From: The Midas Touch - Saturday Apr 03, 2021 12:06 pm
Forbes Newsletters
Welcome to this week's Midas Touch, your weekly newsletter destination for exclusive insights, reporting and analysis from the world of venture capital and startup fundraising. I’m Alex Konrad, a senior editor at Forbes and the editor of the Midas List. I’m joined by venture capital reporter Becca Szkutak.

Last week we spotted a new venture firm in Oklahoma; spoke with Flexport CEO Ryan Petersen on the Suez Canal debacle, the global supply chain, and where tech can — and cannot — help; charted software unicorn ServiceTitan’s path to an $8.3 billion valuation; and looked at how the Allergy Amulet, a food allergy startup, is quietly raising millions in Wisconsin.

This week, we're interviewing Midas List investor Hemant Taneja about General Catalyst’s new healthcare fund and how VCs and founders can join the boom; why Coatue really led a $305 million round into NBA Top Shot’s creators; taking a first look with Kathryn Finney at her latest company focused on Black entrepreneurs; and diving into one agriculture startup’s tech for dusting crops.

Like the startups we cover, we're tinkering and trying something new: reaching you on a Saturday. Let us know what you think at Let’s get going.

Your Weekly Guide to the World of Venture Capital
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April 3, 2021
Elevator Pitch
Midas List investor Hemant Taneja says founders and VCs should partner with domain experts to make progress in healthcare.
Midas List investor Hemant Taneja says founders and VCs should partner with domain experts to make progress in healthcare. General Catalyst
General Catalyst investor Hemant Taneja has become a Midas List fixture for investments all over the tech landscape: $95-billion-valued Stripe in fintech, Samsara in IoT and sensors, ClassDojo in ed tech. But it’s in healthcare — where Taneja helped launch Livongo, the diabetes monitoring company acquired by Teladoc for $18.5 billion — that last year’s No. 31 is spending much of his time.

On Thursday, we broke the news of General Catalyst’s new $600 million fund in the sector, its first vertical-focused fund, and one that came on the heels of two $500 million SPACs in the space. Here, Taneja breaks down his interest in the space — and how to get involved — exclusively for readers of Midas Touch.

Eating nicely: Taneja’s “aha” moment from Livongo was that partnering with true domain expats and health systems unlocked the distribution and credibility for a startup to achieve scale without reinventing the wheel. “It’s not, ‘go disrupt,’” he says. “Every single thing I have done has been with a healthcare leader.” Software may be eating the world, but venture capitalists and entrepreneurs who recognize their own blind spots and seek out partners in the field they’re looking to modernize will spend far less time fighting traditionalists. “The magic is at the intersection,” Taneja says. “We don’t believe techies are going to just come disrupt healthcare.”

Fully onboard: To pull off a focused fund within a large ($8 billion AUM) firm like General Catalyst, the firm added a partner focused on the space full-time, Chris Bischoff, in London. But five or six of General Catalyst’s non-healthcare partners have taken board seats at companies in the category, Taneja says, with the goal of building up their own sector expertise (while sharing insights from their own areas of focus). “A lot of departments had to take this very seriously to say, ‘hey this is important, this is impactful, this is a place to generate great returns, so we want to chip in as well,’” he says.

Walk-ons welcome: While Taneja cautions against founders jumping into healthcare without expert guides, he does believe there’s plenty of room for non-doctors or medical researchers to still get involved in what he predicts as a historic period of growth to come in the next three to five years. “People that have wanted to get into this space, we generally send them on a walkabout and say, ‘hey, go talk to the following people so you really understand what’s going on,’ as opposed to just saying, ‘why is this so messed up, I can do it so much better with technology,’” Taneja explains. “There are reasons why things are the way they are. The most empathetic, service-oriented people get into healthcare. Look at what they dealt with during the pandemic, putting their lives at risk daily. Have empathy for that, and build with intentionality to empower them.”

