From Helsinki: A Conversation On Investing In Deep Tech With Two Firms – Future Ventures and Future Positive Capital

I caught up with two co-founders at the Slush event in Helsinki this year — Maryanna Saenko of Silicon Valley-based Future Ventures and Sofia Hmich of Paris-based Future Positive Capital. Both are newly-founded firms focused on Deep Tech Investing and have raised inaugural funds earlier this year. The following has been edited for brevity and clarity.

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Gené: Maryanna, Future Ventures has raised a $200 million fund this year. How do you plan to invest this fund?

Maryanna: Steve Jurvetson and I founded Future Ventures a year ago and started fundraising in November. We went to our LPs and said; if you are motivated to understand what are the fundamental technologies that will change our world for the better, if you understand that the horizon of these technologies is very long, if you’re willing to kind of come on this ride with us, we want to invest in the most fundamental changes in the world. We pitched a fund of $200 million, two partners. We really care about each and every technology that we’re trying to bring into the fund.

And we are primarily early stage investors. So seed, Series A, the occasional Series B. And we thought that we would do maybe four to six investments a year. Fast forward a year, we closed a $200 million fund in January of 2019. We’ve made 12 investments to date.

We’ve written checks from one to twenty million dollars. And all across the map in terms of stages. So the joy of having your own fund, it turns out, you can do whatever you want, to the extent that it fits the thesis of is it truly world changing and is it unlike anything we’ve ever seen before.

Gené: Sofia, Future Positive Capital has three partners. Your first close is $57 million. How do you plan to invest the fund?

Sofia: We do Seed and Series A. The size is between $500k to $3 million. And with a big capacity to follow on. We keep 60 percent of the fund to do that. We aim to invest in between 20 to 25 companies for the total fund. We made three investments and we are closing our fourth today.

Gené: Most funds exit around 10 years. What does that mean if it’s a 15-year fund? How does that change the company’s trajectory?

Maryanna: We’re grateful to our very patient LPs. Companies in Deep Tech probably drop off the same way that they do in consumer, and possibly earlier. You’ll find out in the first two to four years, whether or not you made an okay decision. But it’s in years seven, eight, nine that these companies start changing the world. If you look at a company like SpaceX — year nine is really when you start to add fuel to that fire, quite literally, and continue to support the company and not thinking about winding down your position. So with a 15-year fund we are able to give our founders more runway, and more commitment.

Gené: What are the trends in Deep Tech?

Sofia: Internally we focus on two themes. We are looking at Ocean Tech. Ninety five percent of our oceans are unexplored. And that’s the next frontier for energy, and health. There are good ecosystems in Europe in the Netherlands and France. We also look at sustainable fashion, particularly manufacturing and advanced materials. Germany’s extremely good in this. AMSilk is the leader in industrializing the production of synthetic silk. There is an application in cosmetics, and of course clothing. Mental health is a topic that one of my partners is very much focused on, and genetics. Then agriculture, and the way we grow food. And Europe is particularly good at bioengineering and AI.

Gené: You’re investing across Europe? Are there key companies who will drive change in the next five years?

Sofia: We have untapped talent here. There’s a discrepancy between the interest of entrepreneurs who are passionate about solving big problems. We have statistically more talent in Europe and developers, than in the US. So there’s a big difference. And then the capital is not meeting the talent. By design, the companies we are backing have a global market, because the problem they’re solving is global in its DNA.

Gené: Your team is distributed across Europe?

Sofia: We have an office in Paris and in London. The UK is the most mature ecosystem. Paris is flourishing, and [French President] Emmanuel Macron is giving a lot to the ecosystem. France has not been good at commercializing innovation. The greatest opportunities are to be funded now.

Gené: What are the key trends that you’re looking at? And what is the technology wave that you are riding?

Maryanna: We haven’t invested in the same space across these 12 companies, but we have seen overarching themes. A theme that we’ve actually invested quite heavily today is AI. As AI grows and takes over the world, as the future of programming becomes more about generative learning and teaching our systems how to function, what metrics do we want them to excel on? We will eventually push more and more compute to the edge. Now that you’re deploying these AIs on the edge, you don’t want to shove a neural net in some camera and then hope it eventually works. It’s very hard to figure out, now that I’ve deployed an AI at the edge which information is it collecting and functioning well, versus which information should it retrain on. A thesis that I’ve been looking at is how do you do continuous improvement, and continuous learning, as we do continuous deployment and AI.

