Looking for the next Cal moonshots with Caroline Winnett of UC Berkeley’s SkyDeck

The below is a full (unedited) transcript of a Youtube session / podcasting episode I recorded with Caroline Winnet, Executive Director at UC Berkeley’s own incubator and accelerator program Skydeck in the fall of 2020. You can listen to the podcast on YoutubeApple PodcastStitcheror wherever you get your podcasts.

Erasmus Elsner 0:07 
What’s up everybody, and welcome to another episode of Sand Hill Road. In this episode, I’m joined by Caroline Winnett, who is the Executive Director of UC Berkeley’s own incubator and accelerator program Skydeck.

Caroline Winnett 0:20 
You should come to Skydeck because you dream big. You want to change the world. You’re not doing this as a side hustle, and you want the whole Berkeley ethos, the Berkeley values of making change in the world. 

Erasmus Elsner 0:33 
In this episode, we’ll learn what makes Skydeck different from other accelerator programs, including the likes of Y Combinator, 500 Startups and Techstars.

Caroline Winnett 0:42 
We are not a separate entity. We’re not a private company. We’re not a 501C spin off. We are a Berkeley program.

Erasmus Elsner 0:48 
And in addition to the skydeck incubator and accelerator program, Skydeck operates its own Venture Fund, which is backed by some of the top tier venture firms in Silicon Valley, including Sequoia Mayfield, Canvas and Sierra Ventures. As a former PhD visiting scholar at UC Berkeley skydeck is really near and dear to my heart. I’m super excited to be joined by Caroline Winnett today, who’s the executive director at UC Berkeley’s incubator and accelerator program skydeck. Welcome, Caroline are you ready to take us to the top? 

Caroline Winnett 2:02 
You bet, go straight to the top.

Erasmus Elsner 2:05 
So as I just told you, I have a unique relation to Skydeck as I was a visiting scholar of UC Berkeley, for the audience, maybe give us the cliff notes of what Skydeck is really all about?

Caroline Winnett 2:16 
Sure. Berkeley Skydeck is UC Berkeley’s startup accelerator and incubator. We have about 140 startups in our program at any given time. And we accelerate and incubate. And we have startups, both from Berkeley from UC Berkeley, also from any of the 10 UC campuses. And for acceleration program, we have startups coming from outside the US who want to come and launch in the US. And we connect all these founders to our extraordinary community of UC Berkeley. And we are a UC Berkeley program. So we are at the heart of Berkeley innovation and Berkeley’s desire to find great solutions to solve the world’s biggest problems.

Erasmus Elsner 2:55 
You just have your most recent demo days in the times of Corona, I assumed that this was all remote. How did how did this work? And how did it differ from the usual demo days.

Caroline Winnett 3:09 
So it worked great. It was it was on YouTube Live. We had great attendance. It was different, of course, because typically our demo day is in person in the middle of UC Berkeley campus. As far as we know, probably the largest Demo Day in the Bay Area. We weren’t live we couldn’t have the Cal band live sadly. But we had the core which is all of our accelerator tracks startups pitching their wonderful business ideas for investor consideration.

Erasmus Elsner 3:36 
Let’s talk a little bit about you and your background and your journey from being in the founder shoes, to running a incubator and accelerator program. You were an entrepreneur for a decade or two, you started two companies. Talk to us a little bit about how that journey has shaped you and how this this really adds to your day to day experience. That’s guidance.

