Investing In Deep Tech Seed Stage

GLOBAL DEEP TECH SEED FUND
$550M under management
800+ investments (+150/year)
#3 most active globally
#1 in Health Tech / IoT / Life sciences
HANDS-ON CAPITAL
Focused accelerators
Pre-seed: $100k-$250k
Follow-on: up to $2M
About SOSV SOSV PROGRAMS
Hardware
HAX (SF, Shenzhen)
Biotech
IndieBio (SF)
RebelBio (London)
Social & Mobile
Chinaccelerator (Shanghai)
MOX (Taipei)
Food
Food-X (NYC)
Blockchain
dLab (NYC)

4
JUMP BIKES
Uber, $200M + stock
HARMONIX
$175M + earn-out $
Makeblock (val. $367M)
Memphis Meats (Gates…)
BitMEX
Formlabs GetAround
Some
SOSV
Startups

Funding Stages
Pre-pre-seed (idea validation / team formation)
Pre-seed (early prototypes)
Seed (advanced prototypes / product)
01/
02/
03/

Stage 1 — Shenzhen
4-8 months
30 staff
Technology
Engineering
Design
Stage 2 —San Francisco
2-3 months
Mentorship & sales
Traction
Fundraising
40STARTUPS
PER YEAR

HAX & DT
Majority since 2014
Industry, Enterprise, Health
Even some consumer!
01/
02/
03/
270STARTUPS

01/
Building
DeepTech
HardwareToday
Theyearsbeforetheunicorns

Definition
Not your average website or mobile app
Science & Engineering
Often tangible component (electronics, molecules…)
01/
02/
03/

Agenda
Building DT hardware today
Optimized timelines & Financing
01/
02/

Building DT Today
Good news: more and more
startups and investors
Bad news: much fear and
misconceptions remain,
funding gaps
01/
02/

Key Failures
02/
03/ Jibo had raised $72.7M for companion robots.
Its high price and the boom of voice assistants
sealed its fate.
01/
03/
Rethink Robotics raised $150M for cobots.
Popularity in research but not enough in industry.
Airware had raised $118M for B2B drones.
Assets were sold to French competitor Delair.
Meta had raised $73M for AR. Market did not pick up.04/
Lytro had raised $216M for light-field cameras. It
did not find a viable market.
05/

Unicorns & IPOs
Company Type Sector Valuation Funding Founded Country
SpaceX B2B Space $30.5B (IPO) $2.4B 2002 US
DJI Consumer Drones $15B (*) $105M 2006 China
Bitmain B2B Crypto mine $15B $765M 2013 China
GM Cruise* B2B
AV tech $15B $3.4B 2013 US
Magic Leap B2B AR $6.3B $2.3B 2011 US
Auris Health B2B Surgery robot $3.4B (acq.) $733 2013 US
Zoox B2B AV tech $3.2B $790M 2014 US
View B2B Smart glass n.a. $1.8B 2006 US
Nuro HAAS Delivery robot $2.7B $1B 2016 US
Zume HAAS Pizza robot $2B $423M 2015 US
Carbon B2B 3d printing $1.7B $422M 2013 US
Ninebot Consumer e-scooters $1.52B $240M 2012 China
Desktop Metal B2B 3d printing $1.5B $437M 2015 US
Proteus B2B Medtech $1.5B $487M 2001 US
Butterﬂy Network B2B Medical imaging $1.25B $350M 2011 US
FormLabs B2B 3d printing $1B $104M 2011 US
Cruise B2B AV Tech $1B (acq.) $19M 2013 US
Rocket Lab B2B Space $1B $215M 2006 US
Geek+ B2B Warehouse robot $1B $239M 2015 China
TuSimple B2B AV trucks $1B $178M 2015 China/US
OrCam Consumer Medtech $1B $86M 2010 Israel
Cyberdyne B2B Exoskeletons $870M (IPO) n.a. 2004 Japan
SigFox HAAS Telecom $673M* $311M 2009 France
Despite deep tech’s image,
some have been fast and
capital-efficient.
B2B dominates. In
particular AV tech and
service robots.
The darlings of yore —
wearables, drones, 3d
printing — scored some
unicorns (most are not DT).
01/
02/
03/

