Network Updates, 5 July 2017
Welcome to our brief, weekly Network News Update. If you would prefer to receive the monthly eBulletin only, email email@example.com.
Log into TENx for complete details and RSVP information for all KF events, unless noted.
- July 15: Fellows Picnic / Family Day, Belmont, CA
- 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
- December 8: NY Regional Chapter breakfast
- International Summit, April 22-27, 2018: Tel Aviv & Jerusalem, ISRAEL
- Andras Forgacs (Class 14) featured in Newsweek cover story on genetic engineering wave
- Adrian Li (Class 21) knows how best to invest in Indonesia
- Pule Taukobong (Class 19) believes the tech sector in Africa is strong
- Victoria Fram (Class 22) tells Inc. why humility leads to success
- Graham Gardner (Class 12) disputes the hospitality industry as a model for finding healthcare
- On the move: Dylan Steeg (Class 13) has joined Scaled Inference • Jan-Maarten Mulder (Class 21) has joined the board of Root Capital
- Portfolio happenings: Ludlow Ventures (Jonathon Triest, Class 20), Upfront Ventures (Mark Suster, Mentor Class 21; Stuart Lander, Class 21), and Weathergage Capital (Courtney Russell McCrea, Class 3) all closed funds recently • Redfin (Josh Stein, Class 9, DFJ) to have IPO • Shasta Ventures (Rob Coneybeer, Class 2) joined latest round for Vector Space
- Podcasts & speakers: Juliana Garaizar (Class 18) in an on-the-spot interview at the ACA Summit • Podcast of Brian Trelstad’s (Class 12) panel talk at “The Future of Impact” forum • Phil Wickham (Charter) spoke at the WIT Japan & North Asia bootcamp
- This week’s blog selections: Jake Saper (Class 20) interviews Stu Peterson of ARTIS Ventures • Jorge Torres (Class 16) publishes issue #2 of Venture Stack • Brad Feld (KF BOD, Mentor Class 20) weighs in on the sexual harassment issue with two posts • Guy Turner (Class 17) examines startup founder characteristics • Victor Gutwein (Class 22) continues his micro-VC series, with follow-up questions from classmate Andris K. Berzins (Class 22)
- Job opportunities:
(NEW) Johnson & Johnson Innovation (Jeff Calcagno, Class 11) seeks business development director • Emergence Capital is hiring an Associate • Wisconsin Alumni Research Foundation (WARF) is looking for a Chief Venture Officer
(CONTINUING) Nexamp (Zaid Ashai, Class 13) seeks assistant general counsel
Andras Forgacs (Class 14) Featured in Newsweek Cover Story on Genetic Engineering Wave
Andras Forgacs (Class 14), co-founder & CEO of Brooklyn-based Modern Meadow, was featured in Newsweek’s cover story, “New Natural Selection: How Scientists Are Altering DNA to Genetically Engineer New Forms of Life.” As we’ve reported previously, Modern Meadow modifies the DNA of microbes so that they produce collagen—the tough, fibrous protein that “makes leather leather”—and then uses a tanning procedure to create “a biofabricated leather material.” Andras describes the work as “biology meets engineering. We diverge from what nature does, and we can design it and engineer it to be anything we want.” Compared to conventional leather production, the firm’s process is faster than raising a sheep or cow, emits much less toxic by-product, and harms no animals. It represents the kind of genetic engineering that few people would object to.
But the nascent genetic engineering industry’s capabilities have advanced beyond basic modification: “Now researchers can edit genomes and even write entirely original DNA.” The potential applications are profound, which explains why in 2016 “synthetic biology companies took in $1 billion from investors … double the total from 2014.” The pace of progress has advanced as well. It took the Human Genome Project 13 years and $2.7B to achieve “the first full sequence draft” of human genes; now, that same process costs $1,000 and can be done in about a day. The faster the “design–build–learn–test” cycle can be repeated, the more scientists can learn what the ~20,000 genes in a human genome do, and what really makes life possible. However, “as cheap and as fast as DNA synthesis has gotten, it needs to be much cheaper and much faster” for viable and complex commercial applications.
Current startup and laboratory efforts include using engineered yeast to produce spider silk fibers and natural rose fragrance, using DNA as a data storage medium, and creating plants that turn white in the presence of a bomb. But the question of human engineering hangs over the industry: “While few people might be against using the techniques of synthetic biology to eliminate genetic disorders or reduce disease, where do we draw the line between medicine and enhancement?”
A significant step toward that future began last year in the form of GP-write, a project whose goal is to “successfully synthesize an entire human genome” within ten years. But the moral questions remain; Hank Greely, a Stanford bioethicist, puts it: “The best time to have these conversations about a new technology is right before it becomes plausible. Now is the time to talk about it.”
Adrian Li (Class 21) Knows How Best to Invest in Indonesia
Adrian Li (Class 21), Managing Partner at Convergence Ventures, explains how to take advantage of the “massive opportunity” Indonesia represents in a new VCJ video, “Indonesia Is the Next Hyper-Growth Market.” More than 42% of the country’s population is under 25—that’s about 110 million people—and they spend a lot of money. Adrian argues that the best way for investors to benefit is to learn from what has worked in China, India, and even the US. By relying on proven models, investors reduce their risk—but when it comes to finding the best teams, he advises going local.
