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Network Updates, 13 June 2017

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We have changed our publication schedule, and are now sending KF Network Updates and eBulletins on Tuesdays, instead of Thursdays.

Upcoming Events

Log into TENx for complete details and RSVP information for all KF events, unless noted.

  • June 11-16: Summer modules & Vesting Day (graduation), Classes 20-22
    Tuesday, June 13 – Cocktail Reception
    Wednesday, June 14 – Graduation / Vesting Day sessions, lunch, cocktail reception
  • June 23: New York Regional Chapter breakfast
  • July 15: Fellows Picnic / Family Day
  • September 14: KF Women’s Group breakfast. Hosted by Miriam Rivera (Class 15) at her private residence.
  • September 22: NY Regional Chapter breakfast
  • December 8: NY Regional Chapter breakfast
  • International Summit, April 22-27, 2018: Tel Aviv & Jerusalem, ISRAEL

Can’t log into TENx? Contact Remi Morita or John McIntyre for assistance or event details.

Headlines

  • Clint Korver (Class 14) offers an alternative methodology to “gut instinct” VC decision-making
  • Eric Hallstein‘s (Class 15) California chapter of The Nature Conservancy awarded $1.9M for water conservation initiatives
  • Seed Accelerator Ranking Project’s  “Best of 2017” list features many Kauffman Fellows & Mentors
  • Fadi Ghandour’s (Mentor Class 15) Wamda co-authors in-depth report on MENA’s FinTech sector
  • 5 Kauffman Fellow/Mentor firms are most active in state’s tech sector
  • Portfolio happenings: David Lowe’s (Class 7) Aeglea BioTherapeutics to have common stock offering • Gianluca Dettori’s (Class 14) Barcamper invests in Nausdream • Ravi Mohan (Class 2) writes about portfolio company Anaplan • Carl Fritjofsson (Class 21) to join board of Clustree
  • Podcasts & speakers: Karen Kerr (Charter) & Brad Feld (KF BOD) spoke at The Digital Factory conference • Daniel Kraft (Class 13) talks of the future of surgery in latest NPR episode
  • This week’s blog selection: Stephen Bloch (Class 7) writes “Breaking Down the Barriers in Genomic Medicine”
  • Job opportunities:
    (NEW) Nexamp seeks assistant general counsel • StartX Accelerator applications open
    (CONTINUING) Alchemist Accelerator startups with multiple positions open • Matter Ventures looking for 2 Program Coordinators

Clint Korver (Class 14) Offers an Alternative Methodology to “Gut Instinct” VC Decision-Making

VCJ logoIn Clint Korver’s (Class 14) latest VCJ online column, “Why Data and Metrics Should Matter More than Gut in the VC World,” Clint examines the the methods used by a large portion of VCs in deciding which firms to invest in, and lays out his firm’s methodology as a better-informed—and successful—alternative. He cites a number of relevant studies (including a 2016 Harvard Business School study by Paul Gompers) showing a large number of VCs making investment decisions based on “gut instinct.” Says Clint:

The Harvard study found that among all VCs, 9 percent don’t use any financial metrics to make decisions while 17 percent of early-stage VCs don’t use any financial metrics. Even those using metrics often don’t take them seriously.

For the few VCs who do use financial metrics, the study notes that “78 percent either don’t adjust for risk or treat all risk the same.”

KFR Volume 3 coverClint goes on to outline Ulu Ventures’ method for deciding whether an opportunity is worth consideration. Their probability-weighted MOIC is a measure they have been developing and fine-tuning for some time (Clint first wrote about it in detail in Kauffman Fellows Report, Volume 3: “Applying Decision Analysis to Venture Investing”).

In Ulu’s model, at each stage of a company’s possible lifespan—early-stage success, crossing the chasm, all the way to mass-market hit—the Ulu team examines the risk factors affecting the likelihood of the startup’s success, and based on those risk factors, creates a probability of survival at each stage, as shown in the image below.

Clint Korver Decision Analysis Model

Image credit: Kauffman Fellows Report, Volume 3.

After their probability tree is complete, Ulu Ventures projects the MOIC at each possible outcome, from early-stage failure (0x) to market-leader success (420x). These possible MOICs are multiplied by the likelihood of their happening to get a probability-weighted MOIC (PWMOIC). If a startup has a PWMOIC of 10x or more, Ulu Ventures will consider investing.

Clint is a firm advocate for this PWMOIC, and he has been using and refining it for at least five years—but does it produce better investment outcomes? Read Clint’s VCJ column, which outlines Ulu’s success rate with this method. Clint’s KFR article presents Ulu’s Decision Analysis system in detail, and shares their actual decision-making data from their early investment in Inkling. (Ulu was part of Inkling’s $925K seed funding; according to CrunchBase, Inkling has raised $102M to date, including a $25M Series E in December 2016.)


Eric Hallstein’s (Class 15) California Chapter of The Nature Conservancy Awarded $1.9M for Water Conservation Initiatives

Nature Conservancy of CaliforniaEric Hallstein (Class 15), Environmental Economist at The Nature Conservancy of California, announced that his TNC chapter was awarded $1.9M from the USDA’s Conservation Innovation Grants program. The annual CIG Awards, administered by the USDA’s Natural Resources Conservation Service, help “develop the tools, technologies, and strategies to support next-generation conservation efforts” and “market-based solutions to resource challenges.” The program has awarded more than $286M for 711 projects since 2004. Eric’s group will use the funding for “a novel combination of data analytics and water markets to meet freshwater conservation goals and improve the overall management and drought resiliency of California water resources.” [Full awards list] [Interactive map; click on the Southern California marker to see Eric’s project]


Seed Accelerator Ranking Project’s “Best of 2017” Features Many Kauffman Fellows & Mentors

Congratulations to the Kauffman Fellows whose firms made the Seed Accelerator Ranking Project’s “best of 2017” list, out of more than 150 that were invited to participate.

