Can Venture Capital Help Unlock 'Underdeveloped' Caltech?
Ben Bergman is the newsroom's senior reporter, covering venture capital. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks. Follow him on Twitter.
The California Institute of Technology ranks as one of the top universities in the world when it comes to receiving patents. But more of those inventions should successfully be making it to market, at least according to the investment thesis of Freeflow, a new pre-seed and seed stage venture firm that exclusively backs Caltech startups focused on human and planetary health.
"The people there are amazing scientists who are not afraid to tackle the hard problems," said Freeflow founder and managing partner David Fleck, who was an early Google employee who has spent the last 20 years tackling big data. "But as I started to spend more time there I realized the ecosystem was somewhat underdeveloped. They needed investors that could help them with capital and help them develop a company."
Fleck wants to be that investor. "We're the only one that we know of having this approach," he added.
David Fleck, who started Freeflow after he sold his online commenting service, Disqus, for a reported $90 million in 2017, hopes to broaden the perception of Los Angeles from a consumer tech hub to a place with the sorts of deep tech companies more commonly associated with where he spent most of his career, Silicon Valley.
Fleck, who started Freeflow after he sold his online commenting service, Disqus, for a reported $90 million in 2017, hopes to broaden the perception of Los Angeles from a consumer tech hub to a place with the sorts of deep tech companies more commonly associated with where he spent most of his career, Silicon Valley. He believes most L.A. VC firms, clustered in Santa Monica, neglect what they view as the hinterlands of Pasadena, where Caltech is based.
"It's very hard to go from west to east," Fleck said. "We made a conscious decision to say we are a Pasadena firm."
Freeflow has raised $8 million of capital so far and is aiming to close a $30 million fund by the end of the year with the help of the heavy hitters on its advisory board who are also serving as limited partners; Fred Wilson, founder of Union Square Ventures, Chris Farmer founder of SignalFire, and Chris Douvos, founder of Ahoy Capital.
Wilson, an early investor in Twitter, Tumblr and Etsy, is based in New York but spends several months every winter in L.A. "He became a good friend and mentor and encouraged us to go after the thesis," Fleck said.
Freeflow is fully independent of Caltech. That differs from the approach of the Massachusetts Institute of Technology, which launched its own venture fund as a public benefit corporation in 2016, The Engine, focusing on "tough tech." Stanford University backed an accelerator starting in 2013, StartX, though the university ended funding last year.
Caltech has had some notable success. Earlier this year, a federal jury in Los Angeles ruled Apple owed Caltech $837 million for selling WiFi chips that infringed on the school's patents and Broadcom, which sold the chips to Apple, owed Caltech another $270 million. (The companies are planning to appeal.)
Freeflow is aiming to back 20 startups over the next 18 months with check sizes averaging around half a million dollars and recently announced its first four investments:
- Appia Bio: Developing a stem cell therapy platform for the development of new drugs to treat cancer, which was initially developed in the Caltech lab of professor and Nobel laureate Dr. David Baltimore.
- Entos: Making physics-based machine learning software that maps chemical space to discover promising new molecules for therapeutics, vaccines and diagnostics through a SaaS model.
- Molecular Instruments: Designs and synthesizes kits for quantitative bio-imaging in drug development, clinical pathology and diagnostics and academic research.
- Toofon: Developing an autonomous, heavy lift drone for last-mile delivery and emergency response, which came out of Caltech's Center for Autonomous Systems and Technologies (CAST).
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When the founders who lead the ten young startups selected for the 2020 Techstars LA class begin their three month accelerator program Monday, they won't be gathering in the Mid-Wilshire office and shaking hands as every other class has done. Like the rest of us, they will be working at home because of the coronavirus. Dinners, meetings, socializing, and mentoring sessions will all be online.
"A big part of the magic of the program is the relationships that are from proximity and from everyone working together in the same space and so what we're doing is we're endeavoring to create as much as that connection in the virtual world as possible," said Anna Barber, managing director of Techstars LA.
