCs.

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