Caroline Winnett 3:56 
So I started far more than two companies. But two of them is what I brag about. I’m really one of them is the one that that I’ve co founded and was within the full ride. The other one I helped co- found and then I went off to do other things. My big startup ride was a company called Neurofocus. And it was a bunch of us Cal alums, scientists and engineers and myself. I’m a Cal MBA. And we teamed up with a neuroscientist who’s a professor at Berkeley of neuroscience, and we would put eg sensors on people’s heads. And that would provide insights for companies on how people reacted to their products. It was a fast drive from launch to acquisition in five years, from zero to 25 million in revenue in that same time, and everything that goes along with it, you know, my co-founder and I putting all of our savings, literally every penny and then going into some personal debt, you know “all the chips on the table”, and “this better wor”k and, you know, fortunately it did work. Having gone from a crazy idea to then acquisition, we were acquired by the Nielsen company that I lived that and I bring that experience. And it really helps me understand my founders helps me understand where they are both from a business perspective, but also from a personal perspective, because I know what it’s like to just put everything on the table for your startup. 

Erasmus Elsner 5:24 
Then in 2014, you joined the Skydeck program. Today if you are at the BART station in Berkeley, everybody knows the the Skydeck offices in the tower there. But how was our the first days of the Skydeck program, I assume it wasn’t an easy sell for a state-owned university system to get into the venture business.

Caroline Winnett 5:45 
So Skydeck existed when I was brought in to run the program. So so some very enterprising people had done the previous hard work of setting up this program for success, the way it was set up, it was a pretty quiet incubator program when I joined. And so when I came on at the end of 14, we wanted to set up an accelerator, which is much harder is just much more intensive. You have to have a program, you have to have structure, you have to have a way to coach these startups and get them from point A to point B, figure out how can we fund these startups? Right, you can’t accelerate a startup unless you give them a nice investment check. So how were we going to do that we as UC Berkeley University, could not set up a small seed fund, so we had to get creative. So what we ended up doing is finding a really talented fund manager to launch a dedicated venture fund that would fund all the startups at skydeck. That fund the Berkeley Skydeck Fund is our dedicated partner fund. It’s a $24.5 million fund. And that fund invests in all the startups in our accelerator track and the fund managers work closely with us to help those startups grow and launch. And then here’s the really fantastic thing about this, the Berkeley Skydeck Fund, and UC Berkeley share equally in the profits of the fund. So that makes us co equal partners in working with these companies. So we get all private capital, because there’s no UC Berkeley capital that went into the fund. It’s all private capital by very professional investors, plus all the resources and energy and the mission of UC Berkeley working together. And it’s a beautiful partnership. And it works incredibly well. 

Erasmus Elsner

Let me double click a little bit on this this fun structuring, mentioned that 50% of the carried interest, the way I understand goes, goes to UC Berkeley, what about the management fee, that’s to cover the fund structure, and that I assume is not something that pays for any of the accelerator facilities. 

Caroline Winnett 

It does, but those funds are due later. But there is some compensation that the fund pays to Berkeley for the fair market value of our services, you know, for the use of our brand name, the Berkeley brand, etc, etc. So that’s all really nicely worked out. So that so that we each share in, you know, the fund returns, UC Berkeley is compensated appropriately, you know, as a public university, and the partnership really works incredibly well. And so now all we have to do is find the next gigantic breakthrough company. And when that company exits, UC Berkeley will receive a portion of those profits, and that will fund education. And so that’s a wonderful goal. It’s a wonderful mission. And it is a way to get our alumni, our supporters or advisors, all very excited about helping the companies at Skydeck. 

Erasmus Elsner

In terms of the LP base of the fund, it’s Sequoia Mayfield Canvas, Sierra Ventures backing this 24 million Skydeck Fund, how did this partnership come together? And I assume this comes out of their Seed pockets laying a foundation to then be able to participate in the follow-on round. 

Caroline Winnett

Right, exactly. When we started the fund. by we I mean, you know, our fund manager, of course, with cooperation from skydeck, we started reaching out to of course, we wanted really top quality Silicon Valley investors to invest not just because they’re great financial partners, but because we knew with that kind of partnering, that we would be looking jointly for great companies, and that when companies graduated from skydeck, they would be talking to companies, investors like Sequoia like Mayfield, we were just delighted and wonderfully thrilled that they were eager to invest. Sequoia was our first investor with our first commitment. And so when we started talking to the other investors, of course, it was it was great to get this just absolute blue chip list of Silicon Valley investors who have been wonderful partners with us.

