DeepTechU Day 2: Industry Insights, Platform Tech Potential, and Advice for Attracting VC Funding
Day two of the DeepTechU conference saw top executives discuss how deep tech innovation is transforming industries and featured a panel discussion between founders and investors who talked through the benefits and opportunities related to platform technologies. The morning sessions concluded with a keynote address about securing venture capital investment. (View recaps of Day 1 and Day 2)
Industry Insight: The Future of Deep Tech Innovation is Here
From his perspective as the President and CEO of GE Healthcare, Everett Cunningham explained that as healthcare becomes more complex, deep tech needs to be integrated into the way we treat patients and focus on patient outcomes.
While digitalized medicine, artificial intelligence, and advanced analytics are changing how disease is treated, Cunningham said deep tech will play “a huge role” in how disease is diagnosed and even prevented.
“Precision medicine accelerates time to diagnosis,” he said, adding that it also helps prevent disease by focusing on wellness. Still, it’s a heavy lift even with significant advances in technology. “Industry can’t do it alone, healthcare can’t do it alone, startups can’t do it alone, we all need each other’s help,” said Cunningham.
As part of this, he said to “scour all corners of the earth” when looking for innovation – which can come from anywhere, including the farms of Iowa, where Cunningham has his roots. “You can’t dismiss people because in your mind you think you want to partner with big, urban, known entities,” he said.
“Innovation comes from all facets, all corners of the earth.”
– Everett Cunningham
Enabling deep tech innovation for their customers is among the goals of Amazon Web Services (AWS), said Hardik Bhatt, general manager, digital governance VC and startups, worldwide public sector.
To do this, the company starts with the customer and works backward, while innovating at the pace of a startup, Bhatt said. A key part of this is accepting failure: “Projects have two-way doors,” he explained, “if something isn’t right, you just exit.” In doing so, they are able to iterate faster and with the customer. The initial goal is not to necessarily provide the perfect product the first time, but instead, give the customer “something they can opine one.”
Moving at this pace requires, small teams, or “two-pizza teams,” as Bhatt described them. These teams are “accountable and empowered” and “don’t have to wait for the decision making to go all the way up to the top and go back, and lose time.”
As part of this “working backward” process, the teams will even write future-looking press releases that enable them to ask questions for which they might not yet have the answers. “We try very hard to start answering those right away,” said Bhatt.
Similarly to AWS, supporting their customers’ ability to innovate is the main goal of the digital transformation platform group at Microsoft, said James Phillips.
“It’s a challenge in any organization that has near-term revenue pressure to set aside the funding and have the staying power to stick with true deep tech that sometimes can take decades to mature,” said Phillips, who is the president of the digital transformation platform group. However, companies like Microsoft have significant investments dedicated to deep tech research, and Phillips said it has seen “a lot of benefit from that.”
Another theme of the day’s discussion, and the conference as a whole, is that this cannot be done alone. “This sort of stick-to-it-ness is very difficult,” said Phillips. “Someone somewhere has to have a vision that they stay with until it becomes obvious.”
Sreelatha Surendranathan, SVP and chief digital officer of UL described disruption as a mindset change: “It’s old ways of working that need to change… It’s starting to look at something like data that has been there like a gold mine that we sit on top of… but creating insights out of it – that takes time and effort.”
Platform Technologies: Funding Opportunities and Challenges
The key benefit of developing platform technologies is the potential for growth, said Akanocure CEO Sherine Abdelmawla, who has more than 12 years of experience teaching organic chemistry in academia and conducting research in the biotechnology industry.
As Abdelmawla explained, developing a platform technology means not having to reinvent the wheel every time – though she stressed the importance of being disciplined.I
“In the VC industry, especially in biotech, there has been a growing interest to invest in platform companies,” said Alexis Ji, a partner at Illumina Ventures, who suggested evaluating technology as a VC would. Is it differentiated? What is the potential and market size?
Not surprisingly, Ji and the other panelists also stressed the need to have a solid team in place. “Work with people who are smarter than you to increase your chance of success,” said Ji. “Find a CEO that’s good at fundraising. That’s the most important job of a CEO. If he’s not qualified, replace him.”
Additionally, Ji stressed filing IP to protect yourself well before you talk with investors or exchange ideas. “Validate the idea and generate early data to show to people and convince yourself,” she added.
In talking with investors, Shane Farritor, CTO of Virtual Incision, suggested leading with your grand vision, before explaining how you are going “to drill down and win in this one area.” This balance of a grand idea – breadth – and a winning area – depth – is key to developing platform technology.
“One of the most important things is to really think about that balance between breadth and depth,” said Farritor. “I can apply my technology to this problem or this problem – or however many problems it is. That’s an obvious advantage; you’ll have many shots on goal.” Still, you also have to have depth in some areas – what is your fist application going to be, who are the customers, how will you manufacture your product and distribute it?
“If your technology can solve every problem it’s probably a sign it can’t solve any problem,” said Farritor.
Scott Button, managing director of Venture Investors echoed Farritor in stressing the need to understand focus. “Don’t be bashful if you feel you have a platform technology, but more importantly… understand the importance of focus,” he said. “It’s fair to talk about what you think the future potential of the platform might be, but again, really be thoughtful in that approach and if you’re going to list something where you think there’s an opportunity… do your homework.”
Keynote: Securing Venture Capital Investment to Fund Your Innovation
Chris Meldrum delivered the keynote address on day two, bringing his unique perspective as an entrepreneur-in-residence at DCVC Bio, a venture capital firm dedicated to the deep tech space.
In considering an investment he said the company looks at four things: the technology, the team, the market being addressed, and intellectual property. Additionally, though DCVC Bio is based in San Francisco, Meldrum noted that “great science doesn’t have a zip code.”
“In terms of the team, we are strong believers that companies win because they have qualified, dedicated leadership,” he added. “The team is the driver. You can have a great car, but if you don’t have a great driver you won’t get far.”
As it pertains to company formation, it’s also important to determine the faculty researcher’s role. Are they a founder, chief scientific officer, CEO, or consultant? Meldrum said it can be beneficial to continue development of the technology and that often this is best done through sponsored research at the academic’s lab. However, there may be issues related to conflicts of interest and other challenges to address in the process.
Among these steps is negotiating the license, a process that can take 3-6 months. While quick, this timeline is not unrealistic, Meldrum explained. Conversely, the process also could take 12-18 months. However, Meldrum said that it can be better to move forward with a pretty good deal than to spend an inordinate amount of time negotiating the best possible one. “Ask yourself this: would you really want to give your competition a one-year head start?”
Meldrum’s other tips for entrepreneurs seeking VC funding:
- Do your homework: “There are a huge number of life science venture firms. Find out what the firm’s focus is, what stage of development they like to invest in.”
- Get connected: The best option is an in-person meeting, then Zoom (which enables you to see body language) or a telephone call. “Next best is email, with an introduction from a colleague or with a specific request,” said Meldrum. “Finally, last, which I don’t recommend, is blind emails.”
- Present your case: Describe how your company is unique and how it is positioned to solve the problem. Also, have a customized slide deck – “We need to have something to review,” Meldrum said. “Your goal in this process is not to score a touchdown on the first play,” he explained. “The goal in the first contact is to get that first presentation and the entire goal of that first meeting is to get the second meeting – and so on and so forth as your move the ball down the field.”