1. Headline & intro
The traditional accelerator deal – a chunky slice of your company for a bit of cash and a shiny badge – is under attack. Ali Partovi’s Neo is effectively asking a heretical question in Silicon Valley: what if accelerators stopped insisting on 7–10% ownership and instead took a much smaller swing at only the most exceptional founders?
In this piece, we’ll look at how Neo’s new Residency program rewrites accelerator economics, why it’s rational for Neo but potentially disruptive for everyone else, and what it means for founders in Europe and beyond.
2. The news in brief
According to TechCrunch, investor Ali Partovi – known for early bets on Facebook, Cursor and Kalshi – is relaunching his firm’s accelerator as Neo Residency, a tightly curated program with unusually founder-friendly terms.
Starting this summer, Neo plans to invest $750,000 in each of roughly 12–15 startups per cohort via an uncapped SAFE. Instead of taking a fixed ownership percentage on day one, Neo’s equity will be calculated at the startup’s next priced round. If that round is at a $15 million valuation, Neo ends up with about 5%; if the valuation reaches $100 million, Neo’s stake shrinks to around 0.75%.
Neo will also select 5–8 students per cohort for a parallel track, giving them $40,000 grants to take a semester off and build projects without any equity taken. The program runs two cohorts per year, capped at 20 teams each, and combines time at Neo’s San Francisco office with an intensive retreat and mentorship from about 30 seasoned operators.
3. Why this matters
Neo is attacking the most sacred part of the accelerator business model: guaranteed, chunky equity.
Y Combinator still anchors the market with a deal that, as TechCrunch notes, translates to 7% equity for $125,000, plus an additional $375,000 on an uncapped SAFE with MFN. Andreessen Horowitz’s Speedrun sits closer to a 10% for $500,000 structure. Both are essentially saying: we want real ownership in every company that passes through the program.
Neo is saying the opposite: we want a small, flexible claim on a tiny elite.
That has several implications:
For top founders, the power balance shifts further. If you can raise a seed round at $20–50 million pre-money (increasingly common for hot AI teams), the idea of parting with 7–10% just to join a brand-name accelerator looks worse every year. Neo’s structure lets those founders keep their cap table far cleaner.
For Neo, this is a pure “outlier” strategy. A 0.75–5% stake looks thin – unless you believe you can repeatedly pick Cursor‑level winners that end up worth tens of billions. In that world, these are essentially very cheap call options on exceptional talent.
For other accelerators, this is a price war they don’t want. YC, Techstars and the rest have operating budgets, staff and alumni services designed around fixed equity inflows. If the most in‑demand founders start demanding Neo-like terms, the entire economic logic of high-volume accelerators gets stressed.
The risk for Neo is obvious: if its selection filter is even slightly off, the portfolio exposure is tiny and hard to make work at fund scale. But the firm is betting its pattern recognition – honed on early checks into companies like Cursor – is strong enough to justify this asymmetry. If they’re right, the rest of the accelerator market will be forced to respond.
4. The bigger picture
Neo’s move fits into a broader, less discussed shift in early-stage funding: the decoupling of capital from credential.
A decade ago, accelerators were mostly about access to money and basic startup education. Today, outstanding AI or infrastructure teams are courted by multiple funds before they ever touch YC’s application form. Capital is abundant; signal is scarce.
That’s why you see:
- a16z’s Speedrun: effectively a pre-accelerator for gaming and adjacent categories, where the brand and network, not the cheque size, are the actual product.
- Micro-accelerators inside funds (e.g. programmatic pre-seed initiatives) that look more like sourcing funnels than independent businesses.
- Founder communities like Pioneer or On Deck (in its earlier form) that tried to detach community from ownership.
Neo pushes this logic to an extreme. The Residency is less a school and more a curated label. If you “graduate,” you’re stamped as a Neo-approved outlier, and that stamp is what downstream investors are really buying.
