My Path to Frontier Tech

Timehop recently alerted me that just over a year ago I released the Future of Frontier Tech Report at CB Insights.

While the report originally focused on Drones, Space, and AR/VR, frontier tech has come to include many different type of emerging advanced technological verticals, with the tech community fully embracing the term.

But where did this whole frontier tech thing come from?

TLDR - I was jaded about where and how VCs were investing, thought these areas were fascinating, and presented a massive opportunity in venture, and I was in the fortunate position of being able to put data around it all.

Long story? See below.

When I started my career at a hedge fund called Crane Partners I was always obsessed with tech, but also was highly focused on the economy, public market finance, and more traditional private equity. I spent a lot of time looking at more traditional industries like cement and glass production, medical devices, automotive, dental, and much more. We were an open-ended fund with a license to invest in pretty much whatever we wanted. And we were good at it.

But I always kept coming back to tech. My public market portfolio had a lot of tech names in it, derivatives trades often centered around tech players, and I followed the VC landscape closely. As we moved into other areas of investing, I pushed our fund to look at earlier-stage companies. Eventually I pitched the head of the fund on a strategy of investing in seed stage startups targeting SMBs/sole proprietors that related to the industries we were looking at on the private equity side, and with a 20-page thesis on why this was a good idea, he carved out a tiny portion of the fund for me to make seed investments with.

I fell in love with investing in startups and understanding the venture landscape. With this in mind, I joined CB Insights when it was ~11 people because I was able to stay market facing in some ways, while also seeing how an early-stage startup was run and scaled. In my 22 months the team grew from 11 to ~85 people, they are now over 100.

Becoming Jaded

At the time, it was Matt and I churning out 6+ research briefs per week. We read everything, knew what everybody in tech was (and wasn’t) talking about, and then figured out what to research, analyze, and write about. The CB Insights research and data team today is still the best in the business at this.

As we built out the research team different members started to gravitate towards different sectors. I focused a lot on international VC and food tech, Matt focused on the On-Demand Economy (remember that?) and insurance tech, Nikhil focused on digital health, and on it went. We had our pulse on the startup ecosystem.

But here’s the thing, as you continue to sit in the flow of some of the best information in the tech industry, you also start to realize just how underwhelming a large portion of the VC landscape is (I’ve written about this ad nauseam). Seed stage rounds increased in size, “pre-seed” was created, insane valuations were being reported for companies that had raised money just months prior. We even took a shot at predicting the next 50 Unicorns (16 have raised money since). Unicorns were king and these investors that were supposed to be investing in the future were increasingly moving from venture capital to product-market fit capital. I was jaded.

I started looking for other areas of tech that excited me. I had already been really interested in drones, had recently bought a Google Cardboard so was starting to get more into VR, and Space was just plain cool. These were all areas that people were afraid to invest in, seemed to have massive future implications for both emerging and developed markets, and not that many people were talking about intelligently. As a contrarian (like everyone else in tech), I liked that and thus, I started reading.

Read ->Learn -> Speak -> Listen -> Learn -> Read…

To tie it into CB Insights (since, you know, that was my job) I also realized that there was very little data around these areas. I queried our database what seemed like 100 different ways, manually tagged companies, and put some hard numbers around each of these verticals. It also just so happened that as a research team we had wanted to start experimenting with new types of reports as we expanded into incorporating outside data in our research briefs. The timing was perfect and my passion project had turned itself into a report detailing funding, exits, strategics, VCs, market sizing, and use-cases across each of these verticals.

The report did pretty well and over the next few months I was obsessing about this new thing we called “Frontier Tech”. I gave a few talks about these areas, interviewed founders for the CBI podcast I launched, moderated some panels, and began to meet many of the key people in these spaces.

From CBI to RV

Eventually I joined the team at Rothenberg Ventures as they had recently re-branded themselves as a“frontier tech fund”. My passion for investing had resurfaced to a level where I had to make the incredibly tough decision to leave a team/startup that I had come to love in CBI, and join a startup in its own right in RV.

I spent 6 months in SF (flying back to NYC every 6 weeks), getting to meet incredible people working on deep technological problems and work with incredible investors on our investment team. I was fortunate enough to be able to lead investments from sourcing to close, establishing independent conviction as the only VC in a few of the rounds we did, and help build out our data + research processes. My investments spanned autonomous vehicles, space, drones, enabling technology for automation, and robotics. I even got to learn from entrepreneurs working on what could be the next wave of frontier tech in areas like CRISPR, quantum computing, exoskeletons, and more.

My plan was always to go to SF and then come back to NYC and be the main investor for the fund here. So in June after a rollercoaster first half of 2016 (or so I thought), I moved back to NYC to open the NY office with Dylan and build on my thesis of the east coast being a key birthing ground for massive frontier tech startups in the future (more on this in another post).

My world changed pretty quickly and the details of those changes aren’t worth discussing (and are increasingly well-documented), but just a little over a year after that first frontier tech report I’m writing this note from a place where I’m slightly less jaded, significantly more educated, and more excited by what’s next every day.

Continuing to Invest

As “VC speak” as it sounds, today I’m fortunate to be able to continue to invest in founders and employees that are routinely some of the smartest people in the world solving deep technological problems in nascent markets. I strongly believe that outsized returns will come from the current areas like Robotics, Drones, AI, Autonomous Vehicles, Space, VR/AR, as well as whatever crazy, cutting-edge ideas people smarter than me can dream up and execute.

Reach out on twitter @mhdempsey or via email.