ROTHENBERG VENTURES’ FRONTIER TECHNOLOGY MISSION
June 8, 2016
Frontier Technologies are the newest viable technologies at any given time, which is incredibly exciting. Hollywood loves the thrill of technologies that are coming next — such as virtual reality “VR” in the Matrix, robotics and artificial intelligence in the Terminator, space travel in the Martian, and augmented reality “AR” in Minority Report.
It never occurred to me that Rothenberg Ventures might one day lead the Frontier Technology charge when I began investing in startups in 2012, nor that we would invest in 40 Virtual Reality startups. At that time, I hadn’t experienced VR, and we hadn’t yet coined the term “Frontier Technology”!
From the beginning, Frontier Technology made an impact on the fund. Three of Rothenberg Ventures’ first investments were Space Exploration Technologies, an aerospace manufacturer and space transport services company, Chubbies, an online men’s clothing brand founded by a college friend from Stanford, and Matterport, an end-to-end virtual media solution that enables their customers to easily capture, edit, and share interactive 3D models of real spaces.
At that time, I assumed the exotic aerospace and 3D modeling / virtual reality companies would be anomalies and that e-commerce, mobile, and Internet technology companies would be the norm. Space and VR were too far out there — even for venture! Sure enough, in 2013 Rothenberg Ventures focused on startups like Robinhood, a commission-free, mobile first stock brokerage, Patreon, an online website that enables fans to provide ongoing support to artists and creators, Revel Systems, an iPad point of sale solution for retail, also founded by a Stanford friend, Chat Sports, a website and mobile app that provides personalized sports news and scores shared with friends, and 1-Page, an online enterprise talent platform now public on the ASX.
However we also took chances with more Frontier Technology startups that year including World View, an aerospace solution to take voyagers to the edge of space, Boosted Boards, lightweight motorized electric vehicles, and SOLS, a startup creating 3D-printed orthotics.
As SpaceX, Matterport, World View, Boosted Boards, and SOLS grew rapidly, we began to notice the pattern of fast-growing startups focused on technologies between R&D and mass-market adoption, but we did not yet focus on it or have a name for it.
Then our eyes opened up to VR in 2014.
In April, we met Eric Romo, the founder of the VR social app AltSpaceVR. Eric demonstrated to us that VR worked, with the help of an expensive powerful computer and an Oculus development kit not available on the market. We loved what we saw and invested, but were not convinced that VR had crossed the chasm. However, AltspaceVR primed us for meeting WeVR shortly thereafter, who provided an original VR experience. TheBlu — a gorgeous under-water whale experience — proved beyond doubt that VR worked on mobile phones and was inexpensive. Incredible! The concept of VR had been around for decades, but finally the computing power and cost had caught up. The possibilities were endless.
We realized VR was here for good.
There was only one problem — it was 2014, and no one agreed with us. We talked to dozens of investors and industry experts who thought it was too early to invest; but in almost every case their information was outdated — after all, VR didn’t work until recently — and they were blown away by the actual VR experiences. To make sure, we carried Samsung GearVR headsets wherever we went and showed the new exciting technology to hundreds of friends and strangers. Time after time, our VR guinea pigs were astounded with the capability of the technology and we quickly realized something big was about to happen.
After hundreds of hours of diligence, it was time to put our money where our mouth was and invest big into VR. The next problem was the apparent lack of VR startups. It was a chicken-and-egg dilemma classic to all frontier technologies — without a viable VR startup ecosystem, VCs did not have startups to invest in, and without VCs, the VR startups did not have access to capital to build their startups.
At Rothenberg Ventures, we saw this as both a challenge and an opportunity. As an investor, you must be contrarian to beat the market. Check! You must also be right. Fortunately, the advantage to investing in startups over, say, the stock market, is that you can have a direct impact on helping the investments grow.
We decided to help build the VR ecosystem — and ecosystems for all Frontier Technologies.
We committed to drive growth in VR. To signal to entrepreneurs that we were serious about VR and to increase deal flow, we announced we would invest in at least ten VR startups in Q1 of 2015 alone. There were no other investors on the planet who had invested in ten VR companies at all, much less in a single quarter. Rothenberg Ventures became the first.
All startups need people to make decisions to help them grow: investors to provide capital, talented people to join the team, mentors and advisors to give guidance and open doors. However, Frontier Technology startups are so new that those ecosystems are nascent and inefficient. We recognized we needed to go above and beyond to support pioneering Frontier Technology companies and bring motivated stakeholders together; the exact people and skill sets needed to fast track these young companies.
We decided to build the River Accelerator for the world’s fastest-growing Frontier Technology startups.
Since Spring 2015, Rothenberg Ventures invested in more than 40 Frontier Technology startups through the River Accelerator, including VR, AR, artificial intelligence, robotics, drones, satellites and space. After a successful Spring and Fall 2015, we raised our average investment size from $100,000 to $250,000-$500,000 to reflect the more mature startups we are attracting. River Accelerator startups in the Spring of 2016 raised an average of $2m before joining River, with 5–10 people per company and a working product or service in the market. Less than a year after our first demo day, our River Accelerator startups have already collectively raised 10x the amount of capital we provided them.
Epilogue: Goldman Sachs this month (June 2016) ranked Rothenberg Ventures and River #1 and #2 in VR. Last year, CB Insights ranked us both #1 in VR and #1 in “Frontier Technology”. We then embraced the term “Frontier Technology” because it resonated with us although we hadn’t heard it before— and of course hired Mr. Dempsey, the brilliant CB Insights analyst who coined the phrase.
The future is here, and it is bright!
Fove from our first group in Spring 2015 raised $11,000,000 less than one year after demo day.
Mike Rothenberg (Founder & CEO)
Mike founded Rothenberg Ventures in 2012 to build communities and solve problems while a student at Harvard Business School. Mike couch-surfed across the country to raise $5m from 50 founders & CEOs for the first fund. As a student, Mike ran the fund and led the investments including SpaceX, Matterport, Robinhood, Revel Systems, and Patreon.
In 2014, Mike founded the River Accelerator and River Studios to help build early-stage Frontier Technology and Virtual Reality ecosystems. Mike is a globally recognized thought-leader in Frontier Technology known for calling the Virtual Reality tipping point, and has keynoted major conferences on Frontier Technology and Virtual Reality on multiple continents.
In 2016, Mike focuses Rothenberg Ventures on Frontier Technology startups, built with technology between the R&D stage and mass-market adoption, because we believe they are the fastest-growing and most valuable startups in the world. Rothenberg Ventures and River continue to build the Frontier Technology ecosystems and is now the top-ranked Venture Capital firm in Frontier Technology and Virtual Reality (according to Goldman Sachs, CB Insights, and Pitchbook).