Boston-based VC hub ven^x launched this year to increase opportunities for deep-tech founders and investors, as it seeks to grow the pie rather than win the biggest slice, according to SkyRiver Ventures General Partner Hyuk-Jeen Suh. That spirit of collaboration is rare in the investment community, and the driving force behind this unique venture that brings together SkyRiver, Anzu Partners, Hitachi Ventures, Myriad Venture Partners and real estate consulting firm The Steele Group.
The collaborators announced the launch of ven^x in late February, and set out to create a space where they could work together, share expertise, and build economies of scale to become a force multiplier for the world of deep tech. Startup Boston caught up with Hyuk-Jeen – along with Anzu Partner John Ho and Steele Group CEO Steele Divitto – to discuss the venture and their vision for the future.
SB: Can you tell me about the genesis of ven^x – who came up with it, and what problem were you looking to solve?
Hyuk-Jeen: It started before Covid, when I was at Samsung Ventures and felt there should be a community of VCs to come together to do deals. It was a way to tap into diverse expertise and knowledge while creating an economy of scale. So I started sharing the idea with people to see whether it made sense to work together. John and the other founding fund members agreed, and Steele was kind enough to offer us a space.
John: Throughout all of our deep tech investments, we’ve recognized the need to build strong, active syndicates of like-minded investors - both to help accelerate commercialization efforts, but also to distribute the load during periods of turbulence. Whether it’s to share commercial contacts, deal flow or best practices, there’s power in having a broader, deeper network to bring to bear on all of the issues that early-stage deep tech companies inevitably face. So, having a chance to develop deeper relationships with other tough tech VCs made a lot of sense to me.
SB: Why create ven^x now – is there something unique about the current environment that makes this a good time?
Hyuk-Jeen: Every decade you have trends that are hot. In the 80s, you had the personal computer. In the 90s, the internet. The 2000s was mobile, and the 2010s cloud. And in each decade, there is a cycle: in the 80s the personal computer was hardware, and the following decade the internet was software. The next decade, with the mobile phone, it was hardware, and next it was the cloud software. This decade is the decade of deep tech and core science, which encompasses climate tech, biotech, and novel new materials. AI wouldn’t be possible without improvement in AI chips and infrastructure. It's an amazing time to invest in these areas because, in order to tackle some of the largest challenges facing the world, we need novel technology backed by core science to be developed.
John: For Anzu Partners, it was a matter of being in the right place at the right time. We had been searching for a footprint in downtown Boston, so when Steele mentioned that he had additional space to host a number of local deep tech VCs, I immediately gravitated towards the idea. There’s a lot of options when it comes to co-working or hot desk spaces around the Boston area, but the ability to work more closely and collaboratively with other deep-tech VCs is unique. Certainly, it's a rocky time for VCs in general, so having the ability to share best practices and draw from a broader pool of resources and knowledge should translate to better outcomes for our individual portfolio companies and LPs.
SB: And in terms of the nuts and bolts of this, it’s a physical location in Boston, correct? It’s also networking. And it’s an opportunity for you guys to structure deals together.
John: We are housed within the Steele Group’s high-rise in downtown Boston and have a space dedicated to the venture investors who want to spend time there or have access to the shared amenities, like conference rooms. We also have a standing meeting on our calendars where we can talk shop – whether it's industry/macro trends, specific situations within our portfolios, or updates from within our own firms that others may find useful. It's really meant to be a roundtable session where information and best practices can be openly shared. We do have thoughts on how to grow this beyond our physical space if there's demand for it, so stay tuned.
Steele: This offers a diversification of networks, and that’s powerful. And there's so much more than capital that the ven^x team can provide out of their collective networks. For example, I was with one of John's portfolio companies earlier today, and we're talking about getting them introduced to a couple of our defense contracting companies, given the overlap.
As we start to look at scaling this in a meaningful way in the community, there's an opportunity to get funds involved that aren't necessarily based in Boston, but have presence in California, Houston, New York and other major markets, and give them the ability to participate in a meaningful way.
Hyuk-Jeen: A lot of tech companies have a hard time finding VCs who are interested in investing in deep tech. If you look at the startup world, there are co-working spaces that are built to create an economy of scale, so VCs and corporate partners can come to a WeWork or a CIC and efficiently meet these companies. There's nothing really like that for the venture capital world, where the mentality is a little bit more of splitting the pie rather than growing the pie.
So if we create an economy of scale for VCs who are interested in investing in deep tech, and make it easy for startups and limited partners to find and interact with us, it is a win-win for everyone. The startup companies know where to go to meet multiple VCs at once, and the VCs are collaborating and syndicating the deals, which help to support startups while reducing their investment risk.
Steele: It is very challenging to successfully create an idea, prototype it, pilot it, then eventually build it into a commercial scale operation. Success in deep technology requires an immense level of resources, an incredible network, smart people and sometimes luck. Deep technology companies encounter numerous technical hurdles along their path, necessitating a supportive ecosystem to facilitate their growth. We firmly believe in providing such a supportive platform, acting as a soft landing pad to assist companies across various scales.
Moreover, it's important to emphasize that our focus is not limited to specific industries. While we recognize the challenges inherent in additive manufacturing, industrial automation, robotics, energy, and biotech, we remain open to supporting ventures across diverse sectors. Given the collection of professionals within the ven^x network, we see an opportunity to help companies reduce risk and time.
SB: Is this modeled on something that you have seen, or is this completely new?
Hyuk-Jeen: I think it's the first of its kind. So, we're working to improve the concept further and will tweak it as we go. There are several phases to this idea. In the beginning, we got together to discuss what we were seeing in the market. We are progressing to a more formal structure and sharing deals. We are inviting guest speakers to share knowledge and sponsoring events to grow the ecosystem. In the future, we hope funds can come together to build additional synergies such as sharing the back-end office, hiring a central office manager, or even pooling or committing some funds to further support portfolio companies of ven^x in times of growth or struggles. There are various economies of scale benefits not only for the fund but also for startups and for our LPs and future LPs. As we grow this out, we hope other deep tech VC funds will join us to make this the hub for deep tech investments.
SB: We’ve already touched on this, but in the announcement, I saw a lot of emphasis on developing technologies that will address climate change. Is it safe to say that’s the main focus of ven^x, or are you agnostic?
Hyuk-Jeen: We're agnostic. Deep tech touches many industries and addresses many challenges. The hurdle we are trying to help overcome with deep tech is whether the science can scale to address market needs because the markets for deep tech already exist. Other companies that are less focused on deep tech have to create the market and spend a lot of money doing so, such as an Uber trying to create this whole rideshare space. Whereas if you can solve carbon capture, there's a market for it immediately. Climate change is obviously one clear market but ven^x is interested in tackling all areas where deep tech is needed, including healthcare, automation, and AI to name a few.
John: I’d say we’re generally agnostic, however we all invest in disruptive technologies with world-changing potential, so there’s quite a bit of natural overlap with technologies that are addressing climate change.
Hyuk-Jeen: I've been pinged by people from all around the country inquiring about how they get involved. It’s really exciting to see, and I feel like we've tapped into a pent-up need of people trying to do this. This is just the beginning of something that’s potentially pretty great. We are looking forward to seeing where this all leads.
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About the author: Randall Woods is a former editor at Bloomberg News and currently
is a Senior Vice President at SBS Comms, a communications agency for technology companies and startups.