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Investing In Deep Tech Seed Stage

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Deep Tech gets software into the real world. This presentation covers part of how we look at investments.

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Investing In Deep Tech Seed Stage

  1. 1. Investingin DeepTech 2019
  2. 2. GLOBAL DEEP TECH SEED FUND $550M under management 800+ investments (+150/year) #3 most active globally #1 in Health Tech / IoT / Life sciences HANDS-ON CAPITAL Focused accelerators Pre-seed: $100k-$250k Follow-on: up to $2M About SOSV SOSV PROGRAMS Hardware HAX (SF, Shenzhen) Biotech IndieBio (SF) RebelBio (London) Social & Mobile Chinaccelerator (Shanghai) MOX (Taipei) Food Food-X (NYC) Blockchain dLab (NYC)
  3. 3. 4 JUMP BIKES Uber, $200M + stock HARMONIX $175M + earn-out $ Makeblock (val. $367M) Memphis Meats (Gates…) BitMEX Formlabs GetAround Some SOSV Startups
  4. 4. Funding Stages Pre-pre-seed (idea validation / team formation) Pre-seed (early prototypes) Seed (advanced prototypes / product) 01/ 02/ 03/
  5. 5. Stage 1 — Shenzhen 4-8 months 30 staff Technology Engineering Design Stage 2 —San Francisco 2-3 months Mentorship & sales Traction Fundraising 40STARTUPS PER YEAR
  6. 6. HAX & DT Majority since 2014 Industry, Enterprise, Health Even some consumer! 01/ 02/ 03/ 270STARTUPS
  7. 7. 01/ Building DeepTech HardwareToday Theyearsbeforetheunicorns
  8. 8. Definition Not your average website or mobile app Science & Engineering Often tangible component (electronics, molecules…) 01/ 02/ 03/
  9. 9. Agenda Building DT hardware today Optimized timelines & Financing 01/ 02/
  10. 10. Building DT Today Good news: more and more startups and investors Bad news: much fear and misconceptions remain, funding gaps 01/ 02/
  11. 11. Key Failures 02/ 03/ Jibo had raised $72.7M for companion robots. Its high price and the boom of voice assistants sealed its fate. 01/ 03/ Rethink Robotics raised $150M for cobots. Popularity in research but not enough in industry. Airware had raised $118M for B2B drones. Assets were sold to French competitor Delair. Meta had raised $73M for AR. Market did not pick up.04/ Lytro had raised $216M for light-field cameras. It did not find a viable market. 05/
  12. 12. Unicorns & IPOs Company Type Sector Valuation Funding Founded Country SpaceX B2B Space $30.5B (IPO) $2.4B 2002 US DJI Consumer Drones $15B (*) $105M 2006 China Bitmain B2B Crypto mine $15B $765M 2013 China GM Cruise* B2B AV tech $15B $3.4B 2013 US Magic Leap B2B AR $6.3B $2.3B 2011 US Auris Health B2B Surgery robot $3.4B (acq.) $733 2013 US Zoox B2B AV tech $3.2B $790M 2014 US View B2B Smart glass n.a. $1.8B 2006 US Nuro HAAS Delivery robot $2.7B $1B 2016 US Zume HAAS Pizza robot $2B $423M 2015 US Carbon B2B 3d printing $1.7B $422M 2013 US Ninebot Consumer e-scooters $1.52B $240M 2012 China Desktop Metal B2B 3d printing $1.5B $437M 2015 US Proteus B2B Medtech $1.5B $487M 2001 US Butterfly Network B2B Medical imaging $1.25B $350M 2011 US FormLabs B2B 3d printing $1B $104M 2011 US Cruise B2B AV Tech $1B (acq.) $19M 2013 US Rocket Lab B2B Space $1B $215M 2006 US Geek+ B2B Warehouse robot $1B $239M 2015 China TuSimple B2B AV trucks $1B $178M 2015 China/US OrCam Consumer Medtech $1B $86M 2010 Israel Cyberdyne B2B Exoskeletons $870M (IPO) n.a. 2004 Japan SigFox HAAS Telecom $673M* $311M 2009 France Despite deep tech’s image, some have been fast and capital-efficient. B2B dominates. In particular AV tech and service robots. The darlings of yore — wearables, drones, 3d printing — scored some unicorns (most are not DT). 01/ 02/ 03/