Erasmus Elsner 9:46 
Yes, it’s really impressive list of venerable Silicon Valley firms. Let’s talk about the elephant in the room. I guess it’s a question you get asked on a daily basis. How does Skydeck differentiate itself from other Excel Other radio programs, such as the infamous Y Combinator, 500 Startups, Techstars, and then maybe more specifically on on the Stanford side, the Sart X program.

Caroline Winnett 10:12 
That’s actually a very easy question to answer. The difference is that, unlike any other accelerator, and I’ll explain exactly how skydeck is Berkeley, we are not a separate entity, we’re not a private company, we’re not a 501C spin off. We are a Berkeley program, my staff and I report to the Vice Chancellor for research. So that makes us have a mission and identity that serves us really, really well. It gives us It makes us a mission driven organization, in a way that no other structure or identity could. And that goes down to how we feel, you know, my staff and I, the core staff, how the advisors feel, who are donating their time, to advisor companies, to the alumni that we call up and say, will you help one of our companies, if they succeed, Berkeley will benefit financially, it is a wonderful circle expanding and growing circle of mission, excitement to support Berkeley, and all of the Berkeley values, which it turns out are very much startup values, right? Find great technologies, change the world with great solutions, get them quickly to solve the world’s problems, don’t talk about them and think about them, let’s really make change in the world. And that’s all coming together in a way that honestly, we, we couldn’t have anticipated when we started this, I’d say that’s really the core difference. There are some programs that are connected to universities or maybe a spin off of universities. Starbucks is an example. And Starbucks is a great program for Stanford, but being an actual program of Berkeley, which skydeck is, I think gives us a whole next level sense of mission. That really is extraordinary.

Erasmus Elsner 12:11 
Let’s talk a little bit about the cohort profile and the eligibility requirements. So in terms of the cohort profile, you mentioned, some stats on the website, given the proximity to the university system. These are really deep tech verticals that give the startups a technological moat, what would you say is the typical application split in terms of technologies and stage.

Caroline Winnett 12:36 
The typical stage of the company at skydeck is very early, we take companies at the pre-seed stage, they have probably some sort of prototype or demo, they might have some data, we can take them very early. We are fortunate in that our program is extremely competitive, we received for this next cohort, that we’re evaluating 1800 applications. And this is for about 20 spots. So because of that wonderfully competitive application pool, we can be very selective. So while we’re taking early stage companies, we’re looking for a company that that has some evidence that the startup really is going to be able to do something meaningful with $105,000, that our skydeck fund will invest in them. And that six months later, when we present them at a demo day, there’ll be ready for institutional investment.

Erasmus Elsner 13:30 
Let’s say I’m a Saas founder from Latvia, or a FinTech founder from the UK. Can I apply? Or how does it work? Do I have to be an alumni of UC Berkeley, a current student or do I need to have some staff who are at UC Berkeley. How does it work?

Caroline Winnett 13:51 
So for the accelerator track, we’re looking for companies that either have a UC affiliation, that’s Berkeley, of course, we look first and foremost at our Berkeley founders, that is our priority. And for international founders, that are located outside the US, we are requiring that when they join the program, they make a meaningful Berkeley connection. So they need to find a co founder, they need to find a faculty advisor, they need to hire some engineers, perhaps or some business development people. We are screening for those companies that are looking to come to skydeck not just for our great program, but because of the great program. That is a perfect program.

Erasmus Elsner 14:36 
Let’s talk a little bit about how the acceleration program actually works. I see that you have a milestone payment in the middle of the program. How does the day to day life at skydeck work for the companies.

Caroline Winnett 15:02 
So it really depends on the company. So we have companies that are all different types of industries. And basically that milestone, we’re just looking for companies that have made meaningful progress that are participating in the program. And really taking advantage of the resources that we have to offer.