I just funded a seed stage startup out of Carnegie Mellon University, which I’m incredibly excited about.

Gené: Can you talk about it?

Maryanna: They’re going to have a big coming out party early next year. The other space we care about is mental health. It’s the largest rising global epidemic. Suicide rates are up globally, especially among adolescents. Technology doesn’t solve all problems, but I am (at heart) a techno-optimist. I do believe that there are technology solutions out there. I don’t necessarily think that we’re going to have AI therapists, because I think we’re really good at connecting and taking care of each other, and having meaningful conversation. I’m not interested in replacing caretakers with robots. What I am interested in is, can we find more efficient computational pathways to find new target drugs, or basically small molecules or therapeutics, whether it’s a gene therapy or other to start addressing some of those chemical pathways. I think on the voice side of things you can do a better job of diagnosing earlier and earlier. We know that early diagnosis leads to early prevention. And so thinking about what are the ways in which advanced computation and analysis move us from a state of treatment to prevention to actively healthy lifestyles.

Gené: Have you made an investment in the mental health space yet or are you still looking?

Maryanna: One that actually closed last week is a UK-based company that’s looking at different pharmacokinetic compounds and accelerating the path to mental health solutions. The other I can’t talk about yet, but it’s a Series B that I’m incredibly excited about that’s in the genomic space. If and when this works, I think you can basically stop taking small molecule drugs.

Gené: Any other trends that are big for you?

Maryanna: The question of the environment and specifically carbon sequestration. I’m an avid athlete. I spend an enormous amount of time outdoors. I see the way in which our world is changing as a result of climate change, and I am actively looking for technologies and solutions in that space. We can’t just stop thinking about carbon offsets, but I think we need to make active change in that space. I’m not sure that geo-climate engineering is the right solution.

Gené: What do you mean by geo-climate engineering?

Maryanna: Seeding clouds and massive global weather shift technologies. I’m mildly terrified of the second order effects. What are the technologies, and solutions out there that start picking away at this problem of climate change, but actually do so on a massive scale. Because the problem I’ve seen today is every solution is very constrained in it’s actual output.

Gené: You’ve made some investments in the energy space that address this?

Maryanna: We think about energy scarcity as a broad and holistic problem and it’s one of the fundamental drivers of so many of the world’s challenges. My brilliant business partner Steve has been looking at nuclear fusion for basically 20 years. I more or less came running into the office screaming about six months ago saying I found our fusion investment and he very kindly ignored me. Then we actually got on the phone with the with the founder of Commonwealth Fusion Systems, an MIT-based startup that’s doing nuclear fusion. Honestly, by the end of the first phone call, he was just as excited as I was and we got to participate in their Series A, which was a $100 million round.

Gené: Has Deep Tech gone mainstream?

Sofia: I think it’s just a cycle thing. Tech used to be Deep Tech. We just had a phase of digital. This is need-based rather than the interest of the investors. There is a risk profile that needs a leap of faith. I believe that there is a convergence happening where people are doing a bit of Deep Tech, but still keep their main investments in digital.

Gené: Do you think Deep Tech has gone mainstream?

Maryanna: I think it’s a taxonomy question. I think the problem is that Deep Tech is everything. So you have enterprise SaaS, you have consumer, you have fintech. These are the places where people know how to pattern match. And then you have literally the rest of the world, and everything else. And the problem is it’s such a large bucket that almost everyone has a play in it. The future of food was squarely in the Deep Tech space four years ago. Now we talk about cultured meat, and plant-based meat, and alternative proteins and all of the subsets as its own category. And so I think that’s what happens is that within Deep Tech, it’s this enormous space where people aren’t quite sure how to pattern match, and then a handful of fundamental investments come out of the space, and people get excited. Suddenly you carve out of Deep Tech, now we have fusion investments, and now we have the future of food, and now we have ocean tech.

We’ll keep falling off the edge of the map because that’s our trajectory. We will continue as a fund, Future Ventures, to invest in things unlike anything we’ve ever seen before. And then hope deeply that others will pile in and follow.

Feature group photo credit: Samuel van Dijk | www.instagram.com/chaindata_nl/

Individual photos credit: Tanu Kallio