It’s difficult to imagine any industry in this day and age that doesn’t use computers. Even the most technologically resistant, like construction, still use computers to send emails, compose invoices, or make schedules with spreadsheets—and, in certain areas, the industry uses full-on BIM (building information modeling).

Given that many of the simplest devices are now “smart” with their own microcontrollers or internet-connected, there’s not much point in asking whether or not any specific industry uses computers. In the same way, we don’t really ask if industries use software, or databases, or—more recently—the internet.

All of these technologies have integrated into every industry. There’s no reason to expect AI to be any different. In fact, it has been gaining adoption faster than past technologies.

However, the adoption of AI across industries is still in its early stages. While the rate of growth has been fast, the total penetration of AI usage in US industries is around 10% or less so far.

We don’t tend to be in the camp of “AI will solve everything” and are far from believers that we’re right around the corner from AGI. That doesn’t mean we think the impact will be minor, however.

Valuations Don’t Reflect Fad or Not

James recently shared in his piece on the US AI Action Plan:

Early internet commentators predicted that a plethora of blogs would dominate the world or create a decentralized utopia. It would have been unimaginable in the late 1990s that the world would get centralized into walled gardens like the social media platforms and have a single search engine be the “home page” of the internet.

That home page—Google, in case it wasn’t obvious—is now under threat by AI. Why go to Google when you can just “ChatGPT” it?

There are many different changes that had to happen to make Webvan a laughingstock of a business after the dot-com bust and Instacart a $13 billion business as of July 2025.

That included smartphones, better mobile connectivity, and more. What will the future bring to AI? It’s still too early to say.

It’s important to remember that Google and Amazon existed before the dot-com bust. While they certainly weren’t “no name” companies by any means, they only achieved their incredible market strength (and valuations) in the years after the bust.

I was at an event recently where an early internet entrepreneur shared how many companies at the height of the boom could simply register a domain and basically raise a round—or even IPO. Financial manias create insane valuations that eventually have to come back to earth. And they will. But that doesn’t make the changes and value created by the boom any less real.

Among the Fortune 50, there are “old economy” names like Walmart, AT&T, and ExxonMobil—which were on there in the 1990s. Names like Amazon, Alphabet, and Meta—internet companies—are now up there too, a fact so obvious that it seems silly to even mention it.

Webvan obviously isn’t up there, but Instacart ($CART) is public and exists.

Just because we might have a bubble in valuations in most AI companies—one worry we have is many companies that have scaled rapidly in revenue can just as easily de-scale in revenue with faster-than-ever competition—doesn’t mean the Fortune 50 in a decade or two won’t similarly feature massive AI companies.

Real-World AI is a Huge Opportunity

What does Creative Ventures consider real-world AI, and why do we care about it?

1. “Picks-and-shovels” of AI. Not all AI companies will survive and thrive. In fact, if the internet boom is anything to go by, very few will do so. They will buy a lot of Nvidia chips, though. And similarly, we will need new cooling, energy storage, and interconnect systems to power the AI boom. That will be required, regardless of who ultimately wins.

2. AI applications with proprietary data. Our framework for what all modern AI is composed of is Models, Compute, and Data. Among these, everyone tends to use the same or similar models, everyone tends to use Nvidia/CUDA, and for LLMs, everyone tends to have mined the same internet data. That isn’t necessarily true elsewhere, however, especially with data. As models get better and better, they may need less data, but they still need it.

Nvidia has been doing a good job with continuing the pace of innovation—and squeezing the market—but there are other dimensions of scaling hardware. China, with its restrictions on AI chips, has been making this quite clear.

As per at :

Huawei is compensating for its less powerful individual processors by deploying many more of them and leveraging a highly scalable, high-bandwidth optical interconnect architecture. And though it requires more space and energy to power the compute, this has not been a constraint for Huawei. This approach has temporarily now made CloudMatrix a viable alternative in China (likely domestic demand is so high that exporting this will not be a priority in the short-term) where Nvidia's cutting-edge GPUs are restricted or unavailable, despite higher costs and energy use. (Source)

The now-famous chart of energy production (in a lot of forms, but it became social-media viral for a while):

The US is “ok” at building renewable energy at this point—but it has been next to impossible to build new nuclear plants. That’s why Microsoft and Meta have been trying to restart decommissioned ones.

In the meantime, if one can get utility-scale battery storage (stationary batteries) up and running, it could convert much of the US’s ability and willingness to deploy renewable energy sources into something closer to “base load” with the ability to provide constant power.

These opportunities constitute the “picks and shovels” of AI, even while new applications of AI within areas like world models for robotics, drug discovery, and materials engineering represent incredible potential to transform our physical world.

This isn’t even getting into the potential of coding tools like Claude Code and various RAG platforms massively increasing broader software development speed—which is a bottleneck for a surprisingly large number of deep tech applications. We don’t necessarily think these productivity gains can be easily value-captured by model companies (because there are too many with strong performance, including ones based on open-source models like Qwen3-Coder), but it will be a factor in accelerating the pace of our world.

Although many hyped applications of AI may strike some as fanciful—and reminiscent of the dot-com bubble—it’s important to remember that, in the end, the internet did transform everything. AI is likely to do the same.

Portfolio News

C.Light Technologies received its CPT code (1010T).

This is a great step forward in helping the company get reimbursed by insurance for its revolutionary technology that aims to non-invasively detect and track neurodegenerative disease.

AM Batteries unveils a 3,500-square-foot lab in Massachusetts for reshoring battery manufacturing

As per the company:

Located in Billerica, our 3,500 sq ft dry-room lab provides battery manufacturers and material suppliers a hands-on environment to test new chemistries, qualify materials, and accelerate commercialization—all while supporting job creation and clean energy innovation here in Massachusetts.

Creative Updates

James’s book is available in October 2025

James’s book, What You Need to Know About AI, is now fully copyedited, proofread, and finished with layout. It’s now in the final stages of cover editing before being sent out to the printers.

We know a lot of you have been waiting for it—we’ll keep you updated as it becomes available on major platforms soon!

Predicting the Future?

Take a look at one of James’s other recent writings on GPT-5 and macro predictions about AI. Let us know if you agree or disagree with various conclusions!

Weighty Thoughts

Three Macro Predictions on AI

OpenAI just released GPT-5—to great fanfare and mixed reviews around the internet. According to benchmarks and subjective personal testing, GPT-5 is better than GPT-4 and o3…

Read more

9 months ago · 21 likes · James Wang

And yet, the mission resonated with so many. Who wouldn’t want to “help people access, understand, and benefit from the human genome”? It sounds empowering. If our genetic codes are the foundation of who we are, then unlocking that code could help us better manage health risks tied to our biology. But as with most things in science and medicine, it’s not that simple. Even 23andMe’s own disclaimers clarify that their reports aren’t a substitute for seeing a healthcare professional. Understanding health isn’t just about the genome—it’s also about how genes are transcribed, how proteins are regulated, how cells interact, and that’s a simplified version. These layers are not captured in a consumer-facing genetic test.

The Challenge of the Two-Sided Data Business Model

If you’ve chatted with us about 23andMe before, we’ve likely shared some skepticism—primarily about their business model. As a direct-to-consumer business, the one-time nature of the product puts a cap on revenue. Aside from rare situations—like specific cancers—your genome doesn’t change. So, once a customer receives their results, there’s little reason to come back. They did try to build a recurring revenue stream through memberships, but the value proposition just wasn’t compelling enough. It didn’t pass the “so what?” test. Customers get their health reports—so what?

Originally launched at $1,000 in 2007, the test price dropped to $299 by 2012 and now sells for $199. Even though they reported ~50% gross margins on around $200 million in annual revenue since 2021, their net income has always been deep in the red. The business model simply never added up.

Where things could have worked was on the pharmaceutical partnership side. About 80% of customers opted in to share their genetic data and self-reported health information. In 2015, 23andMe launched a drug discovery business, and in 2018, they signed a partnership with GSK to use this data for R&D. That was one of the big selling points behind their 2021 SPAC. Two drug candidates even made it into clinical trials—but by 2024, their entire therapeutics effort had shut down.

In hindsight, 23andMe’s pharma partnerships may have come too late. Their scale had already grown beyond what’s typical for an acquisition, and their lack of early alignment with clinical work made it hard to generate real traction. The underlying challenge? This was always a two-sided data platform model, and those are notoriously difficult to make work.

The Missing Clinical Link

Even beyond the business model, the lack of clinical integration was a major issue. While GSK and 23andMe cited a study showing that genetically supported targets have 2x the success rate in drug development, the truth is that their customer data—tied to self-reported conditions rather than clinical diagnoses—may not meet the bar for clinical quality. This highlights one of our core investment theses at Creative Ventures: if a healthcare solution doesn’t align incentives across patients, providers, and payers—and doesn’t plug into the clinical ecosystem—it’s extremely difficult to drive meaningful outcomes.

In another world, if 23andMe had started with sequencing patients within the healthcare system, their story might have played out very differently. Of course, that’s an uphill path—especially in the U.S., where insurance and reimbursement dynamics make it incredibly tough to pull off.

From DNA to Drugs: Easier Said Than Done

And let’s not forget the science. Even when a genetic variant is known to be associated with a disease, that’s just the beginning. Understanding how that gene impacts its associated protein, how the protein affects the mechanisms, and what molecules could potentially intervene—that’s an enormous lift. DNA data alone is not a silver bullet for drug discovery. In fact, many symptoms can’t even be traced to genetic roots.

What We Can Learn

It’s easy to pick apart a failed company in hindsight. But 23andMe offers real lessons—especially for those of us building and investing in biodata businesses. Most notably, the business model matters. How a company makes money and how it eventually exits are critical. Reinventing a business model is hard (though not impossible). In this case, it didn’t work out.