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LA Tech Updates: Apple Podcast Vet Joins QCODE, Amazon Reportedly in Talks to Buy Wondery, Pharrell's New Black Ambition Incubator
Apple Podcast Veteran Joins Startup QCODE<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDUzNTQzMC9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYzNDUzMzYyNH0.pOGV2lL0qOJQDiWw1T5i4SqsGfaL54hLWED6_5Mf1Ww/img.png?width=980" id="8d68d" class="rm-shortcode" data-rm-shortcode-id="f2a47797239f360473fead53338231d4" data-rm-shortcode-name="rebelmouse-image" alt="qcode" />www.sonos.com <p>QCODE, a Los Angeles podcast startup run by a former Creative Artists Agency talent agent, snagged longtime Apple podcast executive Steve Wilson. The 15-year veteran will become QCODE's chief strategy officer.</p> <p>QCODE, which <a href="https://dot.la/sonos-podcast-qcode-2648395035.html" target="_self">last month raised $6.4 million</a> in a Series A round led by Sono, is positioning itself as a funnel for Hollywood. </p> <p>Founded by Rob Herting, a former agent who had represented largely writers and filmmakers, the company has produced eight shows since 2019. Several have been auctioned for film and television, including "Dirty Diana." Amazon picked up the 6-part erotic drama for a TV series.</p>Wilson, who most recently ran marketing for Apple Podcasts, brings insights from the behemoth platform as the industry sees revenues soar. Advertising brought in near $1 billion this year, according to Interactive Advertising Bureau's podcast report prepared by PwC.
Amazon Reportedly in Exclusive Talks to Buy Wondery<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDc5NDU5OS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0MjgyMDY3NX0.BHKSXjwra-gGsFEa7lXCCCMJXWV5cYxrZqhddj3-uds/img.jpg?width=980" id="d401d" class="rm-shortcode" data-rm-shortcode-id="c9c9eee1f9adc4c1d5edeca1af986a84" data-rm-shortcode-name="rebelmouse-image" alt="Hernan Lopez" />Hernan Lopez started Wondery with the belief that in-depth, narrative audio stories were poised to bloom.<p>Amazon is in "exclusive talks" to buy podcast company Wondery and subsume its 30 hit shows and over 8 million monthly listeners into its empire, the Wall Street Journal reported on Wednesday.</p> <p>The talks reportedly value Wondery above $300 million, in line with previous estimates from analysts, when Apple and Sony were said to have expressed interest.</p> <p>Wondery has produced dozens of original series including "Dr. Death" and "Business Wars," and has 19 shows currently in development to become television series. </p> <p>The company does not publicly disclose its financials, but chief executive Hernan Lopez has previously said the company is profitable. About three-quarters of Wondery's revenue comes from advertising, but Lopez has said the company's revenue share from content licensing is growing (Wondery owns the intellectual property for all of its originals). It also launched a subscription service, Wondery Plus, in June and is currently looking to expand its international footprint. </p> <p>Wondery, the West Hollywood-based company with the largest audience of any independent podcast producer, has been the subject of swirling rumors that several suitors are interested in acquiring it.</p> <p>After a pandemic-induced decline that struck much of the podcasting industry, Wondery's audience has surpassed its pre-COVID levels. Its Q3 revenue was about double year-on-year and its Q4 performance has been strong, Lopez previously told dot.LA. </p> <p>Podcasting overall now attracts over 100 million monthly listeners, according to Edison Research. The Interactive Advertising Bureau projects podcasting revenues to exceed $1 billion by 2021.</p> <p>That growth has spurred somewhat of an arms race, most evident in Spotify's spending spree, which also has helped that company diversify from its reliance on streaming. Amazon Music is one of Spotify's biggest competitors along with Apple Music, and <a href="https://www.wsj.com/articles/amazon-music-joins-podcasting-fray-11600261201?mod=article_inline" target="_blank" rel="noopener noreferrer">recently expanded into podcasts as well</a>. </p> <p>Acquiring Wondery would give Amazon more content to slide into Amazon Music, a scaled-down version of which is free for Amazon Prime subscribers. Combining that content with its Alexa smart speaker also could empower the company to capture more eyes and ears in the increasingly competitive attention economy. </p> <p>The talks are reportedly ongoing and no deal has been confirmed. </p>
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