Funding Deep Tech Startups
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What's a deep tech startup? What are the risks and opportunities? How to evaluate early stage startups without a PhD?
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Funding Deep Tech Startups
- 2. Agenda 1. SOSV Intro 2. Defining Deep Tech 3. Deep Tech & Food 4. Why Invest 5. Investment Landscape 6. How to Invest 7. Deep Tech Biases
- 3. About SOSV Deep Tech & Hands-on $250m Global Fund ($650m AUM) Early Stage Deep Tech Hands-on programs with Labs & Experts 150 investments per year Hardware, Biotech, Food…
- 5. FormLabs (3d printing) GetAround (car sharing) BitMex (crypto exchange) Jump Bikes / Uber (e-bikes) Geltor Synthetic human collagen Raised $23m SOSV Top Startups DeepTech Trends2019 Perfect Day CellAg Dairy Raised $61.5m Memphis Meats CallAg Beef & Chicken Raised $20.1m Avidbots Floor cleaning robot Raised $26.6m Simbe Robotics Retail inventory robot Raised $26m Nura Personalized audio Raised $21.9m www.sosv.com/portfolio Makeblock STEM robots Raised $80m Portfolio Sample
- 6. Agenda 1. SOSV Intro 2. Defining Deep Tech 3. Deep Tech & Food 4. Why Invest 5. Investment Landscape 6. How to Invest 7. Deep Tech Biases
- 7. Deep Tech by any Other Name… Deep Tech Science Tech Hard Tech Tough Tech Physical Tech DeepTech Trends2019 Emerging Tech Future Tech Frontier Tech Extreme Tech Dirty Tech
- 8. Defining Deep Tech Science & Engineering “Anything that’s not an app”
- 9. Agenda 1. SOSV Intro 2. Defining Deep Tech 3. Deep Tech & Food 4. Why Invest 5. Investment Landscape 6. How to Invest 7. Deep Tech Biases
- 10. Deep Tech & Food This logo means we invested in the company
- 12. Distribution
- 13. We all know On-Demand
- 15. What about Unmanned Retail?
- 16. BingoBox— $94.7m
- 17. Preparation
- 18. Robot Cooks
- 19. Zume Pizza — $423m
- 22. Spyce — $25.9m
- 23. Micro-retail + Health = Fresh Food Machines
- 24. Cafe X — $14.5m
- 25. Frobot Bowl
- 26. Production
- 28. Plenty (vertical urban farm) — $266m
- 30. Food System Avoiding Spoilage & Food Waste Recycling & Upcycling
- 31. Wasteless (dynamic pricing)— $4.2m
- 32. After 10 days Uncoated Coated Cambridge Crops (thin edible & tasteless coating)— $4m
- 33. Livin Farms (edible insect farm)
- 34. Prejudice against new food is not new… ‘Cockroach of the ocean’‘Devil’s fruit’
- 35. Just don’t look at them up close ;)
- 36. Type
- 37. Clean Protein A major trend for health & environment
- 38. Animal Protein Issues Suffering Land use Water use Greenhouse gases Antibiotics Antibiotic resistance As there are many issues with animal meat
- 39. So far most people heard of ‘plant-based meat’ (IPO for $billions)
- 40. Is this IPO the first sign of ‘The Twilight of the Cow’?
- 41. Stem Cells Yeast Bacteria There are many ways to make animal-free protein
- 42. Cost per raw megabase of DNA sequence Cost of DNA sequencing fell DeepTech Trends2019
- 43. Impossible Foods raised $687.5m for plant-based meat
- 44. Heme Soy Legume hemoglobin from GMO Yeast Fermentation Their burgers ‘bleed’ thanks to heme
- 45. Memphis Meats (beef & chicken protein)— $20.1m
- 46. Perfect Day (milk whey & casein) — $61.5m
- 47. Bisu (Urine test) Diet, metabolism & hormones Caura Lactate & glucose tracking BBB — Blood test Glucose, ketones, cholesterol —$21.5m Digital Diagnostics Replacing lab tests?
- 48. Human Microbiome ‘The Second Brain’ 2 kg of bacterias 1,000+ species 3 million genes (150x humans) Our microbiome also determines how we respond to food
- 49. FoodMarble — $1.4m Tests your digestion through your breath, sold >10,000 units
- 50. Sun Genomics— $3m Designer probiotics based on microbiome
- 51. Agenda 1. SOSV Intro 2. Defining Deep Tech 3. Deep Tech & Food 4. Why Invest 5. Investment Landscape 6. How to Invest 7. Deep Tech Biases
- 52. Risk Timing Execution Those risks are common to all startups
- 53. Timing Risk 18 months is great 3 years is terrible Getting to market / the next milestone in 18 months is great. Longer makes it harder to fundraise.
