Network Updates, 18 July 2017
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Log into TENx for complete details and RSVP information for all KF events, unless noted.
- August 13-15: SU Global Summit, SF (special KF discount)
- September 14: KF Women’s Group breakfast. Hosted by Miriam Rivera (Class 15) at her private residence.
- September 22: NY Regional Chapter breakfast
- October 5: Defy Ventures visit to California State Prison – Solano
- October 22-27: Modules 2 & 5
Intercontinental Hotel, San Francisco
- December 8: NY Regional Chapter breakfast
- January 21-26, 2018: Modules 3 & 6
Convene, 101 Park Ave., NYC
- International Summit, April 22-27, 2018: Tel Aviv & Jerusalem, ISRAEL
- Thomas Ball (Class 10) Tells VentureBeat Why He’s Optimistic about Austin’s VC Future
- Gianluca Dettori (Class 14) Spoke on Innovation at TEDx Event in Bergamo, Italy
- Fredrik Cassel (Class 12) Quoted in Invest Europe Report on the Strength of European VC
- CoWork Oasis Opens Doors This Week; Co-Founder Beto Pallares (Class 18) Hosts a Preview
- Ramphis Castro (Class 19) Tells The Memo Why He’s Excited about Initial Coin Offerings
- Graham Gardner (Class 12) Wants to Help Tackle the Physician Shortage
- Emergence Capital Announces Winner of Google Cloud Machine-Learning Competition
- Brad Feld on Building Startup Communities in New Entrepreneur Video
- Portfolio happenings: Modern Meadow (Andras Forgacs, Class 14) is being courted by Long Island and New Jersey for expansion
- Podcasts: Trish Costello (KF Founding CEO) for the She Invests! podcast on the “ick-factor”
- This week’s blog selections:
- Mitch Kapor (Mentor Class 21) and Freada Kapor Klein on the crisis of character in VC
- Guy Turner (Class 17) on evaluating the qualitative characteristics of founding teams
- Jacob Mullins (Class 22) on opportunities where cameras and AI tech intersect
- Dilek Dayınlarlı (Class 18) on the worldwide success of Turkish startup Zeplin
- Victor Gutwein (Class 22) deconstructs early-stage valuations
- Ezra Galston (Class 18) on how marketplace pitches should focus on product showcasing
- Grace Sai (Class 21) on Impact Hub Singapore’s partnership with Google for Entrepreneurs
- Job opportunities:
(CONTINUING) Frontline Ventures seeks Head of Platform • Catalina Labs looking for a senior UX developer • Emergence Capital hiring an associate • Johnson & Johnson Innovation seeks business development director • Wisconsin Alumni Research Foundation (WARF) looking for a Chief Venture Officer
Thomas Ball (Class 10) Tells VentureBeat Why He’s Optimistic about Austin’s VC Future
VentureBeat interviewed Thomas Ball (Class 10), co-founder and Managing Director at Austin-based Next Coast Ventures, in “40 Austin Startups Raised $385.9 Million in Q2.” Trailing far behind Austin for the quarter, despite their larger size and population, were Dallas ($142M) and Houston ($42M), although Houston’s total more than tripled from Q1. Tom thinks the trend may continue, noting an increase in earlier seed-stage deals: “We’re hoping that translates into the start of more companies.” Furthermore, he says, “We also continue to see firms from the West and East Coast show up in town to look at deals with us, which we think is a very positive indicator for the health of Austin’s early-stage tech community.” For those companies that do land deals, they’re likely to be larger; while the total statewide capital invested in Q2 almost doubled over Q1, the number of deals actually fell.
Other Q2 Austin trends Tom noticed include, not surprisingly, a number of deals with an AI component of some kind, as well as a few healthcare- or healthcare-IT-related companies, which he thinks may have been spurred by UT Austin’s new Dell Seton Medical Center. But he suspects that some companies are just trying to capitalize on the buzzy status of AI: “They are either utilizing technology or applying AI-like applications to things that don’t necessarily need it.”
Gianluca Dettori (Class 14) Spoke on Innovation at TEDx Event in Bergamo, Italy
Gianluca Dettori (Class 14), founder and Partner at dpixel, presented a talk at a TEDx event in Bergamo, Italy, organized around the theme “It’s Time To.” Topics included music, medicine, journalism, technology and ethics, creativity, and business. Gianluca’s talk, “Forecasts: Storms of Innovation,” shared his vision of the innovation needed in the startup world today, for a better tomorrow. (The video is in Italian.)