Equally important is clinical relevance. In health-related applications, a product must deliver meaningful and actionable outcomes, unless it’s going after the customer lifestyle market. And finally, the science has to hold up. If a company aims to bridge the gap between DNA data and therapeutics, its R&D should reflect that from day one. As we keep repeating ourselves here at Creative, deep tech startups don’t have the luxury of SaaS-style pivots.

Our Portfolio Companies in the News

AM Batteries announced a partnership with TDK to advance energy-efficient battery manufacturing.

AM Batteries’ proprietary dry coating technology eliminates the need for solvents and electrode drying – reducing energy consumption by 75 percent and capital expenditures by 30 percent in the battery electrode manufacturing process. Through this collaboration, AM Batteries and TDK will leverage their respective expertise to further optimize battery production and drive advancements in next-generation energy storage solutions.

NxLite named to Cleantech Group's prestigious "50 to Watch.”

NxLite was highlighted in the Materials & Chemicals category for their "thermally and optically smart Diamond-Like Carbon (DLC) coating for windows to control heat and light emission." The recognition specifically notes how their technology provides an innovative approach to energy efficiency in buildings and beyond.

Fort Robotics was highlighted as one of the key solutions to lighten the labor shortage challenge.

“We’re seeing remote operation from line-of-sight and tele-operation, as well as task automation for repetitive jobs, help skilled laborers focus on tasks where their skills are most needed,” said Doug Riffle, vice president of business development at FORT Robotics

And Other News

SXSW was a success! James was at SXSW in March, moderating an all-star panel on the future of AI, with around 200 people turning out—even with Peter Attia and other big names literally next door.

Reach out to catch up with us on his hot take and the latest from the conference. Listen to a recording of the panel here!

Catch Us In-Person!

We’d love to grab coffee and catch up if you’re in town. Here are our upcoming traveling schedules. Please do reach out!

• Seattle: Apr 9 - 11

• Japan & Asia: Apr 20 - 28

• LA and Palm Springs: Apr 28 - May 1

Creative Ventures is a deep tech venture firm investing in early-stage companies for human betterment, bringing the advanced technologies to where the people are and maximizing the value they can generate for the world. Our focus within deep tech opportunities are in Real-World AI and Biodata; bringing the full promises of the advancement in Large Language Models to the physical and biological worlds.

Similarly gloomy, last week’s Pitchbook newsletter led with, “Record highs for down rounds” with 2024 setting decade highs for down rounds, especially in late-stage companies.

This creates a split screen. While we are still seeing many companies “hold the line” with elevated valuations, everyone knows that much of this is illusory.

This is precisely the reason so many funds also have a huge amount of dry powder. A few partners at well-known funds have mentioned to me that while they are trying to invest in high-flying AI names, their funds are also reserving a significant portion of capital to support existing companies.

Part of this is good. We, ourselves, said to our LPs during our last Summit/AGM, “We’re all special situation funds now,” referring to the many disruptions presented by a market in crisis. Many of these cases do not have happy endings. However, others are once-in-a-blue-moon opportunities. In our most successful case, we re-upped on a company whose valuation plummeted to a fraction of its 2021 high (5X’ing our share of the preferred), where most investors have been wiped out, but the company itself has had exponentially growing revenue and whose new valuation barely exceeded a 2X revenue multiple.

That’s a good case for reserving capital. The bad case—which, unfortunately, is much of the market—is to keep your existing companies from collapsing in valuation.

Marks tell the story

How do we know that most of the market is “the bad case”? Other than anecdotal chatter, we see it in most funds’ marks on their companies. Many of these marks are still extraordinarily elevated, even in companies that we know behind the scenes are distressed.

We’ve heard it in cases where we’ve aggressively marked down our companies and been asked why since a similar (or even the same) company has not been marked down by other funds.

We like our portfolio. We think many will become world-changing companies. We also think that it’s insane to assume that company valuations should look like they did in 2021. Private capital supply and demand have drastically changed. Additionally, while US public markets are historically elevated (the forward earnings risk premium is negative for the first time in a long time), a lot of it is driven by a tiny number of mega-companies, and both IPOs and M&As are still sluggish.

This isn’t self-congratulatory patting ourselves on the back about how honest we are. In truth, it’s quite painful to have supposed apples-to-apples performance metrics (spoiler: they never are) that look worse than our peers, but we think it’s important in both keeping the trust of our LPs and us sleeping well at night. As Sarah Samuels stated in the Institutional Investor article, the current dynamics have been destroying a lot of goodwill between GPs and LPs.

However, even besides that, we think inaccurate valuations are extremely unhealthy for the industry.

Inaccurate valuations freeze markets

As many know, James came from Bridgewater’s investment team and has a global macro and public markets background. One lesser-known aspect of Bridgewater’s culture—driven by Ray—is that they tend to be market history nerds. James, in particular, has been fascinated by Japan’s Lost Decade(s) for many years. (One accessible book recommendation from him is “The Holy Grail of Macroeconomics: Lesson from Japan’s Great Recession” by Richard Koos.)

Why did Japan suffer sluggish growth and deflation for so long? A big part was valuations—specifically, for assets on the banking sector’s books—were frozen in amber.

Rather than face the prospect of a messy and potentially catastrophic financial sector collapse, Japan allowed their banks to simply ignore reality. They may be insolvent in reality, but if simply no one recognizes it, life goes on.

Well, kind of. The problem is, that no one is actually fooled, even if everyone is willing to pretend that the emperor has no clothes. Banks know that they can’t afford to take even more losses, which means that they’re unwilling to issue risky loans. This means—in Ray’s framework that growth is driven by money and credit—that credit is severely curtailed, which cycles back to generate less total money in the economy (because one person’s spending, whether from money or credit, is another’s revenue). Combined with a conservative central bank that was never really comfortable easing further out on the risk/duration curve, this was a disaster. It meant Japan barely limped along until a combination of literal decades (slowly growing out of the debt hole) and a push from Abenomics finally got them out.

Today, while they’re starting to get out of it, China has faced a similar problem in their regional governments, SOEs, and shadow banking sector.

And famously, the US avoided Japan’s fate in the aftermath of 2008 by aggressively recognizing and forcing consolidation of weak banks and going out with “Bazookas of cash” from fiscal policy and monetary policy far out on the risk/duration curve (Quantitative Easing). Essentially, the opposite of everything Japan did.

Lessons for today’s VC and PE market (from James)

Mid-last year (2024), I had dinner with a group of VCs. No one thought the fundraising (for either funds or startups) was great.

After hearing about my background and deep skepticism about substantial rate cuts—since inflation and growth conditions did not warrant it—I was asked what, I thought, would drive an unfreezing of the venture market. Specifically, I got a particularly thoughtful question from one particular VC that I respect a lot. She asked, “Sure, time will eventually fix the market. But what’s a realistic scenario that would cause it to actually rapidly improve?”

It took me a bit of thought.

And then my answer horrified the table.

“Mass collapse of late-stage startup valuations, with forced recognition of existing losses, and then forced consolidation or fire-sale of the companies.” The table didn’t really like the answer. One GP mentioned that that would damage the venture industry’s reputation and prospects for a generation. Another grumbled that even if that worked, all of our businesses would be dead.

However, the question-asker was more considered. She asked, “Why?”

It took me a while to clarify at the dinner, but you, dear reader, probably can already see why after the explanation about Japan.

The venture market is frozen because commitments are high, distributions are low, and without the willingness to recognize losses, nothing transacts (despite the vaunted statements by secondary firms about how much business is getting done).

If losses were recognized—and allowed to be realized—distributions, even if disappointing, would actually happen, firms would no longer be sitting on as much capital to support existing companies (and would probably desperately seek fresh, exciting opportunities… to dig themselves out of the hole) and the entire cycle of commitments, capital calls, and distribution would be unfrozen.

What it would take is recognizing reality. History teaches us it’s better to rebuild back from the ground up rather than fall from grace on a shaky, unstable foundation.

Final thoughts

There is a (perhaps niche) saying in hedge funds that you can’t “eat” simulated, gross, or paper returns. The idea is that these metrics of theoretical money are not going to pay for your lunch.

Similarly, one can’t eat TVPI. You can only actually eat DPI, which is low across the board for venture funds right now.

Venture capital already, famously, has a painfully low correlation between interim performance (TVPI or DPI) and final DPI. David Clark of VenCap analyzed 71 funds from 2005-2008—the correlation between year 5 TVPI/DPI and final TVPI/DPI was 0.4 and 0.2 respectively. Worse, some of the best/worst performers at t=5 years flipped at t=15 to 20 years.

Beezer Clarkson from Sapphire Partners noted similarly that in their venture portfolio, funds get to 1X DPI by year 8 on average. And many of their best performers returned absolutely nothing by year 5 (even in better liquidity environments than today).

So, does this mean one just has to throw up one’s hands and accept that there’s no way to assess venture capital? No, but it does mean that the job comes back to whether you think the VC’s strategy makes sense, if they can execute, and if you trust them.

VC is always weird because the time scales mean that we always have to raise sooner than we know the “final results” of our funds. However, as one of our advisors has constantly emphasized to us, the entire ballgame is about getting (more) money back to your LPs. So long as you try to do that, things will work out—or, at the very least, you can know that you did right by those who trusted you.

In other news

Portfolio News

TerraCO2 closed an $82M round co-led by Just Climate (a low-carbon growth firm launched by Al Gore’s Generation Investment Management) and GenZero (the climate investing arm of Temasek).

As per Axios Pro:

Terra plans to use the funds to build its first commercial plant in Cleburne, Texas, that can make a quarter of a million tons per year of its supplementary cementitious material to be blended to produce low-carbon cement. Terra has pre-sold that first plant to Asher Materials, a subsidiary of NSG Logistics.

Catch us in person!

James will be moderating an all-star panel on the future of AI at SXSW on March 8th. Panelists include:

• , writer of , founder of WellAI, and a Ph.D.-trained data scientist, AI entrepreneur, economist, and quant investor with over 30 academic manuscripts.

