Celebrating 20 Years of Impact and Innovation, as our Founders Look to the Decades Ahead
A glimpse into the future
“In the face of climate change, a catastrophic pandemic, and other daunting challenges, the world urgently needs science-based solutions to tackle society’s greatest problems. Berkeley is poised to cultivate emerging scholars and entrepreneurs who are ready for the job” — Carol T. Christ, Chancellor, UC Berkeley, May 2021
As UC Berkeley Chancellor Carol Christ points out, we are entering a new era: the most existential challenges we face over the next few decades require science-based innovation. The pandemic has brought it to the forefront. This is the essence of deep tech.
It’s a new kind of science. What we now call deep tech emerged 20 years ago as an interdisciplinary science. The realization that societal scale problems in health, climate, energy would require the application of multiple scientific fields together. For instance, synthetic bio is a mix between engineering and biology.
Our Founding Partner, Patrick Scaglia, was on the Board of UC Berkeley College of Engineering at the time and, with Dean Richard Newton, part of the founding team that conceived in 2001 the Center for IT Research in the Interest of Society (CITRIS). It was the first interdisciplinary and multi-university institute at UC Berkeley and was the origin of Deep Tech. This is now a multi-$B research institute that spans 4 Universities which has funded cutting-edge research in healthcare, sustainability, AI/robotics, and technologies to advance democracy.
In 2013, we identified a growing demand among scientists and engineers from the University for support of translating their research into entrepreneurial ventures. This led to the creation of the CITRIS Foundry. The concept for the Foundry was simple — take the same view on interdisciplinary research and engineering and provide patient support for these brilliant scientists (Ph.D. Students and faculty) to become entrepreneurs, including access to highly specialized lab equipment — Between 2013 and 2018, 50 deep tech startups were created and have now collectively raised >$250M from venture capital. This was the period in which we developed our method of sourcing, selecting, and supporting these 1st time, mission-driven, deep tech entrepreneurs.
As the current era of business model innovation (web) draws to a close, deep tech is starting to attract a lot of attention in the venture community (BCG reports that total investments grew 4 x in 4 years to $60B and has the potential to triple again to $200B by 2025), but science-based investment is different, and the reality is that there is still only a handful of VC’s that truly invests and understands deep tech, and even fewer who have been doing this as long as we have. That’s why we created Blue Bear Ventures (BBV) in 2017 (It is a response to the challenge we heard from Berkeley and other entrepreneurs) to continue to show the way and accelerate deep tech.
Over the past seven years, we have formed our unique approach to sourcing, evaluating, supporting, and investing in these startups.
We like to illustrate this through a case study from one of our portfolio companies. Take Unnatural Products, a company that’s taking AI and High-throughput Chemistry to discover a new class of drugs to treat the 1000’s of diseases like many cancers for which we don’t have a cure for today.
We met the founders, Cameron and Josh, in 2017, not long after they received their PhD’s in Bioinformatics from a renowned drug chemistry lab at UC Santa Cruz. They had this crazy idea to combine high throughput chemistry and Machine Learning to develop this completely new class of drugs based on their PhD work. They spent their first year circling around Silicon Valley pitching their idea to any investor they could meet, but most investors felt it was too early, too risky, or didn’t understand the potential of their technology. They were referred to us through our UC Santa Cruz research network, and upon hearing their pitch, we immediately understood the potential of what they were trying to build.
It was immediately clear that they were two of the leading young scientists in their field who had their pick of jobs in the Pharma industry, and yet, they were passionate about and willing to take the risk of changing this stagnant field of drug development. At the Foundry, we spent the course of 2018 working with them to refine their story, better define their business model, and set their early validation milestones.
BBV then became their first investor, funding them to hit those milestones, brought in their subsequent investor, Better Ventures, as well as their lead investor, Artis Ventures, for their oversubscribed Seed round in 2019. Now, they are a team of 13+ full-time scientists who are collaborating with some of the largest Pharma companies in the world on their internal drug development programs, having achieved in 12 months what one Pharma company’s internal team has been unable to do over the last few years. We believe their approach, and approaches similar to theirs at the intersection of novel tools, AI and biology, to finding drugs much faster for difficult to treat diseases will become the new standard for drug discovery over the next decade. (Others in our portfolio such as Synkrino Bio and Aether Bio fall into this category)
This is typical of our portfolio — Immulus, a Harvard spin-out founded by Omar Ali and Alex Cheung who are solving one of the biggest challenges in manufacturing cancer cell therapies, is a very similar story where BBV was their first and only investor, and within 12 months of investment, they became our first exit to Lyell Immunopharma (NASDAQ:LYEL). Our 50+ startup founders from our portfolio would gladly share their experiences with you.
Our values and approach align with the mission-driven deep tech founders
What continues to draw founders to us is our alignment of values and understanding of their mission and technology. In deep tech, it is as much about Investors finding Founders as Founders finding Investors.
The Boston Consulting Group and Hello Tomorrow recently published a report on the Deep Tech Investment Paradox. Their study shows that 81% of deep tech ventures say that the average VC investor lacks the scientific and engineering expertise to assess the deep tech potential. And that’s understandable given where the prior era of venture capital emerged from. With the wave of deep tech innovation upon us, we are positioned as leaders in this new class of venture funds.
We focus on industrial and societal scale challenges.
Looking at the deep tech landscape today, it seems that we correctly predicted the current dominant applications in deep tech investing eight years ago when we created the Foundry: synthetic biology, applied AI, advanced materials, genetic medicines. As an example, when we first met the founders of Genedit, Kunwoo and Hyo Min, in 2016, they were already developing what we now call the 3rd generation technology for delivery of genetic medicines, behind viruses and lipid nanoparticles, what’s being used in the mRNA vaccines today.
We believe innovation over the next 10–15 years will be led by our renewed focus on society’s global challenges — areas such as health, climate, and resource scarcity are already becoming catalysts for mission-driven scientists bringing emerging technologies to the market.
The convergence of enabling technologies and global demand to meet these industrial and societal scale challenges is our definition of Deep Tech. We believe the Industrial Scaling of these technologies will also be a driver of the next big wave of innovations and likely where the future Unicorns will be. It’s not merely solving the challenge of moving technology from lab to production but moving them from small volumes to large industrial-scale volumes in order to reach as many people as possible. This is how we get a glimpse into the future.
Deep tech investing is still a fairly nascent category in today’s venture capital ecosystem. As we build a community of like-minded entrepreneurs and investors passionate about creating this new future, we welcome you to get in touch with us to discuss how we can grow this ecosystem.