Crypto Asset Analysis + Seed Investments

Presentation from our Annual Team Offsite at Stinson Beach in July 2017 included below.

This shares some of our internal discussions on how we’re starting to think about evaluating new types of crypto projects + assets.

As an active investor in startups built around open source software, we’re increasingly excited about new + interesting business models to support community activity and have been participating in the cryptocurrency space since WordPress.com started accepting Bitcoin in November 2012.

As a firm focused on pre-seed and seed investing, we believe there will continue to be opportunities for venture capital firms to invest the initial startup capital into new crypto projects (as part of an initial equity financing or as part of an agreement in exchange for future protocol tokens.)

We’re interested in potential opportunities in:

  • Decentralized applications (ie projects like FunFair for Decentralized Gaming)
  • Enabling infrastructure (ie projects like 0x (Decentralized for Trading Tokens) or zCash (Blockchain + technology focused on privacy + selective transparency)

In particular, in potential crypto investments we’re looking for:

  1. Applications that truly need to be distributed (“Need to be built on a blockchain”)
  2. Solid technical team (with expertise across Internet infrastructure and crypto)
  3. Utilization Token tied to business model
  4. Potential for Strong Network Effects

If you think you’d be a fit with our portfolio based on the above information, please reach out – it’d be great to learn more.

True Science Investments

Presentation from our Annual Team Offsite at Stinson Beach in July 2017 included below.

This shares some of the lessons from our investments involving life sciences (starting with Ginger.io in 2011 + Moleculo in 2012) as well as some of the evaluation criteria we think about for potential future opportunities.

As a firm, our focus is leading the first institutional round (usually pre-seed or seed) with investments of $500k to $3m. We often invest with angels and love research work coming out of universities or other labs.

For companies based in core science or research – we like to see:

  1. Great science with large potential impact
    1. Therapeutic applications in healthcare
    2. Other non-healthcare applications with high margin potential
  2. Founder is a leader in the space
    1. Ability to develop cornerstone IP + reputation in the space
    2. Multi discipline teams; cross discipline individual expertise
  3. Path to efficacy (or similar metric) on less than $10m of paid in capital
  4. Market size + Product + New Type of Regulatory Risk
  5. Platform opportunity with large market potential
    1. Ability to build defensible data moat is key
    2. More data makes technology better; increases enterprise value

If you think you’d be a fit with our portfolio based on the above information, please reach out – it’d be great to learn more.

Markets and People (or Thoughts on Venture Investing)

I’ve been thinking about this passage from an article about Sequoia’s Michael Moritz recently:

“Moritz waxed philosophical by comparing venture capital investing to bird spotting. “I rarely think about big themes. The business is like bird spotting. I don’t try to pick out the flock. Each one is different and I try to find an interestingly complected bird in a flock rather than try to make an observation about an entire flock.” For that reason, while other firms may avoid companies because they perceive a certain investment sector as being overplayed or already mature, Moritz said Sequoia is “careful not to redline neighborhoods”.

Continuing with the ornithological analogy, Moritz pointed to Cisco and said, “There’s a lot to be said for investing in the ugly duckling.” When Don Valentine led Sequoia Capital’s investment in Cisco, many others had passed on the husband and wife founding team of Len Bosack and Sandy Lerner.

At its core, venture investing is a job that can be broken down into people (execution) and markets.

Continue reading Markets and People (or Thoughts on Venture Investing)

The Challenge of Real World Interactions (Or Why Consumer Hardware Startups are Hard)

After CES, I wrote a post discussing what we look for when evaluating investments in consumer hardware products.

Since then, I’ve been involved in a series of conversations with investors, Founders, and partners of consumer hardware companies – both small, medium, and at scale.

As an increasing number of factors have brought down costs of starting these companies, there has been a growing meme around the how “easy” building a consumer hardware businesses has become – which any Founder of a scaling consumer hardware company would tell you in simply untrue. (You can see our opinion on it here and here.)

Continue reading The Challenge of Real World Interactions (Or Why Consumer Hardware Startups are Hard)

Working with Atoms: 5 Lessons for Building a Hardware Startup

In 2011, I attended my first Consumer Electronics Show in Las Vegas. While there were a handful of startups scattered throughout the main expo floor, including True-backed Valencell and Makerbot, the majority of companies in attendance were the traditional consumer electronics manufacturers that have ruled the shelves of Best Buy for the past few decades.

After missing CES in 2013 and 2014, I arrived this year expecting to see a similar mix of companies. However, I was thoroughly blown away to see the entire Sands Expo Hall filled with small, emerging consumer electronics businesses—hundreds (if not thousands) of new companies across a variety of brand new categories, including smart homes, digital health and “maker” products. And this didn’t even include the drones and other new technology areas in the main expo hall.

CES2

For a market that was dead before 2008, connected devices are back in a big way and are seeing more innovation (and funding) than ever.

At True, we’ve been fortunate to invest in more than 15 new startups selling physical products, including 3D Robotics, Makerbot and Ring. We even hosted an event last year called “True Atoms,” bringing together the best Founders and executives from across the lean hardware ecosystem to share best practices and learn from one another.

And while many trends, including decreased component costs, increased access to smaller-run manufacturing and the growth of cellphones, have made it easier than ever to launch a connected-device company, the challenges of scaling remain incredibly complex.