• Kartik Tiwari, a roboticist and a three-time founder of companies working on hard problems from self-driving trucks (Starsky Robotics) to autonomous robotic surgery (Andromeda Surgical).

• , a Principal at Gore Range Capital (and previously a summer associate and venture partner at Creative!), co-founder of GlobalHealth AI, and holds both an MD (University of Benin) and an MBA (University of Chicago Booth).

Catch him there and make sure to attend the session!

This newsletter, we’ll dive into Biodata. A recent story perfectly illustrates why we’re so excited about the investment potential.

Biodata: LLMs Unleashing Biology's Potential

It's an incredibly exciting time—for example, see how LLMs are changing the game in biology. You've probably heard about DeepMind's AlphaFold, the protein folding prediction platform. This was a huge win because predicting how amino acid sequences become 3D protein structures helps us understand protein functions and how they potentially interact with other molecules. This has massive implications for everything from drug discovery to optimizing enzymes for industrial or even climate-related purposes (like better carbon capture).

Traditionally, figuring out protein folding meant long hours in the lab with techniques like crystallography. It’s a painstaking process of optimizing protein expression and purification, often involving a lot of trial and error to get those proteins stable enough for X-ray analysis.

AlphaFold is just scratching the surface. In biology, where synthetic data is still pretty unreliable, the quality of the data going into these models is absolutely crucial. The amino acid-to-protein structure problem that AlphaFold tackled is just one small part of the incredibly complex web of biological interactions. That’s why we’re so keen on companies developing tools and platforms to generate the right kind of biological data.

One of biology’s biggest challenges is connecting the dots (or rather, the incredibly intrigue network of connections) between observable traits (phenotypes), functions, and the underlying biological code. There are so many layers of regulation that determining the cause and effect, and the underlying mechanisms, of just one interaction can take up an entire PhD study, and that’s if they’re lucky.

Centenarian cell bank: learning from the biology of those who live past 100.

A few months back, researchers (Dowrey et al., 2024) from Boston University, Tufts Medical Center, and Harvard University published some fascinating work on centenarians—people who live past 100. It’s probably no surprise that these folks are generally more resilient to age-related diseases and have a much lower biological age than their chronological age. The researchers collected blood samples and turned them into induced pluripotent stem cell lines (iPSCs), creating a centenarian cell bank. These iPSCs, made using established protocols, are an incredible resource because they can be turned into different types of tissues, giving us a chance to understand—and maybe even link—biological markers to this exceptional “live long and stay young” phenotype. Imagine finding a common trait in these centenarians, maybe a gene, that could be given to newborns to protect them from age-related diseases and help them live longer, healthier lives.

The science of aging is a big area of research and commercial interest. A 2021 Nature paper by Lin et al., using the UK Biobank data, pointed to genetic variations in insulin signaling and AMP-activated protein kinase signaling pathways as potential contributors to longer lifespans and resistance to age-related diseases. And, of course, “reverse aging” is all over the news, with well-funded companies like Altos, Life Biosciences, and Retro working on ways to reprogram cells and reverse or slow down the aging process.

With resources like the centenarian cell bank, rapid discoveries on the science of aging, and the potential of LLMs to decipher the links between biodata and desirable traits, there’s a tremendous opportunity for those building the next generation of tools for biodata generation and manipulation. They will accelerate the discovery of unprecedented insights, paving the way for transformative therapies.

Why Biodata is Ripe for Investment Now:

Several forces are converging.

1. Data generation: We're generating more high-quality biological data than ever before, thanks to better tools and engineering breakthroughs.

2. LLM Power: The advanced model stepping in to make sense of the extremely complex biological interactions, building on existing knowledge like how researchers figured out protein folding with crystallography.

3. Bio-manipulation: Advanced biotechnology like CRISPR and iPSC that allow us to manipulate biological systems with unprecedented precision.

Think about the centenarian biobank: combining insights from biomarkers, genomics, transcriptomics, proteomics, metabolomics—basically every "-omics" you can think of—and seeing how they all interact, then feeding that into an LLM, and then having the ability to design and deliver targeted therapeutic molecules based on those findings.

That of course is an oversimplification, but you can see how it’s a total game-changer for medicine. Of course, this also raises serious ethical questions, and we absolutely have to be vigilant about potential risks, like whether tweaking certain pathways could inadvertently cause other health problems. But, the potential rewards—longer, healthier lives—make the responsible pursuit of Biodata an incredibly compelling investment.

Portfolio Companies in the News:

The recent news surrounding Northvolt’s bankruptcy has understandably dampened sentiment in the advanced battery sector. However, for us, it reinforces a core investment principle: robust cost structures, feasibility, and execution are absolutely critical. Hype cycles can sometimes obscure these fundamentals, but downturns inevitably bring them back into sharp focus.

Within this same industry, we see a different story unfolding with Sepion, one of our portfolio companies developing polymer membranes for lithium-ion batteries. While their initial value proposition centered on enhanced safety and range, the primary driver for customer engagement over the past year has become cost efficiencies.

We're thrilled to share a significant update: Sepion has secured a major deal with Senior Tech, the second largest manufacturer of lithium battery separators worldwide.

The first product launched from this partnership has the potential to reach 1.2 billion square meters of sales, or roughly 2 million EVs worth of separator—a significant revenue opportunity for Sepion. Senior Tech is a leading supplier of separators to industry giants like CATL, BYD, Volkswagen Group, LG Energy Solutions, and Samsung SDI. This deal represents a substantial validation of Sepion's technology and a major step towards broader market adoption. This reinforces our conviction that the battery sector is gearing for real scalability and that Sepion is well-positioned to capitalize on this growth with their capital-light path to market in partnership with key channel partners.

Book News and Meeting Us In-Person

As many of you know, James has been hard at work writing a book, What You Need to Know About AI: A Primer on its History, Economics, and Technology. The pre-sale is going live very shortly and runs until the first week of February—you can sign up here. As the author of the insightful AI Substack, Weighty Thoughts, James has consistently demonstrated a knack for predicting key trends in the field. This book offers an exceptional opportunity to gain a comprehensive, long-form perspective on AI. We highly recommend checking it out!

If you happen to be at any of these events, in the area, or planning a trip to the Bay Area, we'd love to connect in person!

• Both James and Kulika will be in town (Bay Area) during JPM week, Jan 13 - 16.

• James will be at iConnections in Miami from Jan 27 - 30.

• Kulika will be attending Women in VC in Half Moon Bay from Feb 4 - 6.

• James also has plans to travel to Asia, with dates and locations to be confirmed.

We hope this newsletter has given you a good sense of why we're so bullish on Biodata as an investment thesis. With the combination of advancements in biodata generation tools, the analytical power of LLMs, and the breakthroughs in biotech, we’re looking at an incredible impact on human and planetary health. The centenarian data bank is just one example of the astonishing potential we see in this space. Next up, we'll dive into our "Real-world AI" thesis, exploring how similar advancements are transforming the physical world. In the meantime, we'd love to chat if you're interested in learning more about our fund, our portfolio companies, or these exciting developments.

We’re hoping to cover more news about us here, but also continue providing interesting insights about the venture market at a more frequent basis again.

Global Recognition for Creative

RAISE Global Summit and All Raise

Over 900 GPs applied for a spot on the main stage of RAISE.

There were only 24 spots.

And Creative got one—in particular, our partner Kulika Weizman! With professional VC investors like Cambridge Associates, Fairview Partners, and Makena Capital on the selection committee, we’re excited to have been showcased at such an amazing venue.

Thought Leadership (and a book!)

Speaking of selection, our partner James was selected—out of thousands of proposals—to chair a panel on AI startups at SXSW 2025. Reach out if you’ll be in town then.

Additionally, his popular AI Substack, Weighty Thoughts continues to grow.

And perhaps most excitingly, he’s writing a book! It is due to the publisher on December 6th and targeting a Fall 2025 publication. Follow his progress here!

Our New Investment Focus

Many of you attended our LP Summit last month where we announced our new investment focus. It’s more of a refinement than a complete overhaul, but we’re very excited about it.

Since our founding in 2016, we have talked about the potential of AI and compute for the world. At this point, it’s become one of the most hyped areas of VC. However, we think the most important areas are still being neglected, in favor of flashier areas like “foundational models” (James has written extensively about why we don’t think they’ll realize the returns everyone is hoping for—like the economic model, competition from open-weight models, or even just the valuations).

We’ll be publishing newsletters in the coming months about our new thesis more, but the point is we’re interested in what will impact humans the most. That’s why we’ve adopted a new tagline of humanizing deep tech.

We’re looking for investments that: 1) enable AI (picks and shovels) + are enabled by AI (real world, embodied applications—and not just LLMs), and 2) biodata acquisition and biodata manipulation (which touches AI for things like drug discovery, but is also fundamental physical biology that will change the way we live).

We’ve already been doing these investments for years, but moving forward we’re reemphasizing the importance of these investments in our portfolio—and in a way, are entirely refreshing the way we do things.

Stay tuned as we update you all here, and thank you all for sticking with us on this journey!

IMVARIA Announces FDA De Novo Marketing Authorization of Fibresolve and the Adoption of Novel CPT Billing Codes by the American Medical Association

The FDA authorization of IMVARIA’s lead product Fibresolve, as a billable digital diagnostic tool for clinicians to use for patients, will expedite the medical community’s access to a non-invasive diagnostic solution using digital biomarkers in a novel way for lung fibrosis. This new authorization builds on the past medical and scientific assessments that the FDA had previously completed in assigning Fibresolve Breakthrough Device Designation.

Read more on IMVARIA’s site.

The post January 2024 portfolio round-up appeared first on Creative Ventures.

In the ever-evolving landscape of biotechnology, groundbreaking innovations are continually reshaping the industry. One such innovation that has caught our attention comes from Tierra Biosciences, a company with the potential to revolutionize protein synthesis and transform how we approach biologics and synthetic biology. 

