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What is your definition of nanotechnology?
More than just a scale of measurement, nanotechnology harnesses and exploits the many unique characteristics of working at the nanoscale. The capacity to manipulate and control matter at the atomic level was driven by the development of tools such as the atomic force microscope (AFM). As more tools enable that manipulation, technologists across a wide spectrum of industries use these capabilities in truly unique and disruptive ways in their business.
How many nano investments has DFJ made to date?
Today we have over 20 investments in nanotech-related companies, including such companies as Molecular Imprints, which is the leader in a new approach to lithography at the nano-scale, and Nanocoolers which uses unique materials and techniques for everything from chip cooling to refrigeration.
With which companies has DFJ invested, and in which round? (Seed, A, B, C)
Typically we are the first institutional investors in our portfolio companies. We work with entrepreneurs at the very early stages of their business. (See Current Portfolio - Nanotechnology, MEMS, and Novel Materials for a complete list)
In a typical investment, is DFJ the Lead Investor, Co-Lead, or part of a Syndicate?
Draper Fisher Jurvetson is usually the lead investor in a round though we work with many venture colleagues as part of a syndicate, as well.
Which specific nanotechnologies will DFJ invest in 2004? Which are you likely to invest in 2005 and 2006?
Our nanotech investments are application driven: we don’t look for “cool” technology, but for big markets where innovation on the materials level or in device physics may change the rules of the game. Some of the technology areas we continue to have a lot of interest in exploring include: molecular electronics, advances enabling cleaner energy production and consumption, modeling tools for objects at the molecular scale, and the interface between nanotech techniques and the life sciences.
How many new investments do you anticipate in 2004? In 2005? In 2006?
We don’t have a set number of investments we do per year. We are driven by great entrepreneurs with interesting, change-the-world opportunities.
What is the typical initial investment size or range?
We will invest $1-6M in an initial investment with the potential to put around $15M in a company over its investment lifecycle.
What are the typical sources for deals? Outside referrals? Referrals by associates? Conferences & events networking? Blind submissions by Internet or mail? Other?
We leverage many sources of dealflow, including all of those listed above. We especially like to keep close to individuals who both work at the edge of new scientific frontier, yet also have a demonstrated interest in linking up strong technology with valuable applications. In addition, we have a network of affiliates throughout the world, with which we share dealflow and collaborate on investments.
What is your desired realistic time to liquidity?
We are early stage investors and therefore focus on building the fundamentals of the business first and foremost. That said, most of our investments approach a liquidity event in the 3-7 year timeframe.
Regarding due diligence: do you complete it in-house or use outside consultants for technology? Markets? Other?
We do all of our due diligence in house. We do, however, take advantage of our contacts throughout industry, academia, and our affiliate network to evaluate investments. Since “no one knows as much as everyone,” we gain a great deal of insight by tapping these networks.
In your opinion, what is the single most important factor in investing? Entrepreneur? Team? Technology? Market? Investors? Other?
All of the factors listed above are key in determining the success of a new venture, so it is a bit misleading to focus on just one of them. That being said, the quality of the team has over time been the most closely correlated with whether or not a company succeeds, and having an excellent management team will most enable a young company to meet challenges in other areas.
Typically, what is DFJ's contribution to companies with whom you invest? Team Building? Strategic Alliances? Sales? Marketing? Strategic advice? Keep CEO focused? Other?
Once we make an investment, we roll up our sleeves with our entrepreneurs and assist in any number of ways: recruiting key management, introducing them to early customers or partnerships, developing go-to-market strategies, etc. With our almost 20 years of venture experience, we provide a deep network, a long-term perspective, and diverse skills to help make our companies successful. With our network of affiliate funds, we have partners in over 12 cities in the U.S. as well as offices in Beijing, Singapore, and London all prepared to assist our companies. In the fast-moving tech world, where young companies must hire locally but sell globally, we can be of great assistance.
Overall, what do you like about nano as an investment area?
We see significant opportunity in materials science and in the manipulation of matter at the atomic scale. Catalyzed by critical tools such as the AFM and sequencing of the human genome, these advances promise to enable a host of new applications that are based on the often unique properties that are exhibited at such a small size. Carbon nanotubes, for example, are stronger than steel, highly conductive, and are precisely ordered. Far from being scientific curiosities, these structures may enable a new generation of nonvolatile memory, which is the focus of one of our portfolio companies, Nantero.
In your opinion, how important is Silicon Valley?
Silicon Valley has been a center for the development and commercialization of technology to a degree that is practically unprecedented. However, the scientific advances that are fueling the growth of nanotechnology are occurring in a more distributed way today. As such, nanotech startups, which are often spinouts from universities, are located all over the world. DFJ, directly, and through our affiliate networks are active in most, if not all of those areas of innovation. That said, Silicon Valley has an unique support infrastructure, customer base, and culture that will continue to play a critical role in start-ups for years to come.
Jennifer Fonstad is a Managing Director at Draper Fisher Jurvetson.
Draper Fisher Jurvetson is the premier early stage venture capital firm. Founded in 1985, Draper Fisher Jurvetson has created a global network of affiliated venture funds with approximately $3 billion in capital commitments and offices in the major technology centers around the world. Headquartered in Silicon Valley, the firm has proven expertise in identifying and helping extraordinary entrepreneurs who want to change the world.
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