Neo CEO Ali Partovi on the philosophy of his part-VC fund, part-scouting network: “The way we think is that the next best thing to being an investor is to help [a company] with recruiting, and maybe that opens the door to investing down the line.”
NeoVenture capital firms claiming to be “founder first” are so common these days that the term has become a Silicon Valley buzzword, but Ali Partovi has built a network to prove it. Neo, his mentorship community and VC fund, assembles more than 400 tech industry figures—including founders of Airbnb, Stripe and Zoom—plus 120 top engineering students Partovi handpicks and pledges to invest in for life on the belief that their innate talent serves as the ultimate indicator for their future success.
The exclusive club has tripled its size in the past three years, adding an annual crop of new students to its growing pool of tech operators—all as Partovi, a longtime angel investor, has begun to make institutional investments through Neo’s $80 million first fund. On early bet such as Kalshi, an exchange that allows people to trade on the outcomes of future events, and compliance software firm Vanta, Partovi tapped into his network to recruit more than half of both startups’ engineering teams.
“There’s never been a more demeaning time to be an investor because you’re making house calls begging people to take your money,” he says. “In that context, I’m very happy to be doing what we’re doing because the currency we bring is not just capital—it's star talent.”
This week, Neo announced the closing of its second fund, a $150 million vehicle to allow Partovi and his team to continue to build the talent network and place bets on high potential founders, much in the same way it finds talented engineers. Its first fund was focused exclusively on early stage startups, with an emphasis on diversity (45% of Neo’s deployed capital has gone to companies with a female or underrepresented minority CEO). The new fund will largely take the same approach, with plans to write checks of $500,000 to $1.5 million to about 80 companies over the course of four years. The vast majority of the fund’s limited partners are the same industry vets who are also part of Neo’s community, Partovi says.
Since launching in 2017, Partovi has made an effort to convince its scholars to take engineering jobs at small startups too, instead of tech giants or mid-sized companies like Stripe. “Software engineering is a creative endeavor, and it’s easier to have a high level of creative responsibility at a small company, like joining Google 20 years ago or Facebook 15 years ago,” Partovi says. “People who are early employees of today’s startups are going to be tomorrow's billionaires.”
This year, 74% of the network’s job-seeking students accepted positions at startups, up drastically from about 15% in its first year. As much as he believes it benefits the students, Partovi admits it’s also good for the firm, calling the statistic the “single most important metric” with which to measure Neo. As he puts it, startups on the search for VC sponsors will take notice of Neo’s talent pipeline, particularly at a time when the increased number of startups and the bigger coffers of tech giants has given engineers more job prospects from which to choose.
This in turn has helped keep Partovi on the pulse of the most promising startups to which he connects his Neo scholars. Four years ago, he referred students to companies such as Figma and Robinhood; in recent months, he was recommending the likes of Ramp and Scale AI. As with the scholars—who Partovi and his team select after hundreds of hours of interviews done by traveling to North America’s best universities for tech—the startups are identified through surveying venture capitalists in his network, like Sequoia’s Alfred Lin, No. 1 on the Midas List this year, and talking to the founders, an easier-said-than-done feat honed through two decades of angel investing that saw Partovi and twin brother Hadi score early investments in Facebook and Dropbox.
The top students and startups are pooled together in an online hub Neo created, which gives the students a fast track to apply to the companies in the portal. Scholars also have access to contact information on the industry vets, who they can ping for mentorship advice. Likewise, the startups have access to a report about each scholar, including letters of recommendation and pre-completed technical evaluations, as well as contact information for scholar finalists who just missed the cut. “Imagine that you are the founder of a startup, and you're trying to hire engineers. Your options today are so limited. If you go on LinkedIn and cold call people, how do you identify whether they’re strong or not?,” Partovi says. “These names are basically the top engineers in colleges across North America, so you have a ton of info on them that is private.”
Neo’s track record in recruiting has begun to bear fruit on its investing front—Ramp and Scale, multi-billion dollar startups which have hired engineers from Neo’s network, are among the new fund’s first investments (Neo began deploying some of the capital prior to fully closing its fundraise), and Partovi plans apportion about 25% of the new capital towards later-stage startups. “The way we think is that the next best thing to being an investor is to help [a company] with recruiting, and maybe that opens the door to investing down the line,” Partovi says.
Lin credits Neo’s network for pulling dozens of engineers into his firm’s portfolio companies, which include Kalshi and Vanta, two companies Sequoia backed at valuations of $120 million (according to PitchBook) and $500 million, respectively, following Partovi’s prior seed investments. At CoProcure, a startup in the fund’s portfolio that is building a data hub to search for government contracts, five of the seven engineers—all of them women—were hired through Neo’s network.
“I just wish that Neo had existed when I was in college,” says CoProcure cofounder and CEO Mariel Reed. “I think he could have convinced me to get started on my entrepreneurial journey much sooner.”