Today, we are excited to share why Creative Ventures has decided to invest in Tierra Biosciences and how their cutting-edge technology addresses critical challenges in the field.

Meet Tierra Biosciences

Tierra Biosciences is on a mission to democratize access to proteins by providing on-demand protein production solutions to diverse clients, including pharmaceutical companies, CROs, biotech firms, and synthetic biology companies. Tierra is truly distinguished by its ability to synthesize proteins efficiently, rapidly, and cost-effectively. They address a significant bottleneck in the industry with their core technology in automated cell-free protein synthesis.

The Problem: A protein synthesis bottleneck

Traditional methods of protein synthesis are labor-intensive and time-consuming, often involving weeks of trial-and-error experimentation. The process involves identifying and optimizing DNA sequences that encode the protein of interest, adding purification tags, cloning the DNA sequences into an expression system, protein expression, protein purification, and storage. Every single step is prone to failure and a potential endless optimization that may not materialize. After months of trial and error, obtaining certain proteins for further functional tests may still not be attainable.

The problem is particularly acute because protein expression yield and feasibility may depend highly on the expression hosts. Only a few widely used hosts, such as E. coli and Pichia, are generally used as a protein production system. Other protein targets, such as artificially designed proteins or modifications, may also be difficult or infeasible to make in standard hosts.

Tierra’s Solution: Revolutionizing protein synthesis

Tierra Biosciences has developed a revolutionary approach to protein synthesis, offering a faster, more efficient, and cost-effective solution. Their cell-free core technology takes protein sequences of interest from customers and delivers synthesized proteins ready for relevant downstream testing. This process, which bypasses in-cell expression, is projected to offer 100x higher throughput, 10x faster turnaround, and 10x cost savings at scale. 

Global and technology trends

Tierra Biosciences aligns with significant trends within our investment scope. With rising healthcare costs due to an aging population, Tierra’s technology can help streamline drug discovery, potentially reducing the high costs associated with the development of biologics. The most commonly known types of drugs are derived from chemical-based Active Pharmaceutical Ingredients (API) like acetaminophen, which can be found in pain relievers like Tylenol. The chemical APIs are, for the most part, commodities. Hence, many generic drug alternatives are available in the market. In contrast, a different type of treatment is derived from biologic APIs, such as insulin or antibodies, which are more complicated to manufacture and generally less accessible than chemical APIs.

Notably, while chemical APIs make up the majority of drug prescriptions in the US, biologic APIs comprise a disproportionately greater amount of US drug sales.

Tierra’s platform has the potential to accelerate biologics API development and ultimately plays a key role in simplifying and reducing biologics API manufacturing costs.

Final thoughts

Before the PCR machine was invented, DNA was amplified manually by moving the samples to and from water baths set at different temperatures. Tierra Biosciences’ groundbreaking approach to protein synthesis has the potential to reshape the industry in a similar way by revamping how proteins should be synthesized. 

Creative Ventures is confident in Tierra’s ability to succeed, and we are excited to be part of their journey as they work towards revolutionizing protein synthesis and unlocking new possibilities in biopharmaceuticals and synthetic biology.

The post Why We Invested in Tierra Biosciences appeared first on Creative Ventures.

Q: Let’s start at the beginning! Can you speak about your background and what experiences led you to invest in deep tech?
A: I was born and raised as a third-generation family business heir, and my childhood was essentially spent preparing for me to take over my family’s enterprise. But when I went to work for my family, I quickly learned it wasn’t for me. The bureaucracy and complacency left me questioning my core identity. Who am I, if not an heir? 

I quickly found my answer hidden in that experience with my family’s business. I was surrounded by digital transformation, and that exposure paved my introduction into the startup world and, eventually, venture capital. 

My inherent desire to push boundaries and invest in things that mattered found a home in deep tech. 

Q: What is your personal investment philosophy on companies in the space?
Speak with authority; don’t regurgitate what is already known. Make it personal and reveal a sense of passion. 

A: One of my greatest lessons in venture was taught to me when I was just nine years old. I had these cards that, if you paired with the correct match, allowed you to exchange them for money. After buying my first five and winning, I did what the rest of my nine-year-old peers were doing, and I bought more…only to lose it all. It’s a silly experience on its own, but the lesson stuck with me over the years. 

That memory returned to me when I started Creative Ventures’ first fund. I decided to go into the world of investing knowing my good investments were skill and not luck—not to mention repeatable. I searched for consistency, demanding a repeatable business model from myself, my colleagues, and my founders.

The first step was getting honest about human bias and how easy it is for VCs to fall in love with founders. So many founder-first VCs fall prey to how easy it is to invest in founders who look, think, and resemble them, so I resolved to avoid that trap—and only work with people who were intent on doing the same. To win, I needed to be right, and I needed to be a contrarian to some degree. I needed to be market-first. 

By focusing on picking technologies and playbooks—not what other VCs tell me I should and shouldn’t do—I remain confident to this day that myself and my colleagues have a skill other VCs do not possess.

Q: Are there specific criteria for companies that must be met?

A: Every company we have invested in has met criteria specific to their industry and playbook. 

Back in 2020, we saw a ridiculous amount of money flowing into alternative proteins, and we didn’t think the valuation made much sense. Besides, we were searching for a scalable solution that did not come with ridiculous assumptions. After looking at almost 100 companies in the space, we simply couldn’t find one. So we asked ourselves, “Where else are emissions coming from that others haven’t paid attention to?” We arrived at the cement industry. 

The more we looked at sustainable concrete, the more we realized that technology is a small but crucial part. This business will require a lot of capital and a lot of JV to scale the production and distribution. Once we developed conviction on the business model and go-to-market, our criterion was simple: find a CEO who has done a lot of JV or M&A activities in the construction industry. When we came across TerraCO2, our diligence was primarily done around CEO Bill’s background and how he did his 47 M&A on both the buy and sell sides. The rest was history. 

Q: How about red flags? What makes for an immediate “no” when you’re considering a company for the first time?

A: I firmly believe that clarity in thought leads to clarity in execution. If somone cannot articulate their thoughts succinctly, they haven’t crystalized exactly how they will execute. 

I once sat in a pitch meeting with a founder who told his story so poorly that it led to confusion. As I asked questions about the model he presented, he started to realize that his business did not make sense. In fact, before the pitch was over, he admitted, “I guess this doesn’t really make as much sense as I had initially thought.” 

This is why clarity in thought is a requisite for clarity in execution. Things will go horribly wrong even if you have clarity in your thoughts. You don’t need to double or triple that amount if you want to maximize your chance of success. 

That’s not to say we need the founder to be right. However, we need to know what it is we are betting on. 

Q: So once an investment has been made, what role do you strive to fill for your portfolio companies? 

A: I strive to do whatever it takes to fill the gap that will most likely sink the company. Typically, we identify this gap during our diligence process and are transparent about it to our founders. We tell them up front and invite them to agree with us to a certain degree. We don’t want to invest in a company and fight with the management to agree that certain key issues are even the problems; we’d rather be working together with them on it. 

Sometimes, this manifests as a compensation committee amongst a board of six VCs to align their directions in a non-founder-led company and reflect that into a compensation package for the management team. A non-founder-led company has a harder time having a clear, aligned direction, and I fill in the role, ensuring alignment amongst the board and the management team. 

Other times, this looks like firing or demoting the CEO by putting them in a technical leadership role and working together to find a replacement that can scale the company and raise late-stage investments. 

It’s my mission to confront the nitty gritty and nasty things VCs are reluctant to talk about and do whatever it takes to get the company to graduate to its next stage. 

Q: What’s been the most formative experience for you as a manager, whether for good or bad?
Another opportunity to be personable. 

A: It is most definitely managing my team. Like my founders, I am, first and foremost, a founder as well. I had to start from scratch with an unclear direction. I had no money to hire anyone and had to sell pipedreams to recruit people. I have had to raise money. I have had to build our investment process and iterate on them over the years. I have had to crystalize our culture. I even had to break up with my co-founder.

I have gone through whatever my portfolio founders go will through. 

One of the most important and challenging parts of being a founder myself is recruiting and retaining talents. I am glad to say that we have had zero regrettable losses. Everyone who came and left did so at the right time. But it was not without rough patches. When I was younger (and much more foolish), I was used to being prescriptive and asking everyone to do what’s in my head. I saw them and additional arms and legs of my own, and I wanted them to do exactly as I thought they should. I think of them as a replica of myself, not as an individual with their own strengths and weaknesses. 

That almost cost me the entire team. My partner had to pull me aside and tell me that he thought the team was close to exploding if I did not change. It was a wake-up call and a very difficult one for me to take in and adjust to: to let go of control and allow them to figure out how to get to the goal themselves since I often have the path plotted out for all of them, whatever they did. 

I told all of my LPs that even though I’m a VC, my first and most important investment is always my team. I placed my bet on them before I did my founders, and I needed my team to pull through in order for the firm to grow. And to do that right, I needed to give them room – room to figure things out, room to fail, and ultimately room to succeed in ways I could not have imagined, because if I could, why bother hiring them in the first place? 

Q: What are you most proud of as an investor so far?
Consider an answer that highlights your personal qualities, strengths as an investor, and passions. 

A: I have never come across a foolproof investment strategy. All strategies eventually get punched in the face once implemented. What’s important as an investor is staying disciplined in the execution.

Discipline has been my greatest strength. You will find no strategy drift in our investment. Nothing out of our thesis. Nothing outside of what we described we will do. We will course correct as the market situation changes, but those are all within the flexible and carefully calculable bounds of our strategy. 

Venture is a long-term gain. You are not rewarded for overreacting every time the market produces – and it will –  a knee-jerk reaction to some uncontrollable events. Sure, you adjust the sail, but you don’t keep changing courses, shifting from market to market, and relaunching products every six weeks. There is merit in being agile, but as a VC, there is more merit in holding a steer steady. You just have to be right in the first place. 