Kathryn Finney is the founder of Atlanta-based Genius Guild
Kathryn Finney is the founder of Atlanta-based Genius Guild, focused on advancing Black entrepreneurs. Courtesy of the firm.
Serial entrepreneur Kathryn Finney believes that the universe gives you signs. For the better part of a decade, the former founder of The Budget Fashionista harbored the idea for a business creation platform focused on Black entrepreneurs. After spending the spring of 2020 helping Black-owned businesses secure PPP loans, and seeing the news of George Floyd’s killing six blocks from where she attended elementary school, Finney felt one such moment. The result: a new project called Genius Guild that is part incubator, venture studio and fund.

The plan: Launching on Monday, Genius Guild will look to support Black founders and startups that actively combat racism. By operating an incubator, studio and fund at once, the Atlanta-based project is looking to go deeper and provide more community than a traditional fund might. “We use a venture studio model because it’s sustainable for founders of color, and Black founders,” Finney says. “It’s not just a money problem, it’s not just a knowledge problem, it’s all those things together, and a bit of it is also having discussions related to our culture.” Finney, who was a member of the National Advisory Council on Innovation and Entrepreneurship in the Obama administration and later a general partner at the Harriet Fund, says Genius Guild will especially focus on resources and materials intended for Black founders, as such content has often overlooked the Black community to date

The fund: Genius Guild has raised $5 million so far for its venture fund, The Greenhouse Fund, from the likes of Melinda Gates’s Pivotal Ventures, Barbara Clarke’s Impact Seat, First Close Partners, law firm Lowenstein Sadler and angel investors like Andrew Bosworth. The vehicle will focus on pre-seed companies with at least 50% Black ownership that focus on advancing the Black community, restructuring the flow of capital and building a healthier environment, writing $75,000 to $250,000 checks. Genius Guild has already made a handful of investments and has seen interesting opportunities in the beauty and mental health spaces, Finney says. The final size of the fund is TBD; Finney declined to disclose her fundraising target but said the fund is on the path to being oversubscribed.

The big picture: Genius Guild is launching after nearly a year of racial reckoning and social justice movements in the U.S. and beyond. Despite calls to diversify venture capital last year, only 3% of the $147.6 billion invested went to Black-founded companies, according to the U.S. Census. The industry is starting to show signs of progress, though, with two notable fundraises closing last week: Harlem Capital, a Black-owned firm that invests in diverse and women-led companies raised $134 million, while majority Black-led MaC Venture Capital raised $110 million for its inaugural fund. “Every time I have self-doubt or ask myself if I’m doing the right thing, something happens, not necessarily a tragedy, but something reminds me this is what I need to be doing,” Finney says.

Up And To The Right
Few companies have raised their profiles more during the NFT craze than Dapper Labs, the startup behind popular collectible NBA Top Shot, which has handled three million transactions and $460 million in sales on the secondary market in just five months of open beta testing. Earlier this week, our colleague Brett Knight reported Dapper Labs had raised $305 million in a round valuing the business at $2.6 billion. “There’s no way you could have predicted it, and if anyone tells you they could, they’d be lying,” Miami Heat player Andre Iguodala, an investor in Dapper Labs, told Forbes.
38% of Gen Z is skeptical of NFTs.
The big picture: What didn’t make it into that story — well worth a read in its own right — is that Coatue Ventures chairman Dan Rose, who led the round, saw up-close how an NFT project can rise and fall as an investor in CryptoKitties three years ago. That’s how he stayed in touch with Dapper Labs CEO Roham Gharegozlou. And it’s also why, seeing the scaling challenges of trading NFTs over Ethereum, he’s betting on the startup not just for NBA Top Shots, but its underlying blockchain, Flow.

Coatue’s play: the next NBA Top Shot might have nothing to do with sports, but it could be built on the same bones — all the more important given Gen Z’s bemused take on digital collectibles so far, per recent data. “I think the opportunity they have is to extend Flow out to other developers,” Rose told Knight.
Deal Dive
For one of America’s largest and most important industries, agriculture still relies on methods developed decades, if not hundreds, of years ago. Crop dusting, for example, still mainly uses low-flying planes that look straight out of Alfred Hitchcock’s 1959 film North by Northwest. The job is dangerous, recording fatalities every year, and doesn’t give farmers the necessary precision to make smart fertilization choices. 

