Why NFX Invested in F2: AI for Private Financial Market Investors

F2 is spinning out of Arc Technologies, one of NFX’s portfolio companies, and we’re investing in the spinout along with LeftLane and YC.

F2 is agentic AI for deep analysis of private markets. Here’s some of why we invested:

Eighteen months ago F2 found its “white hot center” of market demand when it launched a simple internal AI-driven tool to take raw excel, PDF and powerpoint files from data rooms, and turn them into structured insights.

After iterating with the LLM’s, the data storage, etc. this product cracked the bottleneck in private markets analysis of wading through unstructured data. Customers reported saving up to 45 hours per week. The tool was doing the job of full time employees who are usually paid $250K+. The customers wanted it yesterday.

It then took another year of fine tuning, security, load testing, etc. before the product became enterprise grade. Now it is.

One question we want AI startups to ask is, what happens in the next few years when the foundational LLM’s show up to a market? Will they turn your product into a feature?

Vertical AI companies can win against horizontal giants. But it takes two things. 1) Solve the customers’ complex problem, not just build a tool. 2) Bring market expertise so the product can create embedded defensibility.

F2 has what we think is a protected niche in the messy, fragmented data world of private financial markets. It’s deeply technical and unique, and the customers all have slightly different needs. Horizontal players will struggle to achieve the needed level of customer fit.

We know Don Muir and the F2 team from our investment in Arc, so we hit the ground running with the management team. They have 18 months under their belt of building and deploying the F2 products, so they hit the ground running with their product maturity. Arc has 100’s of private market clients, so the F2 spinout hits the ground running with customer sales.