Once again making “Platinum Level” were:

“Gold Level” featured some changes:

Researchers from Rice University, the MIT Innovation Initiative Lab for Innovation Science, and the University of Richmond invited U.S. accelerators whose programs had “fixed cohorts and program lengths, a pitch day, and an existing alumni base” to participate. Metrics such as “valuations of participating startups, the amount of funding raised by participating startups, startups’ survival rates, and ratings provided by program graduates” were used to rank each program. [Full report] [Forbes article]


Fadi Ghandour’s (Mentor Class 15) Wamda Co-Authors Fintech in MENA: Unbundling the Financial Services Industry

Wamda LogoWamda, founded by Fadi Ghandour (Mentor Class 15), and the online payments servicer Payfort issued a 90-page, in-depth report on the state of FinTech in MENA. The report examines the current state of MENA’s online banking services, the industry’s drivers and barriers, the types of FinTech offerings and their growth rates across the region, key challenges that need to be overcome for future growth, and concrete recommendations for moving forward. They have included extensive customer surveys as well as numerous statistical breakdowns of the current state of the MENA FinTech market and historical trends. [Listen to the accompanying podcast] [ArabianBusiness.com story] [Full report PDF]

KFR Vol. 6 CoverReaders may also want to compare and combine these findings with two Kauffman Fellows Report stories from Volume 6 about MENA’s VC landscape, tech startups, and barriers facing the region’s investors and entrepreneurs. Tarek Sadi (Class 17) wrote “A Hybrid Venture Capital Model for the Middle East,”and Khaldoon Tabaza (Class 15) wrote “MENA’s Internet Industry: The Opportunities, Challenges, and Success Stories.”


5 Kauffman Fellow/Mentor Firms Are Most Active in State’s Tech Sector

CB Insights LogoCB Insights published its 2017 report of the most active tech-sector VC firms by  state, and several Kauffman Fellow/Mentor firms are represented:

All but Andreessen Horowitz led their states in last year’s report as well. The annual analysis looks at the number of tech companies funded in each state by venture capital, CVC, super-angel, and growth equity firms over the past five years.


Portfolio happenings:

  • Congratulations to David Lowe (Class 7), CEO of Aeglea BioTherapeutics (NASDAQ:AGLE), which this week announced a proposed underwritten public offering of common stock. Aeglea develops enzyme-based therapeutics to treat rare genetic diseases and cancer. Part of the new funds raised will be put toward additional R&D on its drug candidates.
  • Gianluca Dettori’s (Class 14) Barcamper Ventures invested €230K in Nausdream as part of dPixel’s Barcamper Garage acceleration program. The Italian Internet startup enables boat owners and small companies to offer their nautical services worldwide and creates a community for users to share experiences—a sort of AirBnB for nautical tourism. The firm plans to expand service in the Mediterranean, Central America, and Southeast Asia. [Full story (Italian)] [Google Translate of story]
  • Ravi Mohan (Class 2) blogged about what he thinks makes his portfolio company, Anaplan, unique. As Ravi explains it, the company’s software picks up where the two-dimensional nature of traditional spreadsheets leaves off, enabling complicated business modeling for sales, workforce, finance and budgeting, marketing, supply chain, and IT. At the heart of the product is a single codebase that has—from the start—enabled its rollout to diverse companies around the globe. Ravi is Managing Director at Shasta Ventures, which has invested in Anaplan since co-leading the software company’s Series B in 2012.
  • Carl Fritjofsson (Class 21) will join the board of directors at Clustree after Creandum led the $7.9M Series A for the maker of an AI-based HR recommendation platform. Calling human resources functions “a massive market that has not largely been disrupted by technology,” Carl says Clustree is “one of the most impressive technologies we’ve seen to support HR decision making.” The funding will enable the Paris-based firm to prepare for international expansion. [Press release] [Carl’s Medium post]

Podcasts & speakers:

  • Karen Kerr (Charter Class) and Brad Feld (KF BOD) participated in a panel at The Digital Factory, a one-day conference on digital manufacturing at the MIT Media Lab. Their topic was “How to Reinvent the Advanced Manufacturing Ecosystem One Investment at a Time.”
  • Daniel Kraft (Class 13) discusses the future of surgery and other inventions in Episode 17-23 of the TechNation Health podcast from NPR: “The Future of Surgery & The Zika Virus

This week’s blog selection:

Stephen Bloch (Class 7) argues in “Breaking Down Barriers in Genomic Medicine” that the pace of change in genomics is leaving many physicians behind, and points out a lack of practical implementation of genomics data for patients. He sees the solution in “a telemedicine platform to connect patients, physicians, labs, and clinical partners to a national network of genetic experts”—such as that being developed by Genome Medical, whose recent $12M Series A was led by Canaan Partners, where Stephen is a General Partner.


Job opportunities:

If you are a Fellow or Mentor and would like to post a job at your firm or portfolio company, please email us. Jobs are shown here for 4 weeks unless otherwise requested.


Do you have a news story to share? Please email us: news@kfp.org.

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