Heavy Hitters: The Digital Industrial Podcast

Sam shares how his iconic, early-stage enterprise s/w venture fund found itself investing in emerging tech applications like warehouse robotics, drones, etc., outlines why “cognitive applications” will be the next generation of great s/w companies and how those apps are built on top of the current foundation of cloud & SaaS infrastructure, describes how Scale leverages their Mega-Trends Process to identify the upside potential/alpha within emerging technologies, walks us through lessons learned of what does and doesn’t work to hit product-market-fit in industrial robotic settings where bits meet atoms (hint: start with doing one high-frequency task associated with a tangible ROI really well!), and finally he discusses how he thinks about early-stage investment syndication within these emerging tech and industrial applications.

Canaan is a storied, early-stage venture VC fund that has been around 34 years with ~6B AUM across 12 funds, and Rayfe discusses what the macro factors were that led Canaan into expanding a frontier and industrial tech thesis that would drive alpha for their fund. With a large and diverse partnership that is split 1/3 healthcare (digital, biopharma, medtech) and 2/3 tech (consumer, fintech, enterprise/cloud, frontier), he discusses both how to navigate a partnership into a new investment category/thesis and how the diversity of thinking within such a broad partnership leads to the beneficial cross-pollination of complimentary ideas and networks. He discusses how he leverages his thematic specialization to diligence and win deals (hint: a prepared mind from specializing = speed!), how he thinks about financing syndication nuances aligned to the categories of frontier and industrial tech applications (hint: supercharge networks), and finally why he is for off-cycle founder conversations to ensure deep relationships are built long before a fundraising process.

Ginger explains why a private, fourth-generation family-owned industrials business founded in 1930 with over 38 operating companies (heavy construction and materials, environmental services, and specialty chemicals) would spool up a venture group, how her team leverages the extensive resources of The Heritage Group to drive differentiated value to their portfolio companies, why we should all remember industrial innovation relies on physical world innovation (i.e. hardware) not just digital innovation, what team DNA is required to lead these hard tech innovations that often require physical materials, and finally a capital markets discussion on the downstream investment and exit underwriting outlook in these categories (hint: value the moat!).

Trevor outlines how having a sector focus, and associated domain expertise, provides a prepared mind that allows him to both underwrite investments quickly and provide sector-aligned value back to their portfolio companies, where he thinks the venture asset class is headed between sector focused funds and generalist funds, why Blackhorn expanded its multi-stage investment capabilities from seed-to-growth with an opportunity fund that provides the ability to ‘play through’ with investments throughout the lifecycle of a company, how specialized growth equity (and SPACs!) has a key role to play within some of the sub-sectors involved with industrial innovation, and we finish with some tech trends of “What’s hot and what’s hype”.

Travis explains how they saw the opportunity to build an architecture, engineering and construction (AEC) and real estate focused network of investors to launch Building Ventures to invest in ‘sapling-stage’ companies, helps define what the terms Built Environment and Builtworld mean to them, outlines why buildings and the associated construction process of making them have a massive role to play in sustainability efforts going forward, why he feels the term “Constructuring” is indicative of how construction is evolving to be more like manufacturing settings, and how he thinks about the end game for startups in this Builtworld sector.

Bryan has easily been one of the most active investment bankers within the digital industrial ecosystem, and he kicks off the discussion outlining why he believes Desktop Metal’s SPAC in late 2020 was the catalyst that set off the record level of dry powder in the capital markets to target the digital manufacturing ecosystem. He walks us through how 8 months after Desktop Metal’s SPAC there have been 61 transactions and ~$7B in transaction volume; which is on par for the entire history of investment in this category. Of those 61 deals, 22 deals and $5B were in public equity (SPACS, Follow-ons, IPOs), 22 deals and $1.3B were in M&A, and 17 deals and $420M were in private markets. We then discuss why we both feel this current flurry of manufacturing investment activity both is not a bubble and is structurally very different than the digital manufacturing wave of 2013-2014 (3D Systems, Stratasys, Protolabs, etc.), and how SPACs specifically have re-emerged in the capital markets to fill a growth-stage investment gap that existed in this category. Finally, we wrap up with a ‘What’s hot and what’s hype?’ section on innovation trends Bryan is seeing in the market.

Gina leads the DHL Americas Innovation Center, a 28,000 square foot, state-of-the-art facility in Chicago where customers, partners, academia, and thought leaders can experience the next generation of logistics in an interactive showroom environment. From her vantage point helping create the logistics of tomorrow, we discuss what logistics innovation is hot and what is hype, why DHL’s recent sustainability pledge to be emissions free by 2050 is a critical initiative, how to deploy and actually scale innovation within challenging real-world logistics environments, and why we should all be preparing to advance the topic of the future of work within these supply chain environments.

Supply chain tech startups raked in $7.7 billion in venture funding in Q1 2021, an increase of 90.6% over last quarter and a staggering 355.1% year over year (Pitchbook), and transportation & logistics subsegments were a major part of that activity. Mike & I discuss the innovation journey Ryder took to launching Ryder Ventures, what trends and technologies his team are focused on, how he defines and approaches last mile innovation to meet ever-increasing customer experience requirements, and where he sees the broader transportation and logistics ecosystem headed to further engage in the startup ecosystem.

Guy’s unique background, blended between deep tech and capital markets, guides us through a fun discussion on the topic of “Deep Tech”. We define what “Deep Tech” is, outline why we’re already living in a ‘Present Future’ surrounded by these technologies, evaluate how the future of work will be impacted by these innovations, and then bring it all back to how the capital markets are exploding with funding growth in this category to meet the opportunity ahead.

Family office direct investing into the private markets, and the venture capital asset class specifically, is at an all-time high. Cindy joins us to outline how the Perot Jain office leverages its extensive industrial operator network and physical infrastructure footprint to gather market intelligence on real-world pain points to invest behind, how their broader platform leverages all of its resources to drive tangible value back to startups targeted at those pain points (hint: they’ve actually developed a master-planned smart city, Alliance, Texas, that also serves as a supply chain & mobility testbed for startups), and finally why she feels family office direct investing is here to stay.