Fredrik Cassel (Class 12) Quoted in Invest Europe Report on the Strength of European VC
Fredrik Cassel (Class 12), Partner at Creandum, was quoted in “The Acceleration Point: Why Now Is the Time for European Venture Capital,” a new report from Invest Europe, an association “representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors.” The report highlights Europe’s prospering economies, the strength of its tech industry, and the experience of its fund managers. Both VC investment totals and VC fundraising for EU funds have increased each of the last five years, recovering almost to pre-crisis levels, but as Fredrik says, the ecosystem itself “has matured rapidly over the last ten years.” The report indicates that “almost a third of corporate venturing programmes in Europe have been established since 2010,” and that European venture-backed companies produced only three unicorns from 2000 to 2010, but more than 50 since 2010.
Fredrik calls out the “wealth of choice for us as investors in high quality, innovative companies that we see as the entrepreneurial stars of tomorrow.” The 2016 Global Innovation Index list of the world’s ten most innovative economies included eight from Europe, “with the top three spots occupied by European nations.” That year, the communications/computer/electronics sector garnered the most capital, 44%, followed by biotech and healthcare at 27%. The only cloud on the horizon, as an Institutional Investor story on the report points out, is Brexit. The EU’s European Investment Fund, “a public–private partnership designed to facilitate investment in small and medium-size enterprises in Europe,” could decide to withdraw its investments from the UK—in which case, the UK would need to act quickly or risk losing a significant portion of its VC industry.
CoWork Oasis Opens Doors This Week; Co-Founder Beto Pallares (Class 18) Hosts a Preview
Beto Pallares (Class 18) is featured on a KVIA (ABC News in El Paso, TX) news segment, in which he gives viewers a sneak peek at CoWork Oasis, an “innovation community” designed to be a home base for El Paso’s startup ecosystem. The new space, opening its doors on July 20, augments coworking space with workshops, programming classes, regular social events, and expert guidance on more arcane matters like intellectual property rights and funding acquisition.
Noting that household names like Google and Microsoft were once startups too, co-founder and managing director Beto says, “What’s important to us is to be able to … build an environment where our own community can believe that it can build companies like that, and that starts with a physical space—and then it moves into developing community.”
Ramphis Castro (Class 19) Tells The Memo Why He’s Excited about Initial Coin Offerings
The Memo extensively quoted Ramphis Castro (Class 19), co-founder of ScienceVest, in “Underground Fundraising Is Keeping Investors Up at Night.” A digital investing paradigm has arisen based on Initial Coin Offerings (ICO, pronounced EYE-co), which superficially resemble IPOs. Used exclusively by blockchain-based firms, an ICO releases and sells crypto-tokens in a new cryptocurrency, usually in exchange for Bitcoins, but sometimes for “fiat money” (real-world money), and even for voting power; the exact uses are determined by the issuing company. If the company launches successfully, the value of the tokens usually rises, and the original backers can sell for a profit—just like IPO backers.
Underneath that surface, however, ICOs differ dramatically from IPOs. As Ramphis explains, “Because ICOs do not trade in traditional currency, or traditional stocks or shares, there cannot be an expectation of making money.” This frees ICOs from the regulations, checks, and balances required for IPOs, and from the need for an intermediary. ICOs can be launched with little preparation and participated in by anyone, anywhere. The results can be staggering: some participants in Ethereum’s ICO in 2014 realized an ROI of over 6000%, while Basic Attention Token’s ICO this past May raised $30M in 24 seconds.
Making it all possible is the blockchain, which Ramphis calls “a core disruption on the relationship between capital and trust. … Blockchain allows everybody to know what everybody else is doing.” A blockchain is a kind of peer-to-peer digital ledger, consisting of timestamped blocks that are intrinsically linked to each other, with every change and every transaction being public. As a result of this design, a block’s data cannot be changed after the fact without altering all the blocks following it, or without the cooperation of the majority of the network. Furthermore, programming can be built in to trigger automatic actions when defined conditions occur. The potential uses are remarkable: projects employing the technology include online voting, information systems for medical records, and automated contracts. “It’s like building the world from scratch,” says Ramphis.
Graham Gardner (Class 12) Wants to Help Tackle the Physician Shortage
Graham Gardner (Class 12), co-founder and CEO of health IT startup Kyruus, was featured prominently in the Healthcare Finance News article “Tackling the Physician Shortage: Reduce Inefficiency, Add Residency Slots.” Recent research indicates that the US will soon face a shortage of 45,000-105,000 physicians, depending on how the healthcare industry changes. Two major factors contribute to the problem: retirement, as doctors age with the population at large, and a shortage of new doctors. The latter is hardly due to lack of interest, since “the number of students attending U.S. medical schools has actually climbed about 28 percent in recent years.” Instead, the root of the problem lies with healthcare funding. After MD students graduate, they are required to go through extensive training—including internships, residencies, and fellowships—before working as doctors. While the cost is paid largely by Medicare and Medicaid, and also by some states, that funding has increased little in the last 20 years.
