Founder Deals: Elite Accelerator Lowers Equity Stakes

Veteran investor Ali Partovi has launched Neo Residency, a program designed to provide the benefits of an elite accelerator without demanding significant equity. This new initiative offers a $750,000 investment through an uncapped SAFE, ensuring that the equity stake taken by Neo is directly tied to a startup's future valuation. This structure is notably more favorable to founders than the fixed percentage stakes common in other accelerators, such as Y Combinator's 7% or Andreessen Horowitz's 10%.

The Neo Residency program is set to accept 12 to 15 startups this summer. Beyond the investment, participants will benefit from three months at Neo's San Francisco offices, a two-week bootcamp in Oregon, and mentorship from experienced operators. The program also includes a track for college students, offering them a $40,000 grant to pursue projects during a semester off, with the hope of nurturing future entrepreneurial ventures.

Partovi expressed strong confidence in Neo's ability to identify promising founders, citing past successes like early investments in Cursor. The program maintains a selective, elite focus, capping its two annual cohorts at 20 teams, a mix of established startups and student projects. This strategy underscores Neo's commitment to backing exceptional talent with uniquely favorable terms.