5 Qs WITH A DEALMAKER
Lux Capital partner Renata Quintini wasn’t supposed to be a venture capitalist.
She grew up in Brazil, went to law school, and began her career as an attorney. Quintini was working at a law firm that represented venture capital clients who were backing Brazilian startups.
“It was during a time when the Internet infrastructure was getting laid out in Brazil, and e-commerce, content, and media was all starting to develop,” she told Term Sheet. “I became really curious."
Quintini decided to try her hand at investing as an investment manager at Stanford University’s endowment, which backs dozens of private equity and venture capital firms. After three years, she made the move to the VC side and joined Felicis Ventures as a general partner. There, she invested in companies including Cruise (acq. by GM), Dollar Shave Club (acq. by Unilever), Bonobos (acq. by Walmart), and Rigetti Computing.
Now, she’s at Lux Capital, a New York-based venture firm focused on deep tech investing. The firm’s guiding philosophy? The more ambitious the project, the better.
Term Sheet caught up with Quintini to discuss her experience as a limited partner, investing in moonshot projects, and the importance of a strong ethical foundation in tech.
TERM SHEET: As an investor at Stanford’s endowment, what did you look for in a fund manager during the vetting process?
QUINTINI: When you come down to it, it’s about delivering returns consistently. Sometimes you can have stories and opportunities that make sense right now, but you can’t fast-forward 10 years from now and see how they’ll evolve. When you become an LP, you’re locking yourself up for at least a 10-year commitment on that one fund, and honestly, by the time people come back to raise their second fund, there hasn’t been enough time for you to actually see results. So in most cases, you’re actually making a more than one-fund commitment. You always have to think about — is this someone I want to be in business with for many, many years to come?
So a track record is important. If it’s someone who doesn’t have a track record, you don’t have a lot to draw from. And if you still decide to invest, you’re really going after the belief. You need to believe that this person really sees a differentiated opportunity, and you trust they’ll be able to make the right decisions as the landscape evolves.
Lux likes to invest in companies that are considered moonshots. As an investor, what gives you the conviction to bet on a company that other investors tend to shy away from?
QUINTINI: One thing about moonshot investing is that you know the market is there. If you cure cancer, are people going to buy the drug? Yes. If you figure out completely autonomous transportation, will people use it? Yes.
So the market risk is close to zero. That leaves a big technical risk, I’m not underestimating that. But then you ask — What changes in science and technology would actually make this breakthrough possible?
Before investing, we ask ourselves three questions. The first is “why now,” which is critical for deep tech investing. It’s a combination of either platform changes or a new sequence of discoveries — a big change that opens up a bunch of new experiments that weren’t possible before.
The other thing we spend a lot of time thinking about is whether this is feasible in the time frame that is conducive to venture capital. If a founder says they’ll spend 15 years developing something, it doesn’t work for the model.
And the third question you ask is, “Given your timeline of development, how does a business stack on top of that?” It’s really fun to invest in these types of companies because you have people who know the science deeply and they’re missionaries. They’re more purpose-driven than opportunistic.
You’ve talked about the humanization of technology. How do you see humans’ relationships with robots and machines evolving in the next decade?
QUINTINI: We’re at a point that technology can do a lot of things for us, which is really incredible. The right balance will be figuring out what we actually want them to do for us and how much we trust them. That’s the interesting dialogue going on right now.
Because tech is so powerful and so pervasive, the questions of “What is it that I understand?” and “What is it that I trust?” will become more and more important. People are starting to wake up to the fact that there are so many things happening on the back-end of tech that are not transparent. Take the fake news debate and the conversations about the biases in algorithms — those are serious and those are happening at scale.
It makes us as consumers wonder what is really going on, what we trust, and what the checks and balances are. On the consumer side, it’s never been as powerful but it’s also never been as scary. Like, you do so much for me, but what is it that you’re doing that I don’t know?
Now, the big opportunity for tech is to build the right checks and balances so people can continue to trust and embrace innovation. If you think about AI, there’s no way humans can process and infer from such a large volume of data, and that’s so helpful. Computers can do the menial, repetitive tasks at a speed that humans can’t, and it allows us to have the emotion and judgement. It’s a very powerful relationship.
What kind of skills will human workers need to thrive in this AI revolution?
QUINTINI: EQ will be so important. For the longest time, it was all about pushing the technological boundaries to enable us to do more and to do it faster. Now, the questions will change from “Can I do it?” to “Should I do it, and how should I do it?” I think the unintended consequences are a reality, and I love that people are now talking about ethics.
