Hedosophia appoints Nextdoor founder to boost US operations
British venture capitalist Ian Osborne has brought in Nextdoor co-founder Nirav Tolia as executive chair of his investment group Hedosophia as it prepares for a fresh push into the US tech market next year.
Tolia joins the tech-focused investor following the flotation of Nextdoor, where he was chief executive until 2019. The company’s shares surged 40 per cent in its first hour of trading in New York on Monday after merging with a special purpose acquisition company.
Since he left Nextdoor, Tolia has been investing privately. He remains the largest individual shareholder in the neighbourhood social media site, which provides advice and services such as babysitters.
The Dallas-based entrepreneur will oversee Hedosophia’s operations in North America, according to people familiar with the situation, and will join the group’s investment committee. They said it was hoped that his connections would help find deals in the US as well as win more hotly contested funding battles. Hedosophia declined to comment.
Tolia told the Financial Times that he wanted to use his experience in founding and scaling up consumer internet companies over the past two decades to work in backing and nurturing the next generation of entrepreneurs.
“I’ve literally been in their shoes from the founding of a company, all the way to taking it public. How do you source deals? How do you win deals? You have to develop relationships, you have to create trust and you have to give before you ask for anything in return.”
Hedosophia already splits its investment across the US, China and Europe, backing a number of large tech groups during their early years such as Spotify and TransferWise to Virgin Galactic and Clover Health.
Hedosophia has been an investor in Nextdoor since 2013, and led a financing round in 2017 with Axel Springer and Comcast that provided further funds for the group.
The company specialises in earlier growth stage investments. It typically invests about $50m into companies with overall valuations of less than $1bn, allowing it to take larger stakes and also higher potential returns if companies continue to grow strongly.
“Every single cheque we write has to be in the best company,” said Tolia.
The group’s fund sizes are unlikely to rise higher than $1bn, according to people familiar with the company’s strategy. They say this gives the firm a more focused approach, rather than following rivals in putting money into hundreds of different start-ups.
Tolia said tech-sector fundraising was now “incredibly competitive” given the huge funds being deployed by the large venture capital firms.
“The macro environment is completely insane and entrepreneurs are taking advantage of it,” he said.
“But the ones that really think about long-term value, they choose their partners extremely carefully. It’s not just the people who can give them the best valuation. It’s the folks who believe in the company long-term and are willing to do the hard work to build that value.”
Tolia was one of the first 80 employees at Yahoo, before co-founding Epinions in 1999, which then merged with Dealtime as Shopping.com. This business went public in 2004 before being acquired by eBay in 2005 for $620m. Tolia also served as an “entrepreneur in residence” at venture capital group Benchmark.