LtM ep7 - The State of Investment in Deep Tech with Leslie Jump and Mack Kolarich from Different
SOSV Climate Tech PodcastShow Notes
Leslie Jump is the CEO and Mack Kolarich the CPO of Different, an organization that helps institutions and family offices discover, analyze, diligence, and select venture capital funds.
They recently completed a remarkable DeepTech Investing Report based on more than 150 interviews with VCs, LPs and other stakeholders.
The report was funded by Schmidt Futures, a philanthropic vehicle created by former Google & Alphabet Chairman Eric Schmidt and his wife Wendy to “advance society through technology, inspire breakthroughs in scientific knowledge, and promote shared prosperity”.
Prior to Different, Leslie and Mack had diverse experiences including founding and investing in tech companies, and running investment workshops around the world.
This podcast is hosted by Benjamin Joffe, Partner at SOSV, a global early stage fund focused on deep tech. SOSV runs multiple accelerator programs including HAX (intelligent hardware) and IndieBio (life sciences).
Episode Overview
In a recent podcast with Joe Rogan, Elon Musk said:
"There’s an over allocation of talent in finance and law. We should have fewer people doing law and fewer people doing finance and more people making stuff. […] If you don’t make stuff, there’s no stuff." This seems especially true in deep tech.
In this episode, we discuss:
How scientific entrepreneurs are under-capitalized relative to the market and relative to their own potential.
What are the causes of this capital gap.
How media and others have trained VCs and LPs to look for, and expect unicorns, outliers and outsized multiples.
The optics problem of science vs. software startups with LPs and banks.
How most deep tech funds partners don’t have PhDs, but rely on networks on experts.
How — since when asked about a startup potential, 3 PhDs will give you 3 different answers — the job of investors is to figure out which one to believe.
How talent is spread out geographically more than we might expect, and how deep tech startups do not only come from universities.
The challenge of training or complementing scientists with business skills, particularly in ecosystems without a critical mass of business talent.
How LPs suffer from network bias when picking VC funds, and why only a minority is able to vest new deep tech funds, thinking ‘I don’t know how to know if they know what they’re doing’.
Why, within the ‘alternative assets’ class, deep tech funds combine the highest risk, highest fees, longest terms, but also how delivering superior returns require new approaches, and how Covid-19 demonstrates that we need deep tech more than ever.
How deep tech startups differ from FMCG or SaaS companies, and why investors might have to custom-design KPIs for each company.
How looking outside of tech helps think differently about tech.
References Mentioned
Different and their DeepTech Investing Report
Abstract: The Art of Design (Netflix)
The World’s Most Extraordinary Homes (Netflix)
The Colors of History: How Colors Shaped the World (book)
Pepper: A History of the World’s Most Influential Spice (book)
The Mote in God’s Eye (sci-fi book)
Ubongo: a leading edutainment company based in Tanzania.
Subscribe
Podcast: Apple Podcast, Google Podcast, Spotify, etc.
Twitter: @LabToMarket
More from SOSV Climate Tech Podcast
In this discussion from SOSV's 2024 EarthDay+ sessions (Apr 22-26, 2024), Bret Kugelmass, the CEO and co-founder of the nuclear fission startup Last Energy, which focuses on developing small nuclear reactors, talks about: The potential of nuclear power to provide abundant, inexpensive energy with minimal environmental impact.
In this panel discussion from SOSV's 2024 EarthDay+ sessions (Apr 22-26, 2024) moderated by Dr. Pae Wu of IndieBio and SOSV, corporate venture capitalists Brandon Middaugh from Microsoft's Climate Innovation Fund, Taehong Huh from GS Futures, and Aditya Sharma from Honda Innovations discussed their strategies for investing in climate tech startups. They emphasize the importance of early engagement with startups, strategic alignment with corporate goals, and the necessity for startups to understand their market and competition.
In this panel discussion from SOSV's 2024 EarthDay+ sessions (Apr 22-26, 2024) focused on measuring and attributing climate impact and moderated by Hampus Jakobsson of Pale Blue Dot, investors from various climate tech-focused funds discussed the importance of impact measurement in startups and investment decisions. The challenges and methodologies of impact assessment.
In this panel discussion from SOSV's 2024 EarthDay+ sessions (Apr 22-26, 2024) moderated by Tim De Chant, Senior Climate Reporter at TechCrunch, panelists Christina Karapataki from Breakthrough Energy Ventures, Shuo Yang from Lowercarbon Capital, and Duncan Turner from HAX and SOSV discussed the current state and future of climate tech venture capital. The challenges and opportunities in the sector, noting a decrease in deal counts but robust fundraising, with venture capital and private equity firms holding significant "dry powder."
In this discussion from SOSV's 2024 EarthDay+ sessions (Apr 22-26, 2024), Andrew Ponec, Co-founder and CEO of Antora Energy, discusses with Casey Crownhart, Climate Reporter at MIT Technology Review, the challenges and innovations in industrial heating. Antora Energy is electrifying heavy industry with thermal energy storage and raised over 200 million dollars in funding.