Historically, YC played exactly this role: its early batches were tiny, highly selective and hugely de-risking for seed investors. Over time, volume exploded, and the signal weakened. Neo is effectively re‑creating YC’s early days, but with 2026 capital markets: you can afford to own much less of each winner because valuations – especially in AI – are so inflated that even a small slice can return a fund.
If this works, expect copycats: hedge-fund‑style venture firms running micro‑residencies with negligible dilution, all competing on brand and alumni outcomes rather than standardised deals.
5. The European / regional angle
From a European perspective, Neo Residency is both an opportunity and a warning.
On the one hand, it creates another on‑ramp for exceptional European and UK founders into the US funding machine, especially those coming out of institutions like ETH Zürich, TUM, EPFL, Cambridge, Oxford or the top Parisian and Scandinavian schools. A three‑month stint in San Francisco with almost no dilution is far easier to justify than handing over 7–10% to a generic program.
On the other hand, it sharpens the transatlantic brain drain problem. The EU spends heavily on fundamental research and is finalising frameworks like the AI Act to shape responsible innovation, but the most ambitious technical founders continue to look West for capital, networks and exits. If the best of them are now pulled into ultra‑founder‑friendly US residencies, European accelerators risk being left with the “second pick.”
There’s also a structural issue: SAFEs are still not fully standardised across many European jurisdictions. In countries like Germany or parts of Central and Eastern Europe, local law and tax regimes often push founders back to convertibles or equity rounds. Neo’s uncapped SAFE might require extra legal gymnastics for EU‑based companies or force them to incorporate in Delaware from day one.
European alternatives are emerging. Programs like Entrepreneur First (London, Paris, Berlin), Antler (across multiple EU capitals), Station F in Paris, and regional players in Berlin, Barcelona, Lisbon, Zagreb or Ljubljana are all experimenting with lighter equity models and stronger founder communities. But none, so far, combine Neo’s mix of tiny cohorts, global prestige and near‑symbolic equity.
If European policymakers are serious about keeping more value on the continent, they’ll need to think not just about regulation (GDPR, DSA, DMA, AI Act) but about capital formation and talent magnets. Neo shows just how aggressively US private capital can compete for that talent.
6. Looking ahead
The immediate question is whether Neo can prove this model at scale.
We should expect:
Fierce competition for admission. With two cohorts of up to 20 teams a year and terms this generous, Neo can afford to say “no” to almost everyone. Expect acceptance rates closer to elite PhD programmes than to typical accelerators.
Copycat experiments. Other top-tier funds will likely spin up similar residencies – especially those already running fellowships for students or technical talent. At first, these may sit alongside traditional accelerator deals; over time, they could cannibalise them.
Pressure on YC and peers. Y Combinator doesn’t need to react immediately – its brand and alumni network remain extremely strong. But if it begins losing the absolute best AI and infrastructure teams to lower-dilution programs, expect some rethinking of its standard deal within 2–3 years.
Key things to watch:
- Neo’s follow-on strategy. The initial SAFE is deliberately light; the real money will be made (or lost) in how aggressively Neo leads or participates in later rounds.
- Student outcomes. The $40k grants are either a brilliant long game – seeding loyalty before a company exists – or an expensive marketing exercise. The results will be visible only in 5–10 years.
- Regulatory friction for non‑US companies, especially around SAFEs and cross‑border investment rules in the EU.
If the next “Cursor‑scale” winners are visibly stamped Neo Residency, the model will be cemented. If not, accelerators may quietly return to owning bigger chunks of more companies.
7. The bottom line
Neo Residency is a calculated bet that in a world flooded with capital, signal beats ownership. For a tiny subset of world‑class founders, it’s a remarkable deal and another reason to skip traditional accelerators entirely. For everyone else, little changes – yet.
The open question is whether Europe and other regions respond with equally bold, low‑dilution talent magnets, or whether the next generation of global winners will keep taking the first plane to San Francisco.
