# Beyond the Algorithm: How Ali Partovi’s Neo is Redefining Venture Capital

## Beyond the Algorithm: How Ali Partovi’s Neo is Redefining Venture Capital

In the often-incestuous world of Silicon Valley venture capital, Ali Partovi has quietly built a reputation as a talent scout with a unique edge. While the Partovi brothers, including Hadi, have long been respected for their early investments in tech giants like Facebook and Airbnb, Ali’s venture firm, Neo, is now stepping into the spotlight. After eight years, Neo’s unconventional approach to finding and nurturing future tech leaders is demonstrably paying off, with investments in companies like Bluesky and Anysphere showcasing its success.

Neo’s core philosophy revolves around identifying exceptional individuals, often before they’ve even launched a company. Unlike traditional VC firms that focus on specific market trends or established teams, Partovi and his partners, Suzanne Xie and Emily Cohen, prioritize the potential of individual talent. This approach is embodied in the “Neo Scholars” program, which provides a $20,000 grant for college students to take a gap semester and explore their entrepreneurial ideas, without requiring any equity in return. Each year, thirty individuals are selected.

A key element of Partovi’s evaluation process is a deceptively simple coding test. As exemplified by the story of Michael Truell, co-founder of the AI-powered coding editor Cursor, these tests aren’t about rigid assessments. Instead, they serve as a catalyst for deeper conversations, allowing Partovi to gauge technical aptitude, entrepreneurial spirit, and a willingness to challenge the status quo. Truell’s company, Anysphere, is now valued at a staggering $10 billion, potentially becoming one of Neo’s most successful ventures.

This focus on individual potential mirrors Y Combinator’s emphasis on early-stage support but takes it a step further. Neo invests in people, not just companies, providing mentorship and guidance to help them develop their ideas and build successful businesses. Partovi describes his role as “coaxing” founders to take risks and aim higher than they initially envision.

The results speak for themselves. Beyond Anysphere and Bluesky, Neo’s portfolio boasts impressive companies like Cognition (valued at $4 billion), Pika Labs (valued at $700 million), and Chai Discovery, all founded by Neo scholars. Impressively, every new graduate hired by OpenAI last year came from the Neo Scholars program.

Partovi looks for four key qualities in potential “superstars”: technical ability, entrepreneurial inclination, a willingness to challenge the status quo, and magnetism. Technical ability, he believes, is crucial for clear thinking, citing examples of tech titans like Jeff Bezos and Larry Ellison who have computer science backgrounds. Prior entrepreneurial experience demonstrates a willingness to take risks and a passion for building products that resonate with users. Challenging the status quo signifies a founder’s capacity to question fundamental assumptions. Finally, a founder’s “magnetism” – their ability to attract talented friends to their ventures – is a crucial indicator of future success.

As Neo’s success becomes more apparent, competition to join its programs is intensifying. Applications have doubled annually, but Neo is committed to maintaining selectivity over scaling. This philosophy also extends to its fund size; Neo recently closed on $320 million in fresh capital, only slightly more than its 2023 fund, with Partovi himself significantly increasing his personal investment.

While the market faces a challenging exit landscape, Partovi advises his founders to focus on building enduring value and serving others. He believes that money is the result of creating a product that people love, not the primary goal. In a world often driven by fleeting trends and short-term gains, Neo’s commitment to identifying and nurturing long-term potential sets it apart, demonstrating that betting on people is, in fact, a winning strategy.