Graham’s solution is to make better use of the physicians we have. He estimates that across a large health system, as many as 40% of appointment slots go empty. Furthermore, about 10% of a doctor’s time goes to patients whose medical issues require a different doctor (e.g., a gut surgeon getting a patient with foot issues), as well as to ailments that a nurse could handle.
The challenge of efficiently matching patients to doctors is one that technology such as Kyruus’s are tackling—and health providers are taking notice. Business Wire reported this week that Texas’s largest not-for-profit health system, Baylor Scott & White Health, signed up with Kyruus to create a single provider database across its 48 hospitals and allow patients to find providers through a symptom or condition keyword as well as more traditional searches. As Graham points out, the upside to making better use of doctors’ time is that it can help address the cost of healthcare nationwide: “if you have … a billion-dollar healthcare system that’s only operating at 70 percent utilization and you can pick that up by 5 percent, you’re talking about millions of dollars.”
Emergence Capital Announces Winner of Google Cloud Machine-Learning Competition
As we wrote in March, Google Cloud, along with co-sponsors Emergence Capital (so many Mentors and Fellows!) and Data Collective, announced a machine-learning competition for startups at Google’s Cloud Next conference. Ten finalist startups went before an eight-person judging panel (including Santi Subotovsky, Class 15) to compete for three prizes from Google, Emergence, and Data Collective.
Built With Google winners received Google Cloud Platform credits ranging from $500,000 to $1 million; in addition, each VC firm selected one startup to receive an investment of up to $500,000. Emergence chose LiftIgniter, a company that uses machine learning to build personalization engines for businesses to make real-time recommendations to their website visitors, by matching a user’s interactions with the content and matching them to previously observed users.
Brad Feld (Mentor Class 21, KF BOD) on Building Startup Communities in New Entrepreneur Video
In a new video for Entrepreneur, Brad Feld (Mentor Class 21, KF BOD) shares his thoughts on how to best create an entrepreneurial community. The first step, he says, starts with geography: pick a place where you actually want to live, “instead of going somewhere where there’s a job opportunity or where everybody says you should go, because of whatever the entrepreneurial dynamic is.” Constructing that community will take time—so you’ll need to adopt a long-term view of “at least 20 years,” which is why liking where you live is going to be extremely important.
Any city with a population of “at least 100,000 people,” Brad says, should be able to support the number of entrepreneurial leaders needed to build an active and inclusive community over the long haul.
Modern Meadow (Andras Forgacs, Class 14) is being courted by New York and New Jersey as the company looks for a new laboratory and factory site, according to a recent Newsday article. The proposed Long Island location for the firm, which uses biotechnology to create sustainable leather without relying on animals, would be on the campus of Farmingdale State College, with low-cost electricity and $1 million in state business aid to sweeten the pot. In New Jersey, the city of Nutley has offered tax credits totaling $32 million over 10 years, hoping to lure the company to the other side of the Hudson River. Congratulations to Andras and Modern Meadow on having a happy (if difficult) decision to make!
Trish Costello (KF Founding CEO), founder and CEO of Portfolia, talks about her investing experiences and the opportunities for women VCs on the inaugural episode of the She Invests! podcast: “The Genius of Focusing on the ‘Ick’ Factor.”
This week’s blog selections:
- Mitch Kapor (Mentor Class 21) and Freada Kapor Klein, of Kapor Capital, responded to the crisis of character in venture capital in their recent Medium.com blog post, “Can Venture Capital Be Saved?” Sexual harassment, they point out, is an abuse of power reflective of a larger problem with VC culture as a whole. Mitch and Freada call on LPs, VCs, and founders to walk the walk of creating an inclusive, diverse VC culture: “It just doesn’t make sense to pontificate if your own firm or portfolio lacks diversity, or if you have never held your colleagues or your companies accountable to building an inclusive culture with diverse teams. In other words, if you haven’t implemented any fixes, you can’t hold yourself out as an expert to create change.”
- Guy Turner (Class 17) followed up his earlier post on evaluating the objective characteristics of founding teams with “People, Part 2: The Characteristics that Matter in Startup Teams.” In this post, Guy talks about gauging a team’s more qualitative, experiential characteristics.