Boston-based startup Guardian Agriculture hopes to fix that problem with an autonomous vehicle called the evTOL (electric vertical takeoff and landing) that can track where farmers fertilize and how much. “It was immediately clear speaking with farmers and farming groups that crop protection is a major issue and was really becoming a pain point,” Jeff Feldman, Guardian Ag’s cofounder and COO, tells Midas Touch. After four years in stealth — 18 months of which was spent researching and testing its product — the startup announced itself to the world with a fresh funding crop.
Guardian Agriculture’s evTOL device can be rented as a crop dusting service.
Guardian Agriculture’s evTOL device can be rented as a crop dusting service. Guardian Agriculture
How it works: Farmers set routes for the evTOL, which can spray up to 40 acres per hour and be programmed to fertilize specific areas with different chemicals. Guardian Ag leases the tech as a service, similar to hiring crop-dusting businesses today. Feldman plans to charge between $10 to $45 per acre, on par with those traditional alternatives, he says.

The round: Guardian Ag raised a $10.5 million seed round led by Leaps by Bayer, a VC fund focused on health and agriculture tech backed by German pharma giant Bayer. The firm also received funding from agtech service provider Wilbur-Ellis’ venture arm, Cavallo Ventures, and traditional VCs including Fall Line Capital, Pillar VC, Neoteny and MIT-affiliated E14 Fund, bringing the company’s total funding to $15.5 million. “Just among those funders are tens of thousands of acres of a customer base that is already there,” Feldman says. The startup will use the funds to ramp up manufacturing and help fulfill $20 million worth of preorders it has amassed. 

The opportunity: While VC funding into agtech has exploded over the last few years, the advanced farm equipment space that Guardian Ag falls under remains a (growing) niche, according to PitchBook analyst Alex Frederick. The sector saw $317 million of investment in 2020, up 28% from $228 million in 2019, and up 83% from 2015’s total of $50.8 million. “I think there is a long runway,” Frederick says. “Drone technology has been around for a decade-plus now and it seems like agriculture is an area of promise. [We are] seeing new companies testing out the waters there, but I think we are still early days.”

Party Round
Our top stories and favorite reads from the week in VC.
Midas List veteran Rebecca Lynn
Midas List veteran Rebecca Lynn has a new $350 million fund at Canvas Ventures. Canvas Ventures
Cloudinary built a profitable business valued at nearly $1 billion without raising venture capital. So why does CEO Itai Lahan advise startups to take the money anyway? Martin Giles explores in this magazine profile of the Cloud 100 standout. (Forbes) — AK

Apple is back in the venture ring, leading a Series B round into a company that helps musicians distribute music while remaining independent. That’s… pretty interesting if you know anything about Apple music, generally. (CNET) — BS

Born in Pakistan, Zayd Enam risked his father’s wrath by dropping out of Stanford’s prestigious AI Lab to start a company. Raising $50 million from top VC firms hopefully helps. (Forbes) — AK

As venture funds trend larger and generalist, eight-year-old Canvas Ventures continues to go against the grain with a tight thesis around go-to-market strategies at Series A. LPs like it, as its $350 million third fund was oversubscribed. (Forbes) — BS

Spain just had its largest-ever funding round for delivery startup Glovo. (Forbes) — AK

Not too many venture firms set out to raise a $3.75 billion fund. Full stop. Tiger Global went ahead and essentially doubled it, raising more than $6.6 billion for its latest fund. Those seemingly weekly mega-rounds it’s leading now make more sense. (TechCrunch) — BS

Billionaire Li Ka-Shing invested in a startup creating vegan fats for plant-based foods. Consider me intrigued… and a little hungry. (Forbes) — AK

SoftBank-backed mobile advertising startup InMobi has its sights set on a U.S. IPO later this year. Known as India’s first unicorn, the entity is targeting an eye-popping 15x increase in valuation. (Fortune) — BS

For The Record
Last week’s newsletter said that Spark Capital had pulled their investment in Dispo after David Dobrik departed, citing a report that was later corrected; the firm actually pulled the investment prior to his exit. 

The newsletter also misnamed an investor in Allergy Amulet; that investor is actually Lightship Capital. We regret the errors and thank our readers for spotting them.


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