The post Creative Conversations: Meet Champ Suthipongchai appeared first on Creative Ventures.

Rhaeos, Inc. Receives $1.5 Million Blueprint MedTech Grant from the NIH

This grant will further the development of its FDA breakthrough designated medical technology designed to transform the management of hydrocephalus, a neurological condition affecting over one million Americans.

Read more on PR Newswire >

Kolibri 1 of 4 Companies Working to Thread an Improved Triangular Needle for Better, Cheaper, & Faster Advanced Cell Therapies

It “appears that Kolibri (founded 2021) has cracked the code of optimized acoustic waves directed into tissue culture environments, increasing the yield of products like AAV capsids and reducing production costs.”

Read more on RoosterBio >

AM Batteries Named 1 of 4 Most Promising Battery Startups of 2023 by The Information

Winners were companies with the potential to be the most valuable businesses in their categories based on current revenues, business models, and growth prospects.

Read more on The Information >

AM Batteries also recently brought Hieu Duong on board. Duong has been named Chief Manufacturing Officer, and is the former lead inventor of dry electrode coding at Tesla.

Read more on The Information >

Terra CO2 says its Texas factory will cut carbon and cost from cement

“The startup is building its first large-scale plant to turn common rocks into cement additives that can reduce cement’s hefty carbon footprint without raising costs.”

Read more on Canary Media >

The post October 2023 portfolio news appeared first on Creative Ventures.

Many industries, such as construction, manufacturing, and service sectors, face talent shortages. Employers are having difficulty hiring workers, and this is true for low-skill, lower-wage jobs (and even semi-skilled and skilled job categories). Talk to anyone who has tried to get an electrician on-site lately, and you will know what I mean. 

Conceptually, there are three principal ways to address this: immigration policy, education and workforce development, and robotics and automation. I’ll stress that all of these are important, can work in concert, and offer different tradeoffs and types of solutions. Changes to immigration policy are outside my realm of expertise—though, on a personal level, I have a mother who immigrated to the US, and I have worked with many, many talented people who’ve come to the US from other countries—I do believe that favorable immigration policies can offer a solution to critical worker shortages across many industries and allow continued economic growth in the US and other developed nations. I’ll also cover education, workforce development, and labor marketplaces in a separate piece. So what about robots? 

Robots have long been heralded as a force multiplier for many jobs, whether addressing dull, dirty, or dangerous jobs. Examples include a range from Roombas to landmine removal. Or it’s in going places that humans can’t go: from the bottom of the ocean to inside the human body to outer space. If we are going to mine asteroids and the moon, the future is less likely to be a techno-thriller with roughnecks in space and more likely to be robots doing the real work. Perhaps the NASA Psyche mission is just the beginning…

Bringing back precious metals from asteroids aside, there are also ample opportunities right here on planet Earth where robots are poised to make a bigger impact and help drive productivity growth in many areas of society. 

Now, stop me if you’ve heard this before. In fact, this was the premise that first got me excited about the field of robotics 15 years ago. Robotics as a field is right where the personal computer industry was in the 1980s. Computers at the time were big, bulky, expensive, and used mainly by industry, businesses, and hobbyists. 

The span of a few short years in the early 1980s brought us the personal computer: IBM PC, Sun Microsystems, and the Apple Macintosh all emerged. We went from tens of thousands of devices sold per year in 1980 to tens of millions by 1990.  The computer went from requiring a high degree of expertise to use to enter the home and the classroom and many other parts of the economy.

Robotics are at a similar inflection point.

In a very short time, image recognition has gone from relying on filters and edge recognition to using neural networks that perform better than humans. 

Sensing and perceiving the world has gotten cheaper. The cost of a camera that will record high-definition video has decreased by 100x. Other sensors, such as Lidar—which provides 3D information about a scene—have followed similar cost curves.

Reinforcement learning (RL), a subset of machine learning, has emerged as a particularly valuable paradigm for robotics. Robots can now better move outside the predictable factory floor and operate in increasingly complex and chaotic environments, a la the real world. With RL, robots are better able to adapt to and learn from new situations. Robots can now even be trained in and learn from simulated environments—not dissimilar to pilots being able to train on a flight simulator— to decrease their learning curve in the real world significantly. 

All of these technological advances and cost declines of the past decade have laid the groundwork for the next era of robotics. As many of the components have become commoditized, systems engineering and thoughtful integration of different parts are paramount for engineers building these systems.  

On the demand side, labor only continues to become more expensive and difficult to find in many industries. 

Safety becomes crucial as robots become more and more capable and move from relatively fixed, static environments, like a factory floor, to noisier, more chaotic environments, like a warehouse bustling with people, a construction site, a hotel, or a restaurant. 

It’s extremely challenging (dare I say impossible even) for machines to have the versatility and ingenuity of humans. Still, they are getting better and can operate in increasingly noisy and chaotic environments. This trend will only continue to improve, and we expect to see much more in the way of collaborative robotics (that is, machines working alongside people) paving the way for safer and more productive paradigms.

Business models have evolved as well, and a conscious approach is needed for startups to focus on going from selling hardware to solving a customer problem. And the bottom line remains: it always comes down to cost. Thoughtful approaches look to minimize total operating costs, including time and expense incurred in setting up the robot in the first place.

Companies bringing robots into the world need to remain mindful that the best technology doesn’t always win. At the end of the day, it’s about solving a mission-critical problem, and often in the least complicated way possible. It’s better to be clever than it is to over-engineer the solution.

The post Is the robotics revolution upon us?  appeared first on Creative Ventures.

We sat down with C. Light co-founder and CEO Christy Sheehy-Bensinger for the first installment of our Meet Our Mavens series. 

________________________________________________________________________

Q: As someone with a Ph.D., you’ve spent years in rigorous academic study. What aspects of that journey have been unexpectedly valuable as you built your startup?

Surprisingly, working within academia as a Ph.D. student and postdoc has provided me with a skill set that has positively impacted me as a first-time founder. Many people assume that academia only prepares you to become an expert in one very narrow field, leading to a job as a scientist or a professor. However, I’ve found that academia was one of the best jobs I could have had to prepare me as a founder.

Q: Speaking of being a first-time founder, what skills do you feel have been crucial to your success and development?

There are three crucial skills that I have found to be the most important as CEO and founder—all of which came out of academia. The most important of these skills has been problem-solving. For a scientific study, you don’t know the results at the start of the experiment, but you take the data you have researched to make an informed hypothesis of what you aim to find. And all along this journey to discovering the answer, you are bound to hit roadblocks. Things rarely go exactly as planned, and so you get used to having to think through difficult problems, pivot if needed to improve, and keep moving forward to get the answer. This has been the most valuable skill that I have in my toolkit. 

The next skill I’ve found to be invaluable is adaptability. In academia, I needed to adapt quickly to working independently and within groups, sometimes taking the leadership role and other times supporting my labmates and team. Adaptability also applies to the ability to shift to other projects if a current path or project loses funding or perhaps collaborate when the scope of your project grows, requiring additional expertise.

Finally, writing grants has actually been really useful as a founder. There are small business grants that we have applied for that have enabled non-dilutive funding for our company and early clinical validation. We’ve successfully secured 3 NIH grants, bringing in ~$3M in additional funding. Grant writing also taught me how to budget for projects, including personnel and timelines, which successfully can translate to your startup’s financial projections and expense reporting.

Q: It sounds like academia truly impacted you in a way people do not expect when starting a journey. Let’s shift a bit and lean into the world of venture capital. What’s one thing you’ve learned from our GP at our firm that you didn’t anticipate when you first started our partnership?

As a scientific/engineering founder, thinking through how best to make money from my invention wasn’t necessarily instinctive. In that same vein, though, being open to learning and executing new skill sets has been something I’ve been doing my whole life. 

Creative Ventures really stepped in to work with us early on how best to frame our revenue and growth potential—both for ourselves as well as for the clinicians buying the device and accompanying software. The team showed me how not to get hung up on the dollars and cents of the product pricing or even the reimbursement model but rather the big picture of where a platform technology could go and how it can change an entire healthcare sector for the better. They asked, “What needs to happen for you to create a world where every clinician needs your technology and can’t clinically live without it, and how can you streamline adoption to get here?” This shift to big-picture thinking helped me get out of the weeds where I felt I was stuck and showed me how to create the big-picture healthcare investment that people were waiting for.

Q: Can you share a moment when our firm’s involvement truly made a difference at a critical juncture for your company?

Creative Ventures provided us with our lead term sheet for our Seed funding round during the height of the pandemic. They continued to support us (with our other major investor) through a bridge round at a critical junction for our company—just prior to our FDA clearance. I feel extremely grateful to have had Creative support us for the last two years as we transitioned our research-grade device into a viable commercial product. 

Q: Can you elaborate a bit on how our team has helped you and C. Light over time?

Creative’s support has been more than just monetary. The team’s support—which has come through advice received at board meetings, during Zoom calls, and frequent Slack messaging—has enabled us to create an entirely new stream of healthcare data.

What has surprised me over the years is that it isn’t just an individual at Creative providing C. Light support. Not only do we work closely and in-depth with our lead investor, James, but we also have had frequent input, warm intros, and support from Kulika, Champ, and Alex. Knowing that each one of these individuals is a lead for their own portfolio companies but still makes the time to provide help and advise us when we need it really sets this firm apart. This level of support has helped us think through manufacturing roadblocks, component and sourcing delays and deciding on viable revenue strategies. 

Creative Ventures has been the “gut-check” we need to periodically ground us in reality and create a solution with the potential to really help people while optimizing return.

Q: If you could go back in time to when you were starting out, what advice would you give yourself, especially knowing the partnership you would go on to form with our team?