We previously wrote a blog post talking about hardware companies as “the double black diamond” of startups. One year later, I wanted to share some more thoughts and ideas about what we look for in new opportunities in connected hardware.

Continue reading Working with Atoms: 5 Lessons for Building a Hardware Startup

Sharing Notes on Bitcoin and the Crypto Currency Market

Though we haven’t invested in the space yet, we’ve been actively tracking Bitcoin (and the broader crypto currency market) since late 2012 when Automattic (on WordPress.com) became one of the first large merchants to accept bitcoin and kicked off an internal discussion on the technology.

Below I’ve included our first market landscape document (which was written in the beginning of 2013) and an update written earlier this year (2014)

If you’re interested in the space, would love any feedback on our thesis below or to chat about what you’re working on.

Continue reading Sharing Notes on Bitcoin and the Crypto Currency Market

Fundraising Tips: Power of Story and Context

On Tuesday, the True team spent the afternoon at the World’s Largest Office Hours, part of the National Venture Capital Association’s VentureScape annual conference. The goal of these office hours was to bring hundreds of venture capitalists and entrepreneurs together in one room for an afternoon of networking, mentoring and idea exchange. As a member of the NVCA and supporters of innovation and entrepreneurship in general, we were extremely happy to participate.

Our team had a series of six meetings with Founders of companies who were seeking our feedback and advice on their business and pitch. As we worked through each session, we began to see a pattern emerging. Specifically, within the first minute of sitting down, the Founder would launch directly into describing the product or show a demo of the product.

In each case, we would slow the Founder down and ask a series of questions designed to provide background and context to the broader story.

Continue reading Fundraising Tips: Power of Story and Context

Themes to Watch in 2014

Written for Eric Jackson’s Predictions Post for Forbes, some themes to watch in 2014:

The Rise of Citizen Science

Humans have long participated in scientific research, but Moore’s Law and Open Source Communities have given individuals inexpensive access to powerful research tools for the first time.  Similar to other industries, when the cost of experimentation approaches zero, you spur individual creativity and open up whole new areas of opportunity.  Early success stories include Foldit, Galaxy Zoo, Phylo, and Zooniverse but companies like OpenROV and 3D Robotics or projects like HiveBio in Seattle show what could be possible in the short-term.

Commercial Open Source Grows Up

Open Source Software has come a far way from its roots with Richard Stallman and the Free Software Movement in 1983.  Individuals have long understood the technical merits and starting with the Open Sourcing of Netscape’s Browser in 1998, corporations have been opening up to the strategic and business value of Open Source too.  Over the past decade, we’ve watched more and more individuals build sustainable businesses around open source projects – early examples include Automattic, SugarCRM, Cloudera, Mulesoft, and Puppet Labs – and next year we’ll start to see more of them maturing into large independent enterprises.

Human DNA as Code

This is the opportunity created by a software-first approach to solving problems in human biology and patient care driven by the explosion of available medical data (through EMRs) and molecular data (through the rapidly declining costs of full genome sequencing and other tests.)  The market is lipe for rethinking as data finally comes online in a readable and maluable format.  Companies to watch include Moleculo, Counsyl, Ginger.io, and Practice Fusion.

5 Lessons Learned for Building Companies with Data (Or How to Build the Next Bloomberg)

The A.C. Nielsen Company was launched in 1923 with the idea of selling engineering performance surveys – giving birth to one of the world’s first data businesses.  Today, Nielsen is still one of the largest data monopolies in the world and continues to be the primary source of audience measurement and business intelligence research across the globe. 

What’s most interesting is that the way Nielsen (and other similar traditional data companies) tracks and aggregates data hasn’t changed significantly over the past few decades.  At its core, this system relies on a panel-based method – specifically recruiting a large set of people to participate, monitoring their activities, and then weighting the sample to be representative of the broader population.

The result is data that is skewed both by human error (read as lying) and sampling error (who really has time to take surveys or wants to get tracked by Nielsen), but it was the best we could do in a world with limited technology.

With the growth of cloud computing and the resulting decline in storage and compute costs, in combination with the increased availability of passively tracked data – either by inexpensive sensor or API – we’re entering an environment ripe for disruption of these old line data monopolies, which not only includes Nielsen but also other companies such as Bloomberg, Dun & Bradstreet, and NPD (originally “National Purchase Diary”).

While there were a few early companies who decreased the cost of data collection via crowd-sourcing (Euromonitor, Mintel, Data.com, et cetera), we’re at the front of the next wave of opportunity in the space.  Learning from the big winners of the past as well as some of our early investments in the space, these are the five lessons for the next generation data platform companies:

Continue reading 5 Lessons Learned for Building Companies with Data (Or How to Build the Next Bloomberg)

How to Raise your First Round of Capital (Or an Insider’s Look at How Investors Think)

A few weeks ago, Christiaan Vorkink and I decided to teach a Skillshare class on best practices for raising institutional venture capital.

Below is the resulting presentation – “An Insider’s Guide to VC”

The core of the presentation is based around “Three Lessons” on how to drive an investor to “Yes.”

For context, those three lessons are:

1) Build Trust
2) Make it Sharable
3) Create a Tribe

Would love any feedback. Enjoy!