  13. 13. Mobility &AV Company Type Sector Valuation Funding Founded Country SpaceX B2B Space $30.5B (IPO) $2.4B 2002 US GM Cruise* B2B AV tech $15B $3.4B 2013 US Zoox B2B AV tech $3.2B $790M 2014 US Mobike HAAS Mobility $2.7B (acq.) $928M 2015 China Lime HAAS e-scooters $2.4B $765M 2017 US Bird HAAS e-scooters $2.3B $415M 2017 US Ofo HAAS bike rental $2B** $2.2B 2014 China Ninebot Consumer e-scooters $1.52B $240M 2012 China Cruise B2B (acronym?) $1B (acq.) $19M 2013 US Rocket Lab B2B Space $1B $215M 2006 US TuSimple B2B AV trucks $1B $178M 2015 China/US Gogoro Consumer e-scooters $800M* $480M 2011 Taiwan Micro-mobility is booming (not DT) AV Tech coming to age Space age? 01/ 02/ 03/
  14. 14. Note: China Unicorns Company Type Sector Valuation Funding Founded Country Xiaomi Consumer Smart devices $36B (IPO) $3.4B 2010 China DJI Consumer Drones $15B (*) $105M 2006 China Bitmain B2B Crypto mine $15B $765M 2013 China Ecovacs Consumer Home robots $3.5B (IPO) n.a. 1998 China Mobike HAAS Mobility $2.7B (acq.) $928M 2015 China Ofo HAAS bike rental $2B** $2.2B 2014 China Tink Labs HAAS Hospitality phones $1.5B (est.) $460M 2012 Hong Kong Ninebot Consumer e-scooters $1.52B $240M 2012 China Geek+ B2B Warehouse bot $1B $239M 2015 China TuSimple B2B AV trucks $1B $178M 2015 China/US Huami Cossumer Fitness $927M (IPO) $73M 2014 China Half are consumer Mobility is strong Robotics on the rise? 01/ 02/ 03/
  15. 15. Company Type Sector Funding* Founded Country GM Cruise B2B AV tech $2.25B 2013 US View B2B Smart glass $1.8B 2006 US Nuro HAAS Delivery AV $1B 2016 US Zume HAAS Pizza robot $423M 2015 US Plenty B2B AgTech $226M 2014 US Light Consumer Cameras $186M 2013 US Nauto B2B Driving Coach $174M 2015 US Brain Corp B2B AV Tech $125M 2009 US TOTAL $6.1B* 02/ 01/ Softbank's $100B Vision Fund has become a kind of ‘kingmaker’ for startups. SBVF made several deep tech investments. Mostly B2B and HAAS (except Light) * includes co-investors Focus: Softbank
  16. 16. Company Buyer Sector Category Price Funding TVPI Year Auris Health J&J Surgery robot B2B $3.4B $733M 4.6 2019 MiR Teradyne Ind. robots B2B $272M n.a. n.a. 2018 Blue River John Deere AgTech B2B $305M $30M 10.2 2017 Boston Dynamics Softbank Robotics B2B $100M* $37M 2.7 2017 Otto Uber AV Trucks B2B $220M** n.a. n.a. 2017 Cruise GM AV Tech B2B $1B n.a. n.a. 2016 Recon Instruments Intel AR HUD B2B $175M $17M 10.3 2015 Universal Robots Teradyne Ind. robots B2B $285M n.a. n.a. 2015 Oculus Facebook VR Consumer $2B $96M 20.8 2014 Key M&As Software companies get into hardware Non-tech companies get serious about M&As B2B & B2B2C dominate 01/ 02/ 03/
  17. 17. Playbook: 4T’s Team Tech 01/ 02/ Trend03/ Traction04/ Prediction? Pain.
  18. 18. #1 Risk: Team Technically capable? Can they manage themselves? 01/ 02/ Can they manage a team?03/
  19. 19. Bad Cases Give up Severe Asperger Can’t execute ‘Idealist / Artist’ Silicon Valley Burn Rate Caught Up In Startup TheatreCan’t get along Maker Addiction
  20. 20. Founders Growth EntrepreneurInventor ManagerEngineer Software, Maths, Mechanical, Electrical, Design, Prototyping, Sourcing, Manufacturing, Logistics, Marketing, PR, Pricing, Recruiting, Financing, etc.