As a first-time founder, I imagined that working with a VC firm would result in me losing the ability to execute and share my big vision and that it would slowly morph into someone else’s. I learned early on that Creative wasn’t there to take over or even micromanage me or my team. They were there because they believed in our big vision for healthcare and me as a solo founder at the time. They gave me and my team the perfect balance of independence and space to think through problems on our own while also providing a nearby life raft if needed.

If I could go back in time, I’d tell myself not to be so worried about working with VCs—that there really are firms out there that care about you and your mission and want to support you as you build something life-changing. I would tell myself, “Take that term sheet right away. It’s going to be one of the best decisions you will ever make.” 

It’s been a blessing to have James as C. Light’s GP; his openness and honesty are refreshing and ground our ideas in the realities of our market. He’s quick to tell you what you need to hear when you need to hear it and genuinely shows care and support in his leadership.

Q: What advice can you give budding founders dipping their toes in a world saturated with startups and VCs?  

It is so important, when looking for a VC firm to work with, that you do your own diligence on them just as they are going to do on you. Talk to their portfolio companies and founders that they work with on a regular basis. 

During early discussions around Creative, there was consistency in all of the feedback I was hearing: they were good humans who treated their founders with respect, gave them the independence to achieve their goals, and supported them when facing a roadblock. Most importantly, though, Creative didn’t just support the company. They supported the founders themselves. For me, this was huge. I had heard of other investors in the space only putting money in to move the company forward but didn’t trust or support the founder or their capabilities to grow. This type of dynamic is extremely difficult, leaving founders not feeling good enough or supported. 

Know that if you work with Creative, someone in your court is undoubtedly rooting for you.

The post Meet Our Mavens: Christy Sheehy-Bensinger appeared first on Creative Ventures.

SAN FRANCISCO, C.A. October 16, 2023 –  We are excited to announce that Kulika Weizman has been promoted to General Partner at Creative Ventures. 

As Principal for the past 2.5 years, Weizman has continued to hone her expert judgment and ability to source and lead deals while providing hands-on support to our founders. She has also been a frequent headline speaker at conferences like SynBioBeta and a reviewer for the National Science Foundation. 

Weizman has been an invaluable part of the investment team at Creative since joining the firm in 2018. “She has shown a phenomenal aptitude for investing,” says fellow GP Alex Luce. “Kulika has led a number of deals at the firm, working closely and intentionally with our portfolio founders. She brings an incredible perspective with her SynBio Ph.D. background, as well as her own endeavors founding a venture-backed startup.” 

“I am very excited to continue my journey with Creative Ventures,” says Weizman. “It’s a thrilling time to be part of a team making a tangible difference. Advanced technology is the cornerstone of society’s ability to progress and overcome our most pressing challenges.” 

As General Partner, Weizman remains dedicated to Creative Ventures’ mission to identify and support companies solving global issues like climate change, rising healthcare costs, and labor shortages. “From material sciences to biotechnology and robotics, Creative Ventures is seizing tremendous opportunities in advanced deep technologies in fields that will not only drive society forward but promise financial returns,” she says.

Weizman truly exemplifies the values we strive to uphold at the firm: hard work, integrity, curiosity, and a passion for the entrepreneurial journey. We’re excited to continue to work with her and see where she goes from here.

________________________________________________________________________

ABOUT KULIKA WEIZMAN: Kulika joined Creative Ventures in 2018 with a vision of leveraging her technical and entrepreneurial background in the investment world. Prior to that, she went through the prestigious IndieBio accelerator program and was the CEO of a synthetic biology company she co-founded and raised capital for upon completing her Ph.D. in Microbiology at UC Berkeley.

ABOUT CREATIVE VENTURES: Creative Ventures is a San Francisco Bay Area-based deep tech venture firm investing in early-stage companies solving humanity’s most critical crises. Led by a team of world-class experts, our deep tech acumen is informed by rigorous research, unmatched market understanding, and the dedication to lead our companies to success.

The post Kulika Weizman is Newest General Partner at Creative Ventures appeared first on Creative Ventures.

We continue to be optimistic and excited about the potential of C.Light Technologies, a groundbreaking company that specialized in the development of ophthalmologic lasers capable of accurately tracking microsaccades.

Our decision to invest in C.Light in 2021 was driven by the immense potential we saw in their technology to advance early diagnosis and management of neurodegenerative diseases—and the passion of its founder, Dr. Christy Sheehy.

Now, in 2023, we are even more convinced of the compelling nature of our investment, particularly with the recent FDA approvals of potential treatments for Alzheimer’s disease, such as aducanumab in 2022 and lecanemab in 2023. This further underscores the importance of C.Light’s technology in revolutionizing the field of neurodegenerative disease diagnostics and treatment.

Addressing the need for early diagnosis:

Early diagnosis has always been crucial in neurodegenerative diseases, and with the recent approval of potential treatments for Alzheimer’s disease, its significance has grown even more. Our investment in C.Light was driven by their focus on early detection in neurodegenerative diseases, starting with multiple sclerosis (MS). Their ophthalmologic laser technology, along with its ability to accurately track microsaccades, holds the potential to identify subtle eye movement abnormalities that may be indicative of neurodegeneration, allowing for timely interventions and improved patient outcomes.

Reliable biomarker for neurodegeneration

In our initial investment, we recognized the value of microsaccades as a reliable biomarker for neurodegenerative diseases. C.Light’s technology enables precise tracking and analysis of these small eye movements, providing objective and quantitative measurements. By leveraging microsaccades as a biomarker, C.Light aims to improve the sensitivity and specificity of early detection, facilitating timely interventions when treatments such as aducanumab and lecanemab can potentially have the greatest impact.

Potential for multiple neurodegenerative diseases

While our investment in C.Light initially focused on their application in multiple sclerosis, we always recognized the potential for their technology to extend beyond a single disease. With the recent FDA approvals of potential Alzheimer’s disease treatments, the broader potential of C.Light’s technology has become even more evident. By targeting microsaccade analysis, their innovative platform has the potential to aid in the early diagnosis and management of various neurodegenerative conditions, including Alzheimer’s disease and others.

Advancements in precision medicine and personalized care

C.Light’s technology aligns with the evolving field of precision medicine and personalized care. By enabling early diagnosis through microsaccade tracking, clinicians can intervene at the right time with tailored treatments. The recent approvals of aducanumab and lecanemab for Alzheimer’s disease highlight the importance of precise diagnostic tools like C.Light’s technology in guiding personalized treatment approaches and optimizing patient care.

Contribution to scientific research and clinical trials

Finally, our investment in C.Light extends beyond the potential for commercial success. We recognize the significant impact their technology can have on scientific research and the development of new therapies. By accurately tracking microsaccades, C.Light’s platform generates valuable data that contributes to our understanding of disease mechanisms and aids in the design of clinical trials. This collaborative approach to research aligns with our commitment to advancing healthcare solutions and driving progress in the field of neurodegenerative diseases.

We were and still are excited about the potential of C.Light

Our investment in C.Light in 2021 has only become more compelling in 2023, given the recent FDA approvals of potential treatments for Alzheimer’s disease. C.Light’s ophthalmologic laser technology, capable of accurately tracking microsaccades, remains a cutting-edge tool in the early diagnosis and management of neurodegenerative diseases. We are confident that C.Light’s groundbreaking technology, combined with the progress in potential treatments for Alzheimer’s disease, will continue to make a significant impact in the field and ultimately improve the lives of individuals affected by these challenging conditions.

The post Why we invested in C.Light appeared first on Creative Ventures.

“At the Series A stage, VCs want to know that they can pump money into a product that will start going into the market.”

– Champ Suthinpongchai, How to prepare a hardware startup for raising a Series A

Read the full article on TechCrunch.

The post How to prepare a hardware startup for raising a Series A (TechCrunch) appeared first on Creative Ventures.

SynBioBeta was back live in Oakland this year, and it did not disappoint! The event offered a healthy mix of company and service provider presentations, panel discussions, product demos, 1:1 meetups, and corridor catch ups with old friends. It was a great gathering opportunity for industry partners, startups, and investors alike to discuss and learn how our ability to program biology may solve the world’s most critical problems.

Over the years, I’ve enjoyed attending and presenting or participating as a panelist. This year, I had the pleasure of discussing “Investing in Our Future: How can Climate Tech Investment Have a Greater Impact?” along with Tom Baruch (Baruch Future Ventures), Maryanna Saenko (Future Ventures), and Shuo Yang (Lowercarbon Capital).

A few takeaways from the conference and some food for thought:

1. We’re starting to focus on the right elements of SynBio

Looking back on SynBioBeta, it’s refreshing to notice there’s been a shift in the space toward this understanding. More and more people appear to be focusing on the products and the problems they intend to solve.

2. Lab and manufacturing automation are on the rise

The exhibition hall this year was filled with various robotic and/or other solutions that could help reduce the manual and tedious tasks for researchers, ranging from compact adjustable multichannel pipettes and automatic high throughput plasmid purification to high throughput protein quantification. While an older and bulkier version of similar machines has been around for some time, they were often left to gather dust in a corner room. In the past, most researchers wouldn’t trouble themselves with the training and the hassles of setting them up unless they were looking for a truly high throughput one-off type of experiment that really would have been excruciatingly painful without.

Today, combining skilled labor shortages in certain specialties and the fact that automation systems have become more affordable, reliable, compact, and easy to use, lab automation solutions are rapidly becoming integral to R&D lab setups.

3. We’re still talking scale

Scale continues to be everyone’s favorite topic of discussion. Given that the conference had a heavy implication on commercialization, it was hardly surprising. Various solutions are being developed and deployed, such as monitoring solutions for traditional biological processes, AI-assisted scale-up, and cost estimation, to tools that may fundamentally change how we think about scaling biology processes.

While scale was certainly in the limelight, equally important remarks were raised about how important it is to know why you’re scaling to begin with. Scaling a process that yields products nobody is willing to pay for now (or never) is like pouring capital into an empty bucket with a hole in the bottom.

