The founder of real estate website Trulia started a VC firm with a new twist on investing: building its own products

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NFX

  • A venture firm founded by the former Trulia CEO and other tech veterans has raised a $150 million fund to invest in startups.
  • The firm is hiring a team of engineers to build its own products.

Everyone wants to be an internet entrepreneur these days.

But according to Pete Flint, the cofounder of real-estate website Trulia, the most successful businesses are built on something even more powerful than the internet.

Flint, and the other cofounders of venture capital firm NFX, are on the hunt for “network effects” – products that increase in value as more people use it. That’s what propelled Microsoft’s Windows operating system to become the dominant computing platform, years before the internet was a factor. And more recently, it’s the secret to the success of giants like Facebook, Airbnb and Uber among others.

NFX recently closed a $150 million fund to invest in early-stage startups that fit the bill. The firm says it has identified 13 types of network effects, in industries ranging from synthetic biology to machine learning and blockchain.

Hiring engineers to build products in-house

Flint has become an increasingly active startup investor since 2014, when Zillow acquired Trulia for $3.5 billion. While many startups are quick to latch onto buzzwords, very few actually have network effects baked into the core of their product, NFX says.

The firm’s cofounders also include James Currier, a serial entrepreneur who has founded several startups dating back to the late 1990s website Tickle.com (which was acquired by Monster.com); Gigi Levy-Weiss, an Israel-based tech veteran and investor; and Stan Chudnovsky, who is also currently an exec at Facebook overseeing the Messenger product.

NFX is investing up to $250,000 in early-stage startups, in which it will provide up to six months of “structured, hands-on” accelerator-style support, and up to $5 million in funding for slightly more mature companies. The firm has made three investments so far, though the companies are in stealth.

One aspect of NFX that you can already see are products the firm builds itself.

In an unusual move for a VC firm, NFX has hired a team of engineers to build products that bring network effects to – you guessed it – the venture business.

The first such product, called Signal, is essentially a “LinkedIn for startups.” The product aims to help startup founders and investors access expertise and other resources by providing an easy to use social network.So long as the user has a connection in common, founders, investors and others use Signal to get introductions and get in touch.

The product development effort is being led by Amy Lin, the former CEO of online education startup Blendspace and a former Microsoft employee. NFX plans to beef up its current team of 12 engineers to 20 next year, building more tools for things like hiring and fundraising.

In addition to Lin, who is the VC firm’s head of product, NFX has also hired 500 startups co-founder Christen O’Brien as its VP of marketing.