- 54. Risk Timing Execution Science Regulation Deep Tech startups add two forms or risk
- 56. Why Deep Tech? Deep Tech can solve big problems with big impact
- 57. Why Deep Tech? High-Tech Wholesale/Retail Finance/Insurance Energy Industrials Consumer Good Transportation/Logistics Business Services Health Care Media/Entertainment 0 25 50 75 100 16 21 22 35 41 41 60 79 87 98 Fortune 500 Companies by Sector, 2017
- 58. Why Deep Tech? High-Tech Wholesale/Retail Finance/Insurance Energy Industrials Consumer Good Transportation/Logistics Business Services Health Care Media/Entertainment 0 25 50 75 100 16 21 22 35 41 41 60 79 87 98 Fortune 500 Companies by Sector, 2017 0 10 20 30 40 0 27 0 31 6 3 10 0 1 17 There are opportunities in many sectors Number of Deep Tech Startups
- 59. Why Deep Tech? AND offer good returns
- 60. Agenda 1. SOSV Intro 2. Defining Deep Tech 3. Deep Tech & Food 4. Why Invest 5. Investment Landscape 6. How to Invest 7. Deep Tech Biases
- 61. 1 in 5 Unicorns is in Deep Tech LIFE SCIENCES — 17 Henlius Novogene Sinocelltech WuXi NextCODE CureVac IronSource Nanopore Roivant 10X Genomics 23andMe Ginkgo BioWorks Grail Human Longevity Indigo Ag NantOmics Samumed Tempus Envision Prologium Northvolt Ovo Energy ReNew Power ChargePoint Microvast Rubicon Sila Nanotech View NEW ENERGY — 10 Aiways BAIC* Bordrin Byton Chehejia Enovate Hozon Leapmotor Nio* Singulato Skywell WeltMeister Yinglong Youxia Xpeng Motors Aurora Cruise** Faraday Future Nikola Motor Otto** Rivian TuSimple Zoox AV/EV — 23 Hellobike Mobike** Bolt Ola Electric Bird Rides Lime Uber ATG MOBILITY — 7 Ankon iCarbonX United Imaging Alphaeon Auris** Butterfly Network HeartFlow MindMaze Proteus Health SmileDirectClub HEALTH TECH — 10 DJI Geek+ Ninebot Ubtech Nuro Zipline Zume Carbon Desktop Metal Formlabs Magic Leap MindMaze ROBOTICS — 7 3D PRINTING — 3 AR/VR — 2 SPACE TECH — 4 OneWeb Rocket Lab SpaceX Virgin Galactic* US China RoW 14 33 48 Cambricon Horizon Robotics Graphcore OrCam Bitmain Canaan Ebang BitFury IC & SEMI — 4 CRYPTO MINING — 4 IOT — 2 Nest** Infinidat * IPO ** M&A 100 Unicorns Soon Sources: Crunchbase, Hurun Report, SOSV Analysis Beyond Meat* Impossible Foods NEW FOOD — 2
- 62. EUROPE Oxford Sciences Innovation (UK) £450m High-Tech Gründerfonds (Ger/EU) €316.5m IQ Capital (UK) $300m Ahren Innovation Capital (UK) $250m Inventure (Nordics) €110m USA btov (EU) €100m Lux Capital $1.1b NordicNinja (Nordics & Baltics) €100m Data Collective $725m Karma Ventures (EU) €70m Eclipse Ventures $500m Elaia (EU) €65m OS Fund $250m Adara Ventures (EU) €65m The Engine $205m Future Positive Capital (EU) €51m Future Ventures $200m Voima Ventures (Nordics & Baltics) €50m Anzu Partners $150m Vito Ventures (EU) €30m Bolt $80m Apex Ventures (EU) €10m Root Ventures $76.7269m Runa Capital $70m OTHER Main Sequence Ventures (Australia) $240m GLOBAL Abies Ventures (Japan) $100m SOSV $250m Beyond Next Ventures (Japan) $50m Entrepreneurs First $115m Real Tech Fund (Japan) $18m Hardware Club $50m Pi Ventures (India) $31m Some Deep Tech VCs >$5b to invest DeepTech Trends2019Note: Chinese funds are mostly generalists.
- 63. Some Specialists DeepTech Trends2019 Many active generalists Some specialist funds
- 64. Notes: most are B2B * includes co-investors SoftBank Vision Fund DeepTech Trends2019 Company Type Sector Funding* GM Cruise B2B AV tech $2.25B View B2B Smart glass $1.8B Nuro HAAS Delivery AV $1B Zume HAAS Pizza robot $423M Plenty B2B AgTech $226M Light Consumer Cameras $186M Nauto B2B Driving Coach $174M Brain Corp B2B AV Tech $125M TOTAL $6.1B*
- 66. Agenda 1. SOSV Intro 2. Defining Deep Tech 3. Deep Tech & Food 4. Why Invest 5. Investment Landscape 6. How to Invest 7. Deep Tech Biases
- 67. Stages Idea Lab Prototype Product Growth Who can take you to the next step?