SynBio holds great promises, but it’s a tool

As always, it was great to attend SynbioBeta. While Creative Ventures strictly invests in companies addressing existing market problems by using advanced technology-based solutions, synthetic biology remains a powerful tool with the potential to enable biological system manipulation and controls. We look forward to speaking with founders who are solving the world’s most critical problems with defensible technological solutions–synbio or not.

In the world of venture capital, however, there is a right way and wrong way to go about NDAs during the pitching process. In fact, requesting one too early in the process can leave a lasting negative impression on potential investors, ultimately thwarting your ultimate goal: to raise funds and move your company forward.

Before you jump the gun and ask a potential investor to sign a non-disclosure agreement, be sure to take the following three steps.

Step 1: Determine whether the investor is trustworthy

Taking the time to perform due diligence on potential investors can help ensure that you find the right partner for your technical startup. By asking tough questions and seeking out additional information when necessary, you can help safeguard your company’s future success — well before the topic of an NDA even comes up.

But conducting due diligence on potential investors can feel daunting. This challenging but critical task should be a regular part of your pitching process.

While some questions may be easily answered through your own research or experience, others may require additional information from third-party sources. Don’t be afraid to touch base with mutual LinkedIn contacts to discreetly ask other founders to share their experiences. And while it may seem tempting to ask for these references from the investor themselves, you run the risk of tarnishing your relationship with them early on.

Your right to be informed about the investors you choose to work with is equally as important as their right to be informed about your technology and its defensibility. Just make sure you handle this tactfully and without looking like an amateur detective on the hunt for ominous and incriminating evidence.

Step 2: Analyze their portfolio to identify potential competitors

Actual NDA violations aside, there is an inherent risk of overlap when it comes to present and future competitors. The truth of the matter is your ideas are not unique — at least not given a long enough timeline — and it’s normal for many people to have similar ideas. Stealing your idea is not the only way for someone to come to the same conclusion you did.

That said, before asking a potential investor to sign an NDA, it’s worth your time to critically examine their portfolio to identify potential existing competitors. If you find any potential conflict of interest, go back to question one and further your diligence to make sure you feel confident in their ability to manage competing companies. Ask them direct questions, such as:

• What prior experience do you have investing in and managing competing portfolio companies?

• If none, how do they plan to handle the potential dynamic?

• If they do have experience managing competing companies, what has their experience been like, and how do they handle the actual dynamic?

Step 3: Consider whether there is a real risk to your IP

If you’re an early-stage technical cofounder, it’s very likely that you covet your IP. It’s not uncommon for founders like yourself to feel like this aspect of your company is the most precious jewel at this stage.

But, in the words of GP Champ Suthipongchai, “At the end of the day, any technology can be reversed or replicated with enough time and money. Even with IP protecting a technology, a determined and well-funded competitor will eventually figure out a way to achieve similar results through different means.”¹ So, while you may be inclined to withhold access to your IP, there is a simpler way to determine how much information should be shared and avoid putting your potential investors off with too much red tape: leverage what you learned in steps one and two, and apply it to the likelihood your potential investors and their investments will benefit from access to that knowledge.

No investor has the time (or the desire) to go out and recreate what you’ve spent years researching and developing. The only real risk you run with sharing “too much information” is the chance that they’ll somehow break best practices and share it with a later-stage competitor. Still, based on the information you gleaned in steps one and two, this answer will likely come organically and without a doubt.

The best NDA is not needing one at all

Protecting your company’s intellectual property is undoubtedly an important step in the early stages of your company, but requesting an NDA too early in the pitching process can leave a negative impression on potential investors.² Even still, a well-timed NDA is still likely to be “late” when both parties are already heavily invested in discussions.

Beyond that, enforcing that NDA becomes an entirely different—and difficult—task. It’s much better to do your due diligence on risk and think about what to disclose than rely on enforcement.

By lessening your focus on worrying about how much you can withhold while you meet with potential investors, open yourself up to the steps you can take to share the right amount of information at the right time with the right investors. Perform due diligence on your potential investors, including analyzing their portfolios and determining whether they are trustworthy. Don’t be afraid to ask direct questions and seek out references from mutual contacts or their existing portfolio companies. Remember that any technology can be reversed or replicated with enough time and money, so it is essential to leverage what you learned in your due diligence and determine how much information should be shared.

By taking these steps, you can help safeguard your company’s future success and find the right partner to move your technical startup forward.

References:

1. Suthipongchai, Champ. “Software investors must (re)learn these 3 ideas before getting into deep tech.” TechCrunch+
   April 19, 2023, https://techcrunch.com/2023/04/19/software-investors-must-relearn-these-3-ideas-before-getting-into-deep-tech/

2. Wang, James. “One Definite Sign of a Bad Startup.” Weighty Thoughts
   October 9, 2021,

Weighty Thoughts

One Definite Sign of a Bad Startup Idea

Hearing bad startup ideas is an occupational hazard of working in startups or VC…

Read more

5 years ago · 5 likes · James Wang

Creative Ventures invested in 3E Nano’s Series Seed in late 2022. Now the news on the closing is official, and we’re thrilled to welcome 3E Nano to our portfolio. We’ve been actively deploying into companies addressing climate change, and have been looking for opportunities in the building envelope materials for quite some time.

Here’s why we invested in 3E Nano:

Global temperature is consistently getting more extreme

Climate change has directly affected a shift to more extreme temperatures, and its magnitude has consistently increased over the years, though our range of inhabitable and preferred temperatures have not changed.

Heating, Ventilation, and Air Conditioning (HVAC) play a substantial role in controlling living environments in residential and commercial buildings. Evidently, HVAC accounts for 40% of the U.S. primary energy usage. Why? Approximately 80% of the windows in the market today have low thermal resistance (i.e. low R-value), and inefficient windows can account for up to 50% of HVAC expenses. Drafty windows are the leakage points.

Platform technology solution, enabling new use cases previously unattainable

3E Nano is hardly the first company to aim to tackle building envelope material opportunities. What stood out to us, h however, is their fundamentally different approach based on their coating technology. Traditional thermal resistance solution, like low-E coating on glasses, is limited to be applied on, well, glasses, because it is coated at high temperature. Additionally, they’re typically part of a long and specialized flat glass production line.

3E Nano’s proprietary technology allows them to coat materials with fewer layers and at low temperatures, expanding the base materials to versatile surfaces including polymers, which would have melted if coated using a traditional approach. Added benefits are the fact that the coating could be done on intermediate materials, which can then be laminated onto the final surface of interest at different locations.

Targeting architectural polymer and window markets, with favorable regulatory policies

Despite their platform technology nature, 3E Nano is laser-focused on their initial markets: architectural polymers and windows. Given how there are several stakeholders at play, it’s crucial that the company recognizes the execution risks and is actively working toward teasing out their incentives.

The markets are evidently massive, though what’s unique about “why now” is the regulatory landscape. We’ve seen increasing imposed fees on building codes and building emissions, as well as restrictions on building materials in relation to specific climate zones. For example, fines up to $5 million for each non-compliant building may be charged in New York City, starting in 2024. This type of policy reduces the barrier for asset owners to adopt and pay for upfront upgrade expenses.

3E Nano is an ideal fit for what Creative Ventures invests in: market-first opportunity with strong financial incentives for their customers to adopt, backed by defensible and fundamentally unique advanced technology. We’re thrilled to support the 3E Nano team and excited for what lies ahead in their journey to revolutionize building envelope materials!

After predictions that the Fed would step in, that it was too big to fail, and more, Silicon Valley Bank failed.

And while bank failures have become much rarer in the modern era, the harsh reality is they still happen. The FDIC putting SVB into receivership and looking for a sale is completely routine.

Because people asked for it, I’ll get into the details.

Panicking about your money at SVB? Here’s the TLDR:

• If you have less than $250k, you’re covered by FDIC and should have been able to access it by this afternoon.

• If you’re above $250k, what happens next depends on what happens with SVB’s sale. Follow the instructions in the bulletin, call in, file the claim, and wait. In general, most modern bank failures have had all deposits covered. But don’t take my word for it; look through the publicly available list here.

The business of banking

Starting with the basics (and an oversimplification, at that), banks are in the business of borrowing short and lending long.

Generally speaking, banks take deposits and lend them out for credit lines, mortgages, and similar “longer duration” assets that make them money above what they pay in interest for their deposits. Deposits are liabilities—as in, the bank needs to pay them back—and because deposits are short-duration, they can be demanded back at pretty much any time.

This ability to lend out money long while borrowing short is why banks play a critical role in credit and money creation. The exact details are too long for this specific post, but suffice it to say, it’s an important function with many positive societal and economic externalities.

Bank runs are a death sentence

Every bank is also going to fail if all depositors demand their money back at once. This is a bank run.

Bank runs used to be much more common, especially in the United States, where there are typically smaller, regional banks as opposed to the large universal banks that Europe and Asia generally have. This changed to some degree after 2008, but history still means we have a lot of small regional banks—like SVB.

Still, the truth remains that a bank run alongside financial panic can stop the heartbeat of even the largest banks. In fact, in the early 1900s, these two factors were incredibly common. As a result, the FDIC was created in 1933 during the Great Depression in order to restore bank confidence.

But a bank’s organs can be harvested

Obviously, the ongoing financial shock of the Great Depression caused a lot of bank failures, and a lot of normal people lost money. The panic it caused had people stuffing their cash under their mattresses.

When the FDIC was established, its goal was to protect small depositors ($2.5k back then compared to $250k now) but also ensure that the financial system avoided the moral hazard of the government always bailing out banks. Banks still needed to be careful, or else they would pocket profits from excess risk and socialize losses by having government backstops. Small depositors are not looking at this every day, but similar to the SEC’s “accredited investor” label (which really is just about having money, mostly), those with more money are assumed to be sophisticated and thus should monitor and bear risk.