  21. 21. Know thyself HBDI Strong: Vision & Analysis 01/ 02/ Weak: Org & Com03/ STRONG WEAK
  22. 22. Prototype Tech Lab vs. Product 01/ 02/ Toward product 203/
  23. 23. China! Defensibility Patents / Software 01/ 02/ B2B03/
  24. 24. Walls & Moats Patents Regulations Brand Scale Stickiness Network effect Technology Team MOATS WALLS
  25. 25. Do you need a PhD to invest? Sense Of Science Validating the science 01/ 02/ Show your prototype!03/
  26. 26. Case 1:Avidbots
  27. 27. Case 2: Nura
  28. 28. Case 2: Nura
  29. 29. Per unit Business Model As-a-Service / Subscription 01/ 02/ Data = Holy Grail? (but when?)03/
  30. 30. Bias #1: SciFi
  31. 31. Boring & ViableBias #1: SciFi
  32. 32. Case: Keyi
  33. 33. Case: Keyi Modular robotics Toy? STEM? Tool? 01/ 02/ $500 on Kickstarter?03/
  34. 34. Case Study: Keyi >30 staff B2G 01/ 02/ Learning speed vs. Lego (Toy-first vs. STEM-first) 03/
  35. 35. Prototype vs Product Nura May 2016 ($1.8M on Kickstarter) vs. Jan 2018 Bias #3:
  36. 36. Raised $22M Stevie Wonder got 3 01/ 02/ OTA Updates03/ Product 204/ HaaS : $18/month05/ Case: Nura
  37. 37. Pre-seed = pre-trend? Trend Hot = too late? 01/ 02/ See the future!03/ A.I. AR ML Blockchain VR Robots IOT Edge Cyber Security 5G EV QC Voice Always -in
  38. 38. Signals Applicants Corporates 01/ 02/
  39. 39. Case: Sana Health
  40. 40. Case: Sana Health Early 2016 Sleep tech? 01/ 02/ Kickstarter? Medical? Funding?03/
  41. 41. Sana Today FDA route + New Positioning: “Solving Pain Without Pills” Neurotech / Neuromodulation is a thing 01/ 02/ Opioid epidemic03/ Under Armour Innovation award
 Bayer Self-Care winner 
 Mount Sinai Rehab Competition winner Medtech Innovator First prize recipient
  42. 42. Recent News “The latest Apple Watch seemed like the latest in wearable tech when the conference started —not so much a few hours later.”
  43. 43. Invest Today? Call William Gibson or Neal Stephenson Other ideas? 01/ 02/
  44. 44. Faster Than SciFi? 2014 2018
  45. 45. No numbers! Traction Customer discovery (i-Corps, EF, etc.) 01/ 02/ New market?03/
  46. 46. 02/ Optimized Timelines &Funding
  47. 47. 30y Lab to Market
  48. 48. Not all in one place Finding Resources R&D + initial funding 01/ 02/ Prototyping + production03/ Customers & Growth funding03/ Invention Team Prototyping Production Customers Funding
  49. 49. Idea + Team + +
  50. 50. i-Corps (US ~100 unis + some in Canada) Pre-Pre-Seed Entrepreneur First (UK, FRA, GER, HK, SIN, Bangalore) 01/ 02/ DeepTech Founders (France / EU)03/
  51. 51. i-Corps
  52. 52. Case:Autonomow Unfortunately, not a HAX company Mowing = Mild interest Weeding = Need NOW! Autonomy not needed Autonomow is no mo’ … 7 weeks 20 interviews 6 site visits
  53. 53. Case:Autonomow Carrotbot Prototype in 1 week Computer vision Laser Hot Oil Spray (organic)
  54. 54. Case: Blue River Acq. by John Deere for $305M Carrotbot
  55. 55. Labs Speeding Up Prototyping Suppliers 01/ 02/ Experts & Peers03/
  56. 56. Labs
 Shenzhen (50,000sqft) + SF Speeding Up Prototyping Suppliers
 #1 electronics supply chain 01/ 02/ Experts & Peers 30 in-house (ID, Sourcing, DFM, etc.) >50 founders (20-30 startups) >700 alum founders (>200 startups) 03/
  57. 57. 1 year => 4 months Compressing Time Lower costs (& burn rate) 01/ 02/ Lower risk03/ Boots on the ground / no need to outsource
  58. 58. Case 1:Avidbots 2014: China prototyping & retrofit + Waterloo
  59. 59. Case 1:Avidbots Today: $23.6 million Series B led by True Ventures
  60. 60. Case 3: Viabot 2018: Built in China
  61. 61. Case 4: Youibot 2017: China
  62. 62. Case 4: Youibot 2018: Multiple robots
  63. 63. No VC? Other Models VC + Customers 01/ 02/ VC Only (+ Softbank?)03/ Outsource00/
  64. 64. SBIR (2014 data) STTR 7% VC 41% SBIR 52% 5,509 awards $2.23B total 660 awards $263M total
  65. 65. Magic Leap Founded 2011 Raised $2.3B LaunchAug 2018
  66. 66. 11/2018: $220m secured to market to surgeons in the US 03/2018: FDA clearance for diagnosing and treating lungs Teleoperated endolumenal bot than can navigate inside the body, image and treat conditions without making incisions $500k/robot + platform fees + SLA Founder: Dr. Fred Moll / Intuitive Medical (Di Vinci) 08/2017: Series D $280m 09/2015: Series B $149m (still an eye surgery tech) 03/2014: Series A $34m 04/2016: Acquires Hansen Medical, maker of catheter-based robotic technologies, for $80m 09/2016: Series C $50m 02/2019: J&J Acquires Auris for $3.4b Auris
  67. 67. Go-to-Market & EarlyGrowth
  68. 68. What I’m covering Launch timelines for deep tech Metrics for pre-seed & seed What to look & ask for 01/ 02/ 03/
  69. 69. HAX Trends Deep Tech - we’ve seen it all!
