Embedded Ventures: Skunkworks of deep tech venture capital
By Jenna Bryant, Co-Founder & CEO/General Partner at Embedded Ventures
You might be more likely to see a triple Jovian Eclipse on Jupiter than you are to see two fund managers like Jordan Noone and me. A woman who at 22 years of age launched a career of pairing early-stage startups with the most in-demand engineers in the world, while simultaneously appearing on TV shows like Sleepy Hollow and The Detour. And an engineer who at 22 became the technical Co-Founder of a future unicorn hard tech startup that was building the world’s first 3D printed rocket, Relativity Space. We’ve experienced the magic that happens when you’re surrounded by skeptics, but you still roll your sleeves up and turn an idea from nothing to something. Our atypical and serendipitous industry experiences combined with our passion for the communities we represent, led us to the launch of Embedded Ventures — a new option for early-stage complex tech startups seeking capital…aka The VC Remix.
A positive result of the “impostor syndrome” that I have grown to embrace is the ability to zoom out at any moment and identify what legacy processes need to be updated. A few unrelenting observations stand out (and my stubbornness/loyalty to the pursuit of fixing them) as questions we wanted to address as we crafted what mark Embedded Ventures would make on our industry:
1) Why is the industry that helps drive innovation so far behind when it comes to diversity? Even the data proves that diverse teams perform better… so what’s the hold up?
2) Early-stage, hard tech investing is about predicting how science is applied and turned into the technology of the future, and evaluating the technical competency and leadership qualities of the Founders. This begs the question: Why do most early-stage VC’s have pure finance backgrounds instead of hands-on technical, engineering, and startup experience?
3) Hard tech startups need resources beyond what investment and networking provides. They need expensive, scarce physical resources like lab space, rocket launch pads, and manufacturing facilities. So why is there limited or no collaboration between early-stage startups and large corporations who can grant access to these resources and possibly even be the startup’s first customer?
The Venture Capital industry’s claim to fame is seeing trends first. This might be true, but just for technology trends. Despite decades of diversity, equity, and inclusion progress in the United States, most Venture Capital funds still have the diversity makeup that funds did fifty years ago — NONE. One root of this archaic makeup is how the industry wrongfully prides itself on “warm introductions only,” limiting the growth of their network to individuals two degrees of separation away. What happens when someone outside of that network has an amazing idea for a company or has a unique way of thinking that would lead to lucrative investment returns? They get left behind.
The majority of Venture Capital firms rarely, if ever, invest in early-stage hard tech. The areas we consider falling under hard tech are advanced/edge compute, quantum systems, defense & security, communication infrastructure, logistics/supply chain, mining, battery/power systems, material science, advanced peripherals, aerial mobility, dual-use tech, drone technology, manufacturing, robotics, biotech/biochem and sustainability. Most pass on these startups at the early stage, hoping that someone else will invest in them. They’ll participate once there is industry hype or customer traction. Luckily, a few brave early-stage firms have taken chances on this more complex group of technologies, even with limited hands-on technical depth. They often utilize their existing network to evaluate the technical depth of these founders and help determine if technology in this space makes sense. What happens when you put deep tech founders and technologists in the driver seat to evaluate these early investment opportunities, instead of bankers? You understand the potential of each hard tech startup years ahead of others.
Building a hard tech startup is extremely different than building a SaaS company. In addition to having more visible market timing indicators, there is a thriving ecosystem of low barrier-to-entry infrastructure partners for building software companies — the highlight being cloud computing services like AWS, Azure, and Google Cloud. There is no such equivalent for hardware. In some cases, there are only a handful of organizations that have the infrastructure you need and you can’t afford to replicate it (rocket launch pads, for example)! We set out to tie together corporations and startups in a way that is underserved by today’s options.
Our early benefactors are interested in keeping our operations under the radar. We are not planning on publicizing much more than this with you at this point, hence the “skunkworks” semi-secrecy of the majority of our operations.
Jordan and I realize how uniquely positioned we are, between our personal experience and talented community, to help shrink the gap between idea and action for changing these legacy systems. We can’t do this alone, and we are so thankful to be surrounded by some of the most well-respected leaders from every part of the industry as Advisors. We will all work together to break the current ideologically heterogeneous constituencies.
This is a mammoth opportunity, and we know it will take time to see the results of our work. I also assume that the industry won’t change as visibly as I’d like it in my lifetime. No matter what, we will do our absolute best to pave the way for this next generation of VC firms through Embedded Ventures, and will be a guide to those who follow.
…I love that with this audience, I don’t need to say it louder for the people in the back!