Pule Taukobong (Class 19) Believes the Tech Sector in Africa Is Strong
Pule Taukobong (Class 19), co-founder at CRE Venture Capital, was interviewed for “Samsung Blazes a Trail Adapting for African Market” on the Nigerian news site Naija247 News. Of the continent’s mobile telephony sector, Pule said, “We strongly believe that the technology sector in the region will continue to be a strong area of growth.” The success of M-Pesa supports Pule’s optimism, as more than 25M customers used the Kenyan mobile money service “to send funds, access loans, and purchase goods and services” in 2015—to the tune of $28B in transactions. Global brands that want to succeed in Africa must adapt to both the strengths and weaknesses of the African market, and some are doing so: Coca-Cola adapts to the narrow streets of Fez, Morocco, by using donkeys to transport its products; in a similar vein, Samsung produces appliances that can “withstand dips and surges in the power supply.”
Victoria Fram (Class 22) Tells Inc. Why Humility Leads to Success
Victoria Fram (Class 22), Managing Director as Village Capital, and co-founder and Managing Director at VilCap Investments, was profiled in the Inc. story “I Just Learned the Brilliant Way This Stanford MBA Picks CEOs.” VC wasn’t Victoria’s first choice of career. Her BA at Stanford was in international relations, and her post-graduation job was designing and implementing “projects focused on international development and conflict resolution in China, the Netherlands, and East Africa. Realizing that the people she was trying to help were becoming dependent on NGO assistance, she came to the belief that they ”would be better off if they could change their mindset to generating their own capital by building profitable businesses.”
So Victoria got herself experience as an Investment Associate, and then an MBA, which enabled her to join Village Capital in 2012; she was attracted by its commitment to investing in companies tackling real-world problems. Two years later she co-founded Village subsidiary VilCap Investments: VilCap “deploys critical risk capital to early-stage companies” that are peer-selected from Village’s accelerators.
Along the way she encountered “the idea that the most successful CEOs have intellectual humility,” meaning that they “invite challenges to their thinking so they can better position their companies to grow.” While “coachability,” as she calls it, is hardly the only criterion she uses when evaluating opportunities—her process also considers “the problem to be solved and the vision for solving it … the business model, how it will scale, and exit [scenarios]”—it has proven to have significant predictive value.
Graham Gardner (Class 12) Disputes the Hospitality Industry as a Model for Finding Healthcare
Graham Gardner (Class 12), co-founder and CEO of Kyruus, argues that “The Hospitality Industry as a Model for Healthcare Often Doesn’t Ring True” in MedCity News. Online travel booking websites such as Expedia and Orbitz have indeed proven popular. But while there is a superficial similarity between booking a travel reservation and finding a healthcare provider—enough that similar websites have sprung up to provide the latter—Graham points out that there are serious differences.
Patients usually only know their symptoms and have no idea whether they need a specialist, or if so, which one; third-party websites are unable to provide that crucial triage that guides people to the correct care. Health care is a complex matter: “Unlike taking a flight or staying at a hotel, healthcare is not a ‘one and done’ experience.” Travelocity doesn’t need to know anything about one’s travel history in order to book the next trip, but a doctor needs to know as much as possible about one’s health history in order to provide appropriate care. If (as is often the case) a third-party health website has insufficiently detailed information about a physician’s specialties, Graham points out, “a diabetic patient may end up scheduling with an endocrinologist who specializes in thyroid conditions instead of diabetes.” Quality health care also requires “effective coordination between multiple providers—particularly for patients with chronic diseases,” so use of third-party sites to find different providers “can unknowingly disrupt the team approach to care.”
Inaccurate data on third-party websites may also extend to a provider’s network participation. Outdated or incorrect insurance information can lead to patients stuck with entirely avoidable costs: “Nobody looks good if the patient gets to the wrong provider and is left with an unanticipated bill.”
The solution, Graham says, lies in the hands of health systems. As they improve their websites and IT infrastructure by adding (frequently) missing features such as reviews, robust searching, and online appointment scheduling, they will “keep patients coming back for their future care needs.”
On the move:
- Dylan Steeg (Class 13) is now Head of Commercialization at Palo Alto, CA-based Scaled Inference, an innovator in the artificial intelligence segment.
- Jan-Maarten Mulder (Class 21) has joined the board of directors at Root Capital, a nonprofit serving agricultural businesses in developing markets via lending capital, delivering financial training, and strengthening market connections. They are specifically focused on agricultural businesses that are too big to micro-finance, yet too small to secure credit from commercial banks.
Three Fellows’ firms closed funds in the last few weeks. Congratulations to the following:
- Jonathon Triest (Class 20), Founder and Managing Partner at Detroit-based Ludlow Ventures. The firm announced this week the closing of its second fund at $45M. The original target for the fund was $40M; Ludlow’s first fund closed at $15.5M in 2014. [TechCrunch article].