  70. 70. Deep Tech Is Broad Timelines vary!
  71. 71. 2 4 861 3 7 95 Identify Customers EVT DVT 1 Manufacturing samples DVT 2 Marketing samples PVT Pilot Unit 
 Production SOSV (pre-seed) SEED Product Dev $$$ Month 10 Pilot 12+ 18+ Roll-out 24+ SERIES A Program Development Sales Fundraising Shenzhen San Francisco Develop CRM & Sales Materials Pitch Customers Mass 
 Production Establish product 
 benefits Fundraising Timeline: Enterprise / Robotics
  72. 72. 2 4 861 3 7 95 Identify Customers EVT DVT 1 Manufacturing samples DVT 2 Marketing samples PVT Pilot Unit 
 Production SOSV (pre-seed) SEED Product Dev $$$ Month 10 Pilot 12+ 18+ Roll-out 24+ SERIES A Program Development Sales Fundraising Shenzhen San Francisco Develop CRM & Sales Materials Pitch Customers Mass 
 Production Establish product 
 benefits Fundraising Timeline: Enterprise / Robotics
  73. 73. 2 4 861 3 7 95 Class determination EVT DVT 1 Manufacturing samples DVT 2 Marketing samples PVT Pilot Unit 
 Production SOSV (pre-seed) SEED Product Dev $$$ Month HAX FOR HEALTH 10 12+ 18+ Launch 24+ SERIES A Program Development Sales Fundraising Shenzhen San Francisco Pitch Customers Mass 
 Production Fundraising Further trials if seeking medical certification Certifications Clinical, usability, label studies if novel product Assess FDA classification type Class I (predicate exists) Class II or III: File 510k or PMA FDA 513G meeting to lay groundwork for future certs Further trials if seeking medical certification
  74. 74. Health Tech Examples
  75. 75. 2 4 861 3 7 95 Class determination EVT DVT 1 Manufacturing samples DVT 2 Marketing samples PVT Pilot Unit 
 Production SOSV (pre-seed) SEED Product Dev $$$ Month HAX FOR HEALTH 10 12+ 18+ Launch 24+ SERIES A Program Development Sales Fundraising Shenzhen San Francisco Pitch Customers Mass 
 Production Fundraising Further trials if seeking medical certification Certifications Clinical, usability, label studies if novel product Assess FDA classification type Class I (predicate exists) Class II or III: File 510k or PMA FDA 513G meeting to lay groundwork for future certs Further trials if seeking medical certification
  76. 76. Whattolookforin DeepTechTeams & MetricsOverTime
  77. 77. Funding Gap Seed is the new A New rounds: Pre-seed, Pre-pre-seed Obvious gap after pre-seed in deep tech 01/ 02/ 03/
  78. 78. Our Checklist For Seed Target: Lining up your ducks like second-time founders Sales come first DD files must be ready 01/ 02/ 03/ Times are different… new playbook! Expectations should be high!
  79. 79. We see it all: Timeless Classic Questions For Deep Tech
  80. 80. $100B $5M Q1: What’s your TAM? Dream big?
  81. 81. Case: ShapeMeasure
  82. 82. Case:Avidbots Series B announced $3M sales LY $5B market Sky’s the limit
  83. 83. Q2: Who pays for this? Medtech: patient? insurer? government? other? Medtech: remote codes (regulation updated Nov 2018), Re-hospitalization charges (COPD, Asthma…) Other? 01/ 02/ 03/
  84. 84. Q3: What’s Different? From That Other Company That Just Raised
  85. 85. What NOT toAsk CAC / LTV (no cohort yet!) Pageviews Patents (vs. business model & distribution) 02/ 03/ 05/ MRR01/ Got FDA? (would not talk about seed…)04/ :)
  86. 86. Due Diligence Prototype check: delivers core signal processing? Assess manufacturability Price vs. BOM + Operation costs 02/ 03/ 05/ Check substance of key patent01/ Validated price point with customers?04/
  87. 87. Due Diligence Clarify the insight or action for end users Evaluate SW complexity & head start ‘What would google do?’ (or Medtronic) 07/ 08/ 10/ Determine next milestone for funding06/ Is the team using the right tech?09/ Hardware skills needed (esp. robotics)11/
  88. 88. Why Investors Pass 'Only invest in US & Canada’ ‘Invested in competitor’ ‘Don’t know enough about this market’ 02/ 03/ 05/ ‘Too early’01/ TAM is too small04/
  89. 89. THANKYOU!

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