Mobility &AV
SpaceX B2B Space $30.5B (IPO) $2.4B 2002 US
GM Cruise*
B2B

AV tech $15B $3.4B 2013 US
Zoox B2B AV tech $3.2B $790M 2014 US
Mobike HAAS Mobility $2.7B (acq.) $928M 2015 China
Lime HAAS e-scooters $2.4B $765M 2017 US
Bird HAAS e-scooters $2.3B $415M 2017 US
Ofo HAAS bike rental $2B** $2.2B 2014 China
Cruise B2B (acronym?) $1B (acq.) $19M 2013 US
Rocket Lab B2B Space $1B $215M 2006 US
Gogoro Consumer e-scooters $800M* $480M 2011 Taiwan
Micro-mobility is booming
(not DT)
AV Tech coming to age
Space age?
01/
02/
03/

Note: China Unicorns
Xiaomi Consumer Smart devices $36B (IPO) $3.4B 2010 China
DJI Consumer Drones $15B (*) $105M 2006 China
Bitmain B2B Crypto mine $15B $765M 2013 China
Ecovacs Consumer Home robots $3.5B (IPO) n.a. 1998 China
Mobike HAAS Mobility $2.7B (acq.) $928M 2015 China
Ofo HAAS bike rental $2B** $2.2B 2014 China
Tink Labs HAAS
Hospitality
phones
$1.5B (est.) $460M 2012
Hong
Kong
Geek+ B2B
Warehouse
bot
$1B $239M 2015 China
Huami Cossumer Fitness $927M (IPO) $73M 2014 China
Half are consumer
Mobility is strong
Robotics on the rise?
01/
02/
03/

Company Type Sector Funding* Founded Country
GM Cruise B2B AV tech $2.25B 2013 US
View B2B Smart glass $1.8B 2006 US
Nuro HAAS Delivery AV $1B 2016 US
Zume HAAS Pizza robot $423M 2015 US
Plenty B2B AgTech $226M 2014 US
Light Consumer Cameras $186M 2013 US
Nauto B2B Driving Coach $174M 2015 US
Brain Corp B2B AV Tech $125M 2009 US
TOTAL $6.1B*
02/
01/ Softbank's $100B Vision Fund
has become a kind of
‘kingmaker’ for startups.
SBVF made several deep tech
investments. Mostly B2B and
HAAS (except Light)
* includes co-investors
Focus: Softbank

Company Buyer Sector Category Price Funding TVPI Year
Auris Health J&J Surgery robot B2B $3.4B $733M 4.6 2019
MiR Teradyne Ind. robots B2B $272M n.a. n.a. 2018
Blue River John Deere AgTech B2B $305M $30M 10.2 2017
Boston Dynamics Softbank Robotics B2B $100M* $37M 2.7 2017
Otto Uber AV Trucks B2B $220M** n.a. n.a. 2017
Cruise GM AV Tech B2B $1B n.a. n.a. 2016
Recon Instruments Intel AR HUD B2B $175M $17M 10.3 2015
Universal Robots Teradyne Ind. robots B2B $285M n.a. n.a. 2015
Oculus Facebook VR Consumer $2B $96M 20.8 2014
Key M&As
Software companies get
into hardware
Non-tech companies get
serious about M&As
B2B & B2B2C dominate
01/
02/
03/

Playbook: 4T’s
Team
Tech
01/
02/
Trend03/
Traction04/
Prediction?
Pain.

#1 Risk: Team
Technically capable?
Can they manage themselves?
01/
02/
Can they manage a team?03/

Bad Cases
Give up
Severe
Asperger
Can’t execute
‘Idealist / Artist’
Silicon Valley
Burn Rate
Caught Up
In Startup
TheatreCan’t get along
Maker Addiction

Founders Growth
EntrepreneurInventor ManagerEngineer
Software, Maths, Mechanical, Electrical, Design, Prototyping, Sourcing,
Manufacturing, Logistics, Marketing, PR, Pricing, Recruiting, Financing, etc.