- Mark Suster (Mentor Class 21) and Stuart Lander (Class 21), whose Upfront Ventures closed its 6th fund at $400M, putting the firm at $2B AUM. Upfront Ventures has become an anchor in the VC landscape of Los Angeles, investing primarily in seed and Series A opportunities. The firm was able to close the fund 2.5 months after its launch. [TechCrunch article] [Both Sides of the Table blog post]
- Courtney Russell McCrea (Class 3), whose Weathergage Capital closed a fund in June. The firm raised $296M for its fourth fund-of-funds (its previous fund closed in 2014). Weathergage invests in established and emerging U.S.-based VC and growth-equity firms, including micro-VCs. [Press release] Watch Courtney here discussing “Emerging Managers: Minefields or Diamond Mines”?
More portfolio news:
- Congratulations to Josh Stein (Class 9), whose portfolio company Redfin has announced its IPO. Josh was DFJ’s lead investor, and has participated in Series C–F. The real estate-startup Redfin has an initial offering amount of $100M, but that figure is regarded as a placeholder until closer to IPO day.
- Shasta Ventures (Rob Coneybeer, Class 2) joined the recent $21M Series A round for Vector Space, a firm founded by SpaceX veterans to create low-cost ($1.5M) rockets to get small satellites into low-earth orbit. The firm’s goal is to do 100 launches per year, a volume equivalent to the current annual output of the entire aerospace industry. Says Rob, “The lower end of the market will be more important than most people realize. … Moore’s Law is allowing you to make more capable things smaller and smaller, and I think the low-end rockets will hit the sweet spot.” [Economic Times story]
Podcasts, videos, & speakers:
- Juliana Garaizar (Class 18) was the guest for an on-the-spot interview at the 2017 Angel Capital Association Summit in SF last month. Juliana discusses her work with Chile Global Angels, WE Angels, and the Houston Angel Network.
- Brian Trelstad (Class 12) was a panel speaker at LiquidNet for Good’s “Future of Impact” forum on June 15. The event set out to address the question, “What will the next ten years of impact [investing] look like?” Brian’s panel session was recorded; listen below. [Medium post]
- Phil Wickham (Charter Class), founder and General Partner at Sozo Ventures, was a speaker at the 2017 WIT Japan & North Asia bootcamp, both as a pitch judge and on the “Investors Talk” panel. Among Phil’s tips to founders is his advice to think big: “A trap that many young entrepreneurs fall into is that they get a little too tactical and technical. Problem-solving is easy but the harder part is … imagining the big narrative and structuring your pitch around not what’s happening technically today, but how big and magnificent this company is going to become.” [WIT highlights]
This week’s blog selections:
- In “How to Spot a $10B Company Before Anyone Else,” Jake Saper (Class 20) interviews Stu Peterson of ARTIS Ventures, one of the first investors in Stemcentrx, which was acquired by AbbVie in 2016 for $10.2B. Stu goes through the story of that 2011 investment; Jake says, “What I learned surprised me and caused me to rethink the potential for the relationship between VCs and the investors that back them.” Read the full interview and see for yourself.
- Jorge Torres (Class 16) has published the second issue of Venture Stack, presenting insights on starting and building high-performing venture funds as well as a chronicle of the latest fund activity, insights from LPs, and much more.
- Brad Feld (KF BOD, Mentor Class 20) wrote two blog posts this week. On his Feld Thoughts blog, he wrote of the Justin Caldbeck revelations, “I Don’t Accept This Apology,” motivated in part by Reid Hoffman’s post on the subject and Brenden Mulligan’s “Everything I Hate About Justin Caldbeck’s Statement.” Later in the week, Brad wrote on the Foundry Group blog, “Our Zero Tolerance Policy on Sexual Harassment.” Brad says in this post that as he and his partners discussed the issue, “each of us felt that we hadn’t done nearly enough. We realize that it’s not enough to not be a part of the problem—we need to take a more active role in being part of the solution.“
- Guy Turner (Class 17) writes “People, Part 1: Successful Startup Team Modes” on his vcwithme blog. Guy plots founders’ objective/externally knowable characteristics on a 3-dimensional set of axes: Professional experience, startup experience, and industry/product knowledge. Different quadrants of these axes can be examined to gauge likely startup success.
- Victor Gutwein (Class 22) published Part 3 of his 4-part series on micro-VC, “Part 3: Sacrifice Dilution for Diversity.” Victor gives some mathematical examples to show how “focusing on follow-on hurts an early-stage fund’s performance in both risk and reward” (closely mirroring the argument Clint Korver (Class 14) makes in his VCJ article, “Questioning the Conventional Wisdom of the Reserve Fund”). In a response on Medium, Andris K. Berzins (Class 22) asks a number of pointed questions in regards to the real-world application of Victor’s theory—and Victor answers them in yet a third post.
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.
- (NEW) 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.
- (NEW) 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.
- (NEW) 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.
- Zaid Ashai (Class 13) announced on LinkedIn that his firm, commercial solar developer Nexamp, is looking to hire an assistant general counsel. See the Nexamp website for details.
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