- 68. Ecosystem Resources Funding Talent Tools Clients You might need to leverage several ecosystems
- 69. Minimum Fundable Milestone Not always product! Specific Customer? Team Member? Certification? Make sure to identify the right milestone for the next round
- 70. New Models Supporting Science Startups To go from Lab to Market i-Corps (~100 locations in US) 7-weeks coaching program Created by Steve Blank Focus on customer development Entrepreneur First (7 countries) ‘Talent investor’ 14 weeks program Team formation + idea validation Deeptech Founders (France) 6 months part-time program Focus on customer development SOSV (global) ‘Hands-on VC’ with experts & labs 3+ months programs Product & business development Non-investing Investing
- 71. Questions Do you need a PhD in everything?
- 72. Questions Do you need a PhD in everything? How to avoid the next Theranos?
- 73. Science Risk Patents? Prototypes Experts Customers You can reduce the science risk by using experts
- 74. Founders Risk Give up early Severe Asperger Can’t execute ‘Artist’ Silicon Valley Burn Rate Caught Up In ‘Startup Theatre’ Can’t get along ‘Maker’ Addiction DeathHarassment 1 2 3 4 5 6 7 8 9 10 At early stage the biggest risk is Founders Risk
- 75. Founders Risk Inventor Engineer Entrepreneur CEO Founders might not be able to cover key roles
- 76. ‘Right Brain’ Intuitive ‘Left Brain’ Rational HBDI Herrmann Brain Dominance Instrument We use this test to identify ‘mental diversity’ gaps in founding teams
- 77. HBDI Herrmann Brain Dominance Instrument Spock Rational & logical Scotty Processes Kirk ‘The final frontier’ Bones People Teams often need to find a Scotty and a Bones
- 78. Agenda 1. SOSV Intro 2. Defining Deep Tech 3. Deep Tech & Food 4. Why Invest 5. Investment Landscape 6. How to Invest 7. Deep Tech Biases
- 79. Biases 1. Star Wars bias 2. Ugly Duckling bias 3. Make-up bias 4. Darwin bias Four biases we had to learn about the hard way…
- 80. Biases 1. Star Wars bias 2. Ugly Duckling bias 3. Make-up bias 4. Darwin bias We grew up with sci-fi and get excited when we see it come true
- 81. Star Wars bias Anything that look like science fiction is suspect
- 82. Electroloom Revolutionary fabric 3d printing technology?
- 83. Worked… somehow. But no market.
- 84. Unspun Bespoke jeans Lower tech, but much more viable
- 85. Boring & Viable Those robots target clear markets
- 86. Rebartek Construction tech robot. Boring?
- 87. Wow & Profit are often Orthogonal Lower tech, but much more viable
- 88. Biases 1. Star Wars bias 2. Ugly Duckling bias 3. Make-up bias 4. Darwin bias Early tech can look bad
- 89. Ugly Duckling But sometimes the value is already there
- 90. Simbe Robotics This is an early prototype. The tech was mostly there!
- 91. Simbe Robotics Three months later it looked great. Raised $26M series A
- 92. Biases 1. Star Wars bias 2. Ugly Duckling bias 3. Make-up bias 4. Darwin bias Looks can also be deceiving
- 94. Nura Nura can personalize the sound to your hearing
- 95. Nura What is the difference between the two?
- 96. Prototype May 2016 Product Jan 2018 Nura Investing just before production is sometimes great timing.
- 97. Nura Nura raised a $21m series A. Stevie Wonder bought 3 pairs
- 98. And the best product is often the second
- 99. Trajectory YEAR 1 YEAR 5 SaaS Deep TechSWEET SPOT FOR SEED? Find the right timing balancing risk & opportunity
- 100. Biases 1. Star Wars bias 2. Ugly Duckling bias 3. Make-up bias 4. Darwin bias Great ideas are hard to recognize.
- 101. “The year has not been productive in contributions of interest and value” Thomas Bell (1858) President, Linnean Societ Experts did not care much for Darwin’s theory at first…
- 102. He was even mocked…
- 103. Many of tomorrow’s successes are already around us Looking Glass holographic display
- 104. www.slideshare.com/sosv Read Contact Thank you! benjamin.joffe@sosv.com www.sosv.com/deeptechtrends Deep Tech Trends Report (119 pages, free)