What’s Different - Old Venture Capital vs. New Venture Capital
Venture capital is generally considered to be the engine that drives much of American innovation. While that may have been true of VC in the mid-to-late 20th century that focused on supporting innovators of transformative technologies such as the new fields of semiconductors and microprocessors, it is generally not true today.
Today’s venture capitalists are constrained by relatively short return windows. As a result, they tend to focus on market risks rather than technical risks -- that is, whether a product can get to market (and how fast) rather than its technical merits. World changing, transformative technologies generally are not good candidates for VC financing because they are hard to do due diligence on, take longer to develop, and broadscale commercialization occurs outside of VC return windows.
Foundational deep tech, which has the potential to change not one, but four or five or six markets and can have network effects that change entire economies a holistic investment strategy, incubation and, most importantly, time. In one sense, successful investment in deep tech requires a back-to-the-future approach. The VCs of the mid-1900s that oversaw one of the greatest eras of technological growth and innovation in history, not only placed tremendous value on portfolio companies’ crown jewels - intellectual property - but also incubated their investments, allowing organic technological advancement and business growth not necessarily constrained by particular windows of return. This, combined with research labs such as Xerox Parc and Bell Labs, created an ecosystem that supported innovation, leading to the proliferation of technologies we still use today and will for decades to come.
Like VCs of yesteryear, we are screening for crown jewels - IP and technology that will transform America’s economy and help it address the challenges of the future. We invest in technologies that will revolutionize our focus areas of robotics, artificial intelligence, quantum computing, life sciences, secure systems, and energy. Our investment studio incubates deep tech startups until they are ready for market and develops the IP for multiple markets in which it can advance technology: if a technology we invest in works, we will find a market for it; if the IP is mature and foundational, we will generate royalties from it. This dual focus on deep tech IP and venture revives the old spirit of venture investing and will support commercialization of transformational technologies and revolutionize innovation in the US.
To be clear, the venture capital model is not broken. Venture capital investment later in the lifecycle of meaningful technologies is valuable, but it is also limited by its emphasis on established revenues and shorter-term returns. Our goal at Aventurine is to change that by adding a new, complimentary investment style to early stage deep tech investment.