You’ve written about the importance of empathy and ethics within an organization. What should founders be thinking about when helping shape a company’s culture?
QUINTINI: Everyone talks about mission statements and vision statements. But actually thinking about what it is that our company will stand for, what our company will not stand for, and where we draw the line should be very clear from Day 1.
What are the values that we have? It’s more than just thinking: KPI No. 1 is growth, KPI No. 2 is profit. Of course it’s important to have a good business, but the change in tech now is that you not only have to have a good business, but you also must have a do-good company.
Founders have to constantly ask themselves how they can build transparency and trust across their organization. And it’s important to figure out how to measure and incentivize the right behaviors.
** Who would you like to see featured in this series? Send dealmaker nominations to firstname.lastname@example.org **
THE LATEST FROM FORTUNE...
• Urban Agriculture Startup Gotham Greens Closes $29 Million Round of Funding (by Beth Kowitt)
• 'This Is a Fundamental Issue:' Why Cisco CEO Chuck Robbins Challenged Trump on Border Separations (by Alan Murray)
• Cryptocurrency Hedge Fund Gets VC Fred Wilson's Backing Amid Bitcoin Slump (by Jen Wieczner)
• Cryptocurrencies Tumble After $32 Million South Korea Exchange Hack
• Cylance Inc, an Irvine, California-based cybersecurity company, raised $120 million in funding. Investors include Blackstone Tactical Opportunities.
• ezCater, a Boston-based business catering marketplace, raised $100 million in Series D funding. Wellington Management Company LLP led the round, and was joined by investors including ICONIQ Capital and Insight Venture Partners.
• Elastic Path, a Canada-based provider of enterprise headless commerce solutions, raised C$43 million ($32 million) in Series B funding. Sageview Capital led the round, and was joined by investors including Yaletown Partners and BDC Venture Capital.
• Aaptiv Inc., a New York-based provider of digital health and wellness content, raised $22 million in Series C funding. Millennium Technology Value Partners led the round, and was joined by investors including 14W and Insight Venture Partners.
• Embodied, a Pasadena, Calif.-based robotics and AI company, raised $22 million in Series A funding. Calibrate Ventures led the round, and was joined by investors including JAZZ Venture Partners, Osage University Partners, Intel Capital, and Grishin Robotics.
• Vbrick, a Herndon, Va.-based developer of enterprise video platforms, raised $20 million in a deal led by Morgan Stanley Expansion Capital and joined by existing investors Acme Nova and Adams Capital.
• ViZn Energy Systems Inc, a Columbia Falls, Montana-based, raised $15 million in funding. The investors were not named.
• LoftSmart, a New York-based website that helps college students find off-campus housing, raised $12.9 million in funding. The investors were not named.
• Convey, an Austin-based active delivery platform, raised $10 million in funding. Investors include Silverton Partners, Techstars Venture Capital Fund, RPM Ventures and NextGen.
• Staffbase, a Germany-based B2B SaaS company, raised $10 million in funding. Investors include e.ventures, Capnamic Ventures and Kizoo Technology Capital.
• Talentry, a Munich-based recruitment marketing platform provider, raised 6 million euros ($6.9 million) in Series A funding. Nauta Capital led the round.
• Site Fuel, Inc., a Newport Beach, Calif.-based creator of a digital fuel exchange, raised $5 million in Series A funding. Checkmate Capital led the round.
• Pulse Q&A, a San Francisco-based platform that delivers business trends and insights to executives, raised $4 million in seed funding. True Ventures led the round.
• JJUMPP, a Lehi, Utah-based provider of a digital marketing platform for small businesses, raised $3 million in funding. The investor was Arthur Ventures.
• Mightier, a Boston-based children’s behavioral health company, raised $2.4 million in seed funding. Slow Ventures led the round, and was joined by investors including Bolt, Founder Collective and Project 11.
• Costello, an Indianapolis-based real-time sales playbook platform, raised $2.1 million in seed funding. Investors include Dundee Ventures, Collina Ventures, Irena Goloschokin, and Social Capital.
• GoKid, a New York City-based provider of carpool solutions for schools, teams and families, raised $1.5 million in funding. Investors include VilCap Investments.
HEALTH AND LIFE SCIENCES DEALS
• Stealth BioTherapeutics, a Newton, Mass.-based biopharmaceutical company, raised $100 million in funding. Nan Fung Technology’s Pivotal Beta led the round, and was joined by investors including Atlantis Investment Management, BVCF Management, CMBC Capital Holdings, Kingdon Capital, Ocean Equity Partners, Sagamore Investments and Morningside Venture.
