Category Archives: Featured

Venrock 9

Venrock raised a new, $450 million pool of capital today to continue our mission to invest in early stage technology and healthcare businesses that are taking novel approaches to solving important problems.  While the fund size and overall strategy remain consistent with prior funds, our implementation and approach evolves constantly and unpredictably. People, trends and technology change so quickly that pattern recognition from prior experience is more likely to lead us astray than provide advantages in identifying or building great businesses.  We drive ourselves every day, to challenge our assumptions and beliefs, to learn, stretch, re-evaluate and take-in new data. There is no repeatable roadmap and continued excellence will require as much effort, creativity and luck as we can muster.  

The path to finding “great” entrepreneurs and “great” ideas is winding and foggy, at best.  The uncertainties and challenges on the decade plus journey test the fortitude, creativity and resilience of all involved.  But when you get it right, there is no better feeling – as much because of the problems overcome and relationships forged along the way, as the scale of the outcome (though our investors really do like the outcome…).  We look forward to giving it our absolute best for this new fund, Venrock 9. 

10,000 Steps on a Knife Edge: Building a Large, Enduring Business

Over the last seven years, a bunch of variables – some influenced by our effort and attention, while others definitely out of our control – fell into place much more positively than usual. The result being that Cloudflare and 10X Genomics – companies in which Venrock led Series A financings – both went public this week. These are terrific, emergent businesses creating material, differentiated value in their ecosystems… with many more miles to go. Their founder leaders – Ben Hindson and Serge Saxonov at 10X, Michelle Zatlyn and Matthew Prince at Cloudflare – are inspiring learners with extreme focus on driving themselves and their organizations to durably critical positions in their industries. They, and their teams, deserve kudos for their accomplishments thus far, especially given they are sure to remain more focused on the “miles to go” than the kudos.

The VC humble brag is a particularly unattractive motif, so let’s be clear, these returns for Venrock will be great. Our initial investments, while probably at appropriate risk adjusted prices then, now look exceedingly cheap. In addition, each company had operational success in a forgiving capital environment, so our ownership positions were not overly diluted. Whenever we do crystallize these positions, each will return substantially more than the fund’s committed capital. In addition, we hope that Cloudflare and 10X’s success will help us connect, and partner, with one or two additional tenaciously driven company builders. 

But none of this is the reason for actually putting pen to paper today. The important nugget, too often buried amidst companies’ successes, is reflected in the opening sentence of this piece. Each of these businesses are mid-journey on the path of 10,000 steps on a knife edge.

To the pundits and prognosticators, startups begin with a person and an idea (maybe a garage) that leads to a breakthrough, after which money falls out of the air. This narrative ignores the ongoing barrage of strategic and executional hurdles, and also the asymmetry of consequences. One wrong move or bad break can erase the gains resulting from many right calls – this is life on the knife edge. This phenomenon of disproportionately large negative repercussions has corollaries in the realm of integrity and respect – it is difficult to gain, but easy to lose. One step off the knife edge is a problem. 

Successful start-ups are the result of teams making thousands of – much more often than not – good choices, but as importantly, rapidly fixing the bad choices. This is hard, lonely, and unforgiving work that isn’t for most people, especially at the formative stage. These pioneers invest themselves completely to forever change their industries.

So while – for the first time – two Venrock portfolio companies are ringing the bell at different stock exchanges on the same day, knowing these teams, I am certain that they will quickly return to their journey of asymmetric risk/reward because it is their nature. These IPO’s are one step along that knife edge, in this case to gather capital, provide liquidity and allow for maturation of the shareholder base. Congratulations to the employees of Cloudflare and 10x during this moment of success – thank you.

The Anticipation of a Journey

We closed Venrock 8 today. It is a(nother) $450 million fund which feels, for us, a bit like the littlest bear’s bowl of porridge—not too big and not too small, but just about right. We expect to follow a similar strategy as we have for the last several funds—finding great people addressing substantial needs in ways that most of the world thinks will not work. These investments will end up being made in a likely surprising variety of companies across technology and healthcare. We have nearly always invested in first time CEOs – people like John Stuelpnagel of Illumina, Jonathan Bush of Athenahealth and Matthew Prince of Cloudflare; and backed them pre product-market fit, when the likelihood, timing and scale of success is hard to pin down. We expect these traits will continue in Venrock 8.

We continue to believe that there are some really interesting problems to tackle, and therefore some very large businesses to build, but that is all in the future. Thus far, we have only taken on the responsibility of a large sum of money from people who are counting on us to return multiples of it, so that they can continue their work supporting a wide array of wonderful programs and causes.

As a result, I have to confess to being a somewhat reluctant blogger on this topic, as we are really at the beginning of an arduous journey towards a tenuous goal, more so than at an end, worthy of celebration. Given the current low return environment across most asset classes globally, recent venture performance has attracted a substantial oversupply of capital. For us and many others, this makes fund raising a reasonably efficient process, but does nothing to decrease the weight of responsibility placed on the firm. And, it means that we have to be even more insightful or early or proprietary with investment opportunities. Appropriately, our close-knit team feels more of the anticipation and nervousness of embarking on an all-consuming effort— to improve ourselves, focus on long term company success, and do our best for entrepreneurs 24×7— than the joy of successful completion.

As a team, we know how fortunate we are to sit in these seats, bearing witness to the formation of so many companies, led by extraordinary people with noble ambitions. We take the responsibility seriously, both as stewards of others’ hard-earned capital and as hopeful catalysts of a better world.

Venrock Health IT Disruptor Award

Venrock has partnered with VentureBeat to present the first ever Venrock “Health IT Disruptor Award” at the HealthBeat Early Stage Innovation Showdown.  The winner of the award will receive a $250,000 convertible note, dinner with Venrock partners and our portfolio company CEOs, 6 months of office space in The Quarry, our incubator space, and many other prizes.  Applications for interested companies are available on the VentureBeat website.  Read more about the competition here.