Know thyself
HBDI
Strong: Vision & Analysis
01/
02/
Weak: Org & Com03/
STRONG
WEAK

Prototype
Tech
Lab vs. Product
01/
02/
Toward product 203/

China!
Defensibility
Patents / Software
01/
02/
B2B03/

Walls & Moats
Patents
Regulations
Brand
Scale
Stickiness
Network eﬀect
Technology
Team
MOATS
WALLS

Do you need a PhD to invest?
Sense Of Science
Validating the science
01/
02/
Show your prototype!03/

Per unit
Business Model
As-a-Service / Subscription
01/
02/
Data = Holy Grail? (but when?)03/

Case: Keyi
Modular robotics
Toy? STEM? Tool?
01/
02/
$500 on Kickstarter?03/

Case Study: Keyi
>30 staff
B2G
01/
02/
Learning speed vs. Lego
(Toy-first vs. STEM-first)
03/

Prototype
vs Product
Nura
May 2016

($1.8M on

Kickstarter)

vs.

Jan 2018
Bias #3:

Raised $22M
Stevie Wonder got 3
01/
02/
OTA Updates03/
Product 204/
HaaS : $18/month05/
Case: Nura

Pre-seed = pre-trend?
Trend
Hot = too late?
01/
02/
See the future!03/
A.I.
AR ML
Blockchain
VR
Robots
IOT
Edge
Cyber
Security
5G
EV
QC
Voice
Always
-in

Signals
Applicants
Corporates
01/
02/

Case: Sana Health
Early 2016
Sleep tech?
01/
02/
Kickstarter? Medical? Funding?03/

Sana Today
FDA route + New Positioning:
“Solving Pain Without Pills”
Neurotech / Neuromodulation
is a thing
01/
02/
Opioid epidemic03/
Under Armour
Innovation award 
Bayer
Self-Care winner
 
Mount Sinai
Rehab Competition winner
Medtech Innovator
First prize recipient

Recent News “The latest Apple Watch seemed like the latest
in wearable tech when the conference started
—not so much a few hours later.”

Invest Today?
Call William Gibson or Neal Stephenson
Other ideas?
01/
02/

No numbers!
Traction
Customer discovery (i-Corps, EF, etc.)
01/
02/
New market?03/

02/
Optimized
Timelines
&Funding

Not all in one place
Finding Resources
R&D + initial funding
01/
02/
Prototyping + production03/
Customers & Growth funding03/
Invention
Team
Prototyping
Production
Customers
Funding

i-Corps (US ~100 unis + some in Canada)
Pre-Pre-Seed
Entrepreneur First
(UK, FRA, GER, HK, SIN, Bangalore)
01/
02/
DeepTech Founders (France / EU)03/

Case:Autonomow
Unfortunately, not a HAX company
Mowing = Mild interest
Weeding = Need NOW!
Autonomy not needed
Autonomow is no mo’ …
7 weeks
20 interviews
6 site visits

Case:Autonomow Carrotbot
Prototype
in 1 week
Computer vision
Laser
Hot Oil
Spray
(organic)

Case: Blue River
Acq. by John Deere for $305M
Carrotbot

Labs
Speeding Up Prototyping
Suppliers
01/
02/
Experts & Peers03/

Labs 
Shenzhen (50,000sqft) + SF
Speeding Up Prototyping
Suppliers 
#1 electronics supply chain
01/
02/
Experts & Peers
30 in-house (ID, Sourcing, DFM, etc.)
>50 founders (20-30 startups)
>700 alum founders (>200 startups)
03/

1 year => 4 months
Compressing Time
Lower costs (& burn rate)
01/
02/
Lower risk03/
Boots on the ground / no need to outsource

Case 1:Avidbots
2014: China prototyping & retrofit + Waterloo

Case 1:Avidbots
Today: $23.6 million Series B led by True Ventures

Case 3: Viabot
2018: Built in China

Case 4: Youibot
2018: Multiple robots

No VC?
Other Models
VC + Customers
01/
02/
VC Only (+ Softbank?)03/
Outsource00/

SBIR (2014 data)
STTR
7%
VC
41%
SBIR
52%
5,509 awards
$2.23B total
660 awards
$263M total