• Decibel Therapeutics, a Boston-based developer of treatments for hearing loss and hearing-related disorders, raised $55 million in Series C funding. Investors include Third Rock Ventures, GV, SR One, Regeneron Pharmaceuticals, Foresite Capital, Bessemer Venture Partners, Schroder Adveq, S-Cubed and Longevity.
• Alpha Biopharma Inc, a China-based biopharmaceutical company, raised $37 million in its $65 million Series A funding round. Qiming Venture Partners led the round, and was joined by investors including TF Fund and the LYZZ Healthcare Venture Fund.
• Cerebral Therapeutics, Inc., a clinical-stage company focused on implanted drug-device combination therapies for patients with uncontrolled neurological diseases, raised $3 million in Series A funding. Investors include Granite Point Capital Management, L.P., and Vivo Capital, LLC.
PRIVATE EQUITY DEALS
• Drake Automotive Group, which is backed by Huron Capital, acquired DV8 Offroad, a Riverside, Calif.-based maker of off-road accessories and wheels. Financial terms weren't disclosed.
• CVC is in advanced talks to buy a controlling stake in the pharmaceutical business of Italy’s billionaire Recordati family, according to The Financial Times. The deal would value the company at 3 billion euros ($3.5 billion). Read more (subscription required).
• Morgan Stanley Capital Partners made an investment of an undisclosed amount in Comar, a Voorhees, N.J.-based rigid plastics packaging manufacturer of bottles, containers, liquid dosing devices and closures for the healthcare industry. Financial terms weren't disclosed.
• Polaris Equity Partners agreed to acquire a majority stake in ProData Consult, a Denmark-based IT consultancy focused on business and IT consultants.
• AIG Life Ltd, a subsidiary of American International Group, Inc. (NYSE: AIG), agreed to acquire Ellipse, a Denmark-based specialist provider of group life risk protection, from Munich Re. Financial terms weren't disclosed.
• Xiaomi, the Chinese smartphone giant, shelved plans to sell Chinese depository receipts on the mainland, but will push ahead with plans to raise as much as $6.1 billion in a Hong Kong listing next month, the SCMP reports citing sources. The firm was previously said to be aiming for a $10 billion raise from both listings. Read more.
• Thunder Bridge Acquisition, a Great Fall, Va.-based SPAC seeking a fintech firm, increased its raise to $225 million in an offer of 22.5 million units priced at $10 apiece. Gary A. Simanson of First Capital Group is CEO of the firm. Cantor and CLSA are underwriters. The firm plans to list on the Nasdaq as “TBRGU.” Read more.
• Tridica, a San Francisco-based biotech firm for kidney diseases, said it plans to raise $175 million in an IPO of 10.3 million shares priced between $16 to $18. It has yet to post a revenue. Orbimed (36.9% pre-offering), Sibling Capital (23.4%), and Longitude Venture Partners (10.1%) back the firm. Goldman Sachs, J.P. Morgan, and Cowen & Company are underwriters. The firm plans to list on the Nasdaq as “TCDA.” Read more.
• EverQuote, a Cambridge, Mass.-based auto insurance marketplace, plans to raise $75 million in an IPO of 4.7 million shares priced between $15 to q17. The firm posted revenue of $126.2 million in 2017. Link Ventures (61.9% pre-offering) backs the firm. J.P. Morgan and BofA Merrill Lynch are underwriters in the deal. It plans to list on the Nasdaq as “EVER.” Read more.
• Acuris, which is backed by BC Partners and GIC, acquired SparkSpread, a New York City-based provider of energy financing, trading and M&A news. Financial terms weren't disclosed.
• PayPal Holdings Inc agreed to buy Hyperwallet, a Canada-based payments provider, for $400 million cash. Primus Capital and Bratenahl Capital Partners invested in Hyperwallet in 2014.
FIRMS + FUNDS
• Banner Oak Capital Partners, a Dallas-based investment management firm, raised $800 million for two new funds, Banner Oak Operating Company Fund and Banner Oak Investment Fund.
• Providence Strategic Growth Capital Partners L.L.C, a Providence, R.I.-based private equity firm, raised $1.3 billion for its third fund, PSG Fund III.
• MetaProp, a New York-based an accelerator specializing in incubation, growth capital, startup, and early stage investments, raised $40 million for its second fund.