- Jacob Mullins (Class 22) published a Medium post about “The Great Camera Awakening—The Incredible Opportunities Emerging in Computer Vision, at the Intersection of the Camera + AI.” The omnipresence of consumer cameras, better connectivity, and readily accessible big data means that those cat-face photo filters only hint at what’s possible.
- In a Medium post titled, “28-Year-Old Entrepreneurs Are the Secret Behind a Turkish Startup’s Worldwide Initiative [original in Turkish],” Dilek Dayınlarlı (Class 18) describes the Turkish startup success story that is Zeplin, a collaboration app for frontend designers and UI developers with close to 1 million users in 181 countries, including big names like Microsoft and Salesforce. Four employees of Pozitron, a mobile commerce technology provider that sold for $100M in 2014, moved on with the goal of addressing the communication interface issues between designers and software developers. They received 15,000 Euros as a seed investment from Startup Bootcamp, participated in Product Hunt, and applied to Y Combinator. In 2015, after 3 months at Y Combinator, they received $1.2M from well-known Silicon Valley investors including Mike Maples (Twitter and Twitch), Elad Gil (Airbnb and Pinterest), and Kevin Hale (Wuufoo). Dilek summarizes the secrets of Zeplin’s worldwide success: focusing income on the product, a strong team with a solid culture led by a female CEO, and the wisdom to keep finding people who could take them farther. (Read a 2015 interview with Zeplin founder Pelin Kenez.)
- Victor Gutwein (Class 22) concluded his series of posts on how micro-VCs should not necessarily stick to the usual VC playbook with “Part 4: Value Valuations,” which explains the math behind early-stage valuations and then counters some of the “valuation conventional wisdom that early investors use to justify their pricing malleability and overall willingness to pay a premium.” Among other topics, Victor covers high cap or uncapped notes/SAFEs; for more on the potential downsides of SAFEs, see Pascal Levensohn’s (Mentor Class 14 & 22) article in last week’s newsletter.
- In a recent BreakingVC post titled “Make the Merchant a Star,” Ezra Galston (Class 18) explains why companies pitching their marketplaces might want to de-emphasize the size of the discount available to interested merchants—and instead focus on how the marketplace takes their product showcasing to a new level.
- Grace Sai (Class 21), co-founder and CEO of Impact Hub Singapore, announced the Hub’s partnership with the Google for Entrepreneurs network in a press release appearing on Newsroom America: “Helping Entrepreneurs in Singapore Make a Bigger Global Impact.” Congratulations, Grace!
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- (CONTINUING) Dublin, Ireland-based Frontline Ventures (Will Prendergast, Class 14; William McQuillan, Class 21; Shay Garvey, Mentor Class 21) is hiring a Head of Platform. Frontline Ventures is an early-stage firm focused on “European B2B companies with global ambitions.” The goal of this position is to manage and connect Frontline’s network of entrepreneurs, LPs, and co-investors “to ensure our portfolio of companies are learning faster than just the speed of experience.” Read the full job description.
- (CONTINUING) Gayathri Radhakrishnan (Class 16) is hiring a Senior UX Designer to join her team at Catalina Labs. This person will “lead the design direction for our product [Wixi] by placing the user at the center of the design process.” See the full job description online.
- (CONTINUING) Jeff Calcagno (Class 11), Senior Director, New Ventures at Johnson & Johnson Innovation, has a job opening for a Director-level business development person—preferably with PhD or MD-PhD and a few years of license deal experience—to focus primarily on biopharma external innovation sourcing and deal-making. (Note that despite the job title “Director of New Ventures,” this is a business development role and not a venture investing role.) See the J&J website for a full job description and qualifications.
- (CONTINUING) Emergence Capital is hiring an Associate to join its investment team. At Emergence, Associates drive the sourcing process, allowing them to work closely with every investor on the team and work with every portfolio company. Associates also support diligence efforts and drive the development of new investment themes. See the full job description.
- (CONTINUING) The Wisconsin Alumni Research Foundation (WARF) is seeking an inaugural Chief Venture Officer (CVO). This person will be responsible for growing the direct-investment portfolio by leading deal origination across a variety of sectors and asset classes, supporting the commercialization of discoveries at the University of Wisconsin – Madison (UW-Madison). WARF is a 501(c)(3) organization with $2.7B AUM. The CVO will establish and manage a small team; requirements include 10+ years of direct investing experience. See the full job description [scroll down and click on “Chief Venture Officer” from the linked page]. Application deadline: July 31.
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