Magic Leap
Founded 2011
Raised $2.3B
LaunchAug 2018

11/2018: $220m secured to market to surgeons in the US
03/2018: FDA clearance for diagnosing and treating lungs
Teleoperated endolumenal bot than can navigate inside the
body, image and treat conditions without making incisions
$500k/robot + platform fees + SLA
Founder: Dr. Fred Moll / Intuitive Medical (Di Vinci)
08/2017: Series D $280m
09/2015: Series B $149m (still an eye surgery tech)
03/2014: Series A $34m
04/2016: Acquires Hansen Medical, maker of
catheter-based robotic technologies, for $80m
09/2016: Series C $50m
02/2019: J&J Acquires Auris for $3.4b
Auris

What I’m covering
Launch timelines for deep tech
Metrics for pre-seed & seed
What to look & ask for
01/
02/
03/

HAX Trends Deep Tech - we’ve seen it all!

Deep Tech Is Broad Timelines vary!

2 4 861 3 7 95
Identify Customers
EVT DVT 1
Manufacturing samples
DVT 2
Marketing samples
PVT Pilot Unit  
Production
SOSV (pre-seed) SEED
Product Dev $$$
Month
10
Pilot
12+ 18+
Roll-out
24+
SERIES A
Program
Development
Sales
Fundraising
Shenzhen San Francisco
Develop CRM &
Sales Materials
Pitch Customers
Mass  
Production
Establish product  
beneﬁts
Fundraising
Timeline: Enterprise / Robotics

2 4 861 3 7 95
Class determination
EVT DVT 1
Manufacturing samples
DVT 2
Marketing samples
PVT Pilot Unit  
Production
SOSV (pre-seed) SEED
Product Dev $$$
Month
HAX FOR HEALTH
10 12+ 18+
Launch
24+
SERIES A
Program
Development
Sales
Fundraising
Shenzhen San Francisco
Pitch Customers
Mass  
Production
Fundraising
Further trials if seeking
medical certification
Certifications
Clinical, usability,
label studies if
novel product
Assess FDA
classification type
Class I
(predicate exists)
Class II or III:
File 510k or PMA
FDA 513G meeting
to lay groundwork
for future certs
Further trials if seeking
medical certification

Whattolookforin
DeepTechTeams
&
MetricsOverTime

Funding Gap
Seed is the new A
New rounds: Pre-seed, Pre-pre-seed
Obvious gap after pre-seed in deep tech
01/
02/
03/

Our Checklist For Seed
Target: Lining up your ducks like
second-time founders
Sales come first
DD files must be ready
01/
02/
03/
Times are diﬀerent… new playbook!
Expectations should be high!

We see it all:
Timeless Classic Questions
For Deep Tech

$100B
$5M
Q1: What’s your TAM?
Dream big?

Case:Avidbots
Series B announced
$3M sales LY
$5B market
Sky’s the limit

Q2: Who pays for this?
Medtech: patient? insurer?
government? other?
Medtech: remote codes
(regulation updated Nov 2018),
Re-hospitalization charges
(COPD, Asthma…)
Other?
01/
02/
03/

Q3: What’s Different? From That Other Company That Just Raised

What NOT toAsk
CAC / LTV (no cohort yet!)
Pageviews
Patents (vs. business model & distribution)
02/
03/
05/
MRR01/
Got FDA? (would not talk about seed…)04/
:)

Due Diligence
Prototype check: delivers core signal processing?
Assess manufacturability
Price vs. BOM + Operation costs
02/
03/
05/
Check substance of key patent01/
Validated price point with customers?04/

Due Diligence
Clarify the insight or action for end users
Evaluate SW complexity & head start
‘What would google do?’ (or Medtronic)
07/
08/
10/
Determine next milestone for funding06/
Is the team using the right tech?09/
Hardware skills needed (esp. robotics)11/

Why Investors Pass
'Only invest in US & Canada’
‘Invested in competitor’
‘Don’t know enough about this market’
02/
03/
05/
‘Too early’01/
TAM is too small04/

Investing In Deep Tech Seed Stage

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