Over the years, the FDIC has been revised and improved, but the overall process is this:

1. A bank fails

2. The FDIC takes it over (which is what happened with the creation of the Deposit Insurance National Bank of Santa Clara)

3. Another larger bank typically takes over the assets (loans, etc.) and liabilities (deposits)

And that’s precisely what’s happening with SVB.

Why did SVB experience a bank run?

I know the public accounts, but I’m not really going to speculate too deeply given I’m sure the facts will change. What is clear, however, is that SVB lost a lot of money. This loss depleted its equity, causing its effective leverage (that is, how much more it owes than it has on hand) to increase much, much more.

SVB was planning on raising money from public markets; everyone saw what happened, and, as happens with all bank runs, confidence in the bank was hit, everyone started pulling their money out, and failure became inevitable. Whether or not SVB was actually solvent (meaning if they actually had equity left), they quickly depleted everything from everyone pulling their money out.

Was it bad investments in mortgage-backed securities in a rising interest rate environment? Sure, that would be part of it, but I expect some other financial institution would have loaned money if the book was easy to read and fundamentally sound.

My guess is there’s still worry about further losses that buyers will need to assess and price down.

Inevitably, even without knowing precise details, the sequence of events is almost certain. SVB tried to get a credit line from a larger bank to tide over the bank run but failed, especially with uncertain levels of losses. Then they tried to sell to a large bank, which failed for the same reason. Finally, after a long night of late-night conference calls, they had to call it, and the FDIC put it in receivership.

Leverage always works against it. It decreases the amount you make going up, and exponentially magnifies the amount you lose going down. Once SVB’s equity dwindled down that much, it was always extremely vulnerable to being blown over. This is a common story. Sure, the speed of collapse was fast but it was not exceptional in the history of bank runs.

Pretty much, the takeaway is this: a well-loved (in startup circles) specialist bank failed, but this is far from unheard of in the history of banks (especially in the U.S.), and fairly typical.

So what now?

If you have less than $250k, the FDIC will be enabling access to your accounts very quickly, as per their bulletin.

If you have more… well, that depends on what buyer the FDIC finds, and how much they’re willing to take on. Remember, deposits are liabilities. If the assets are seen as too badly damaged, part of the negotiation may be for a buyer to assume some liabilities, but not all of them.

Nonetheless, most modern bank takeovers have covered all deposits, and there are very, very large banking entities (again, thanks to consolidation, especially post-GFC) that exist today relative to any other time in U.S. history. It may be a week or a few weeks — especially if it takes a long time to sort through SVB’s assets — but access should be restored.

In the meantime, if you’re a startup, call in, ensure that you have enough cash to run for the short term, and go from there.

And if you’re a VC — especially if you’re a large one — you definitely should have known better. You’re a financial manager that takes risks, and this is part of the business. Fortunately, if you’re a smaller VC, you’re extremely unlikely to take a haircut anyway (but again, peruse that failed bank list).

As for instructions, do refer to the FDIC official bulletin.

With inflation raging and the labor market tightening even more, it’s no surprise that the number of robotics companies has continued to grow and will do so for the foreseeable future. And while logistics has been front and center in automation technology, numerous other sectors are also adopting robotics.

In food service, for example, Domino’s Pizza Enterprise has adopted Picnic, an automated pizza system that can assemble up to 100 pizzas an hour. RLH Corporation, which runs the Red Lion Family of Hotels, introduced housekeeping robots in collaboration with Peanut Robotics.

So how are these robotics companies making money as they traverse the path to commercialization? Is there really a viable path for these robotics companies to triumph in a world where software is eating up every opportunity in its wake?

1. Sell widgets

Let’s face it: selling a widget with markups on a one-off basis is a bad business model for startups. Investors love recurring revenues. They want the company to monetize robotics for its lifetime usage, not a one-time installation. Recurring revenue is more predictable, which leads to lower volatility and, therefore, valuation.

So why would any company in their right mind sell widgets?

For one, many customers do not like to pay recurring revenue to startups. In their view, they took the risk to work with an early-stage company, so they might as well reap the long-term benefits.

Most early-stage startups are not able to get debt financing for their pilots. Robots are expensive, costing anywhere between $30k and $250k. Selling widgets helps with cash flow to fund the upfront cost of robots.

Or perhaps the industry demands it. One such example, the construction industry, generally gets contracted on a project basis. All hardware is either bought once or rented for a short period of time and then budgeted against the project. Field construction does not allow for recurring revenue to prosper at all. This makes selling widgets a “necessary evil” approach to go-to-market.

Few hardware companies can start off without going through this process. Fewer can make this model make sense, unless their product’s lifetime is very short and behaves more like a consumable.

2. Sell services

In an ideal world, the goal is to sell the service your robots perform, as their true value is not in the robot itself but in the work it can perform. The robot is simply an extension of your company and the service it provides, albeit automatically.

In other words, a robotics company is a service provider. It’s the company, not the customer, that has automated the work your robots can perform. The companies I mentioned above, Picnic and Peanut, provide services in this way. Picnic performs pizza assembly, while Peanut cleans hotel bathrooms. The amount they can charge is equal to human wages multiplied by the pain of recruiting and managing them.

And the pain is key. If it is very painful—perhaps because the job is very crucial and laborers are hard to find— then customers will be willing to pay a multiple of what they pay human workers for the stability of service.

Now, the added benefit here is the company’s product need not be a full-on product. If a robotics company can sell a function of a robot, they can still services.

FORT Robotics provides safety and a security layer for mobile robots, and they do this by providing a wireless e-stop button and endpoint controller. By rights, they should be selling widgets to every company building mobile robots—and they started that way before switching to long-term commercial contracts that move their revenue model to be closer to recurring revenue. Earlier this year, FORT raised $25 million from Tiger Global and Prologis.

Again, it doesn’t matter what product you sell. It only matters what the value is and whether the customer feels enough pain for you to be able to capture the value of solving those pains over the entire customer’s lifetime. If such pain exists, and you have a product for it, you can build a recurring revenue model regardless of the product itself.

3. Sell platforms

Some companies aspire to become a platform rather than settling on vertically focused applications.

The no-code industrial robotics programming saw a number of platform companies, such as Wandlebots and Southie Autonomy. Industrial robotics programming is complicated and costly, so these companies are building platforms that allow laymen to program robots easily and quickly, rather than engineers.

These companies didn’t start as a platform; nobody is going to use them as such from day one. Similar to how some companies began by selling widgets before moving to sell services, however, platform companies generally start with a certain application or vertical, expand the number of applications, and become an uncontested platform of choice over time.

Platform companies may also pick specific verticals to focus on. For example, companies like InOrbit, which helps robotics companies with mass deployment, could choose to focus on certain verticals like logistics and become a platform of choice for one such vertical before expanding to other verticals.

The key to winning the platform play is to select and win a sizable beachhead market using technologies that can be scaled effortlessly to other verticals. It is the hardest business model, but also one with the highest upside.

Despite storms, hail, and flash flood warnings, San Francisco hosted the JP Morgan Healthcare Conference live and in person last week — and it was back and forth, rushing from one meeting to another as per usual.

To kick off the week, our team at Creative Ventures hosted our healthcare portfolio founders in Jack London Square. We truly enjoyed grabbing an evening of their time, giving them a brief reprieve from the tireless efforts they’re putting into reducing the costs of healthcare while reflecting on the privilege it is to work with such wonderful minds.

Keeping exposure bias in mind, the funding environment for seed and series A health tech companies is still quite active. Valuations have been recalibrated given the market condition, but VC firms are taking advantage of a slower deployment pace to dig into the diligence and get to know the companies. This is largely in line with the various reports that show early stage investments are more sheltered than those focusing on late stage companies.

That said, for early-stage pre-revenue companies with less than six months of runway, it doesn’t matter what the market climate is. If you need to raise, you need to raise. There’s no waiting out the storm.

The pressure to align stakeholder incentives is stronger during tough times

During the JPM conference, there were a lot of talks about digitizing the healthcare system. While it’s hardly a new topic, it is one example of solutions that get put on hold during a time when financial and resource budgets are tight. Providers just came out of a brutal year where 50 – 70% of the hospitals were operating at a loss in 2022.

Our stance remains that unless the solutions fit into the workflow for operators, provide positive economic incentives for providers and payors, and result in improved patient outcomes, adoption is a roadblock that can make or break a solution’s viability.

While we don’t specialize in direct-to-consumer opportunities, we’re inclined to believe that its closely related business model of targeting employer-sponsored programs will prove rather volatile in 2023. Sure, things were going well when tech companies were at their peaks, showering their workers with perks, but things are bound to change after multiple high-volume layoffs at the end of last year. This path to market relies so heavily on how well the rest of the market performs, rather than macro trends observed in the areas of an aging population and rising healthcare costs.

A looming healthcare system failure due to labor shortages

The global pandemic gave us a front-row seat to the strain our current healthcare systems are subject to under human resource pressures. And the fact remains, those problems are not going away. In fact, they’ve been exacerbated.

Anyone with a remote sense of self-interest witnessing what healthcare professionals went through wouldn’t wish that upon themselves.

This is the exact intersection of two of our investment theses: labor automation and reducing healthcare costs. We see it as a particularly pressing and growing market so, perhaps biasedly, it was surprising to see a lack of discussions centered around how we as a society will be tackling the issues. We can only surmise it’s because the topic falls so far outside of pharmaceutical companies’ businesses — and that’s where the money is.

Having actively searched for companies working in the space, scattered workflow and integration are two key hurdles most solutions fail to address. Hopefully, for the sake of our sustainable access to healthcare, that does not mean it cannot be done. Our prediction is that the pressure from labor costs and availability will only aggravate in the immediate future, while the need for healthcare in an aging population will skyrocket, making it a prime market for startups to tackle.