Erasmus Elsner 15:21 
Let’s talk about your favorite success stories. The companies, the outliers, I mean, I see there on your website, obviously, from the micro-mobility, scooter wars, we have Lime.

Caroline Winnett 15:32 
So I love all of our companies. They’re all wonderful. A few of them we talked about, because they’re there, they’re getting sort of well known publicly. And one of them, of course, is Lime, who came through Skydeck as an incubator track company some time ago, because by the time we launched our accelerator track, with funding . Lime had already raised about $100 million at that point, so but they’ve participated actively, they have some Berkeley co founders on their team, and of course, is founded by a Berkeley alum. So they’ve been a great partner, we love to brag about them as brilliant minds coming from Berkeley, and really being, I think, an emblematic of PE world. Take a look at UC Berkeley, we really do have an extraordinary crop of talented founders who are coming out of our ecosystem.

Erasmus Elsner 16:25 
Talking about the broader ecosystem. I remember when I was a visiting scholar at Berkeley, I would travel to Sand Hill Road a couple of times, and it took me about two hours with the BART and the Cal train. Some people think that this location advantage that Stanford has is now completely being eradicated. Given that, that you can raise a Sequoia Seed round from Colorado, if you have a good Wifi connectio,n just as easily as you can from Stanford main campus, how do you see Berkeley’s positioning evolving in these circumstances?

Caroline Winnett 17:01 
Great question. So the depth of Silicon Valley has been greatly exaggerated. It is still and let me define Silicon Valley, Silicon Valley is really now the Bay Area anywhere that is within one to two hour drive radius. That depends on traffic when we used to drive before COVID. And there’s nothing there’s still nothing like the concentration of startup expertise of investors, of vendors, law firms, accountants, etc, etc, that understand how to tailor their services to startups. There’s nothing like the concentration that we have in Silicon Valley anywhere else in the world. No other place comes close. Now that said the other tech hotspots around the world are growing and interesting things are happening. And I think, you know, over the years, we will see other Silicon Valley like places emerge that maybe have specific industry focuses, right like obviously in China and Shenzhen there’s manufacturing going on there for startups, huge center there. We have financial services, startup ecosystem in London, many other places around the world. There we go identify COVID has accelerated this process. You know, we see partners at Silicon Valley firms having zooms with startups everywhere. So I would say that the center of gravity of the startup world is still in dispute ugly, Silicon Valley, but it is democratizing a bit as the world disperses. COVID makes us more comfortable doing everything remotely.

Erasmus Elsner 18:32 
Let’s talk a little bit about how you see the future of Skydeck. So in the ideal world, would you see the Skydeck fund move into later and later follow on rounds? Or do you think this is the ideal sweet spot, the Goldilocks zone, if you like, and how do you see your personal future at Skydeck building out this program further.

Caroline Winnett 18:52 
We see for the foreseeable future that we will continue to focus on this accelerator stage fund. So skydeck fund one and then our subsequent fund two, which will which will begin in a year or two, when we’re done with fund one will continue to focus on the accelerator stage, the fund does make some follow on investments in subsequent rounds. And so there will be more capital to do that when we raise a larger fund to you know, the long term goal for Berkeley is to have several partner funds like the Berkeley skydeck fund that invest in various stages and share our carry with the campus. And whether that’s other offshoots of the skydeck fund or other funds we partner with is TBD. But that’s our game plan myself personally, I absolutely love what I’m doing. It’s just the most fun I’ve ever had. I love feeling like when I get up in the morning, I’m not only helping founders achieve their visions and their dreams, but I’m helping UC Berkeley and as a Berkeley alum, myself a daughter of Berkeley alums. everybody in my family children at Berkeley I mean it I’m as I’m as blue and gold as they come But it really is personally very satisfying for me to do something that provides benefit to the campus not just as an exciting program that gets all of our founders excited but also can really meaningfully support the campus for the future.

Erasmus Elsner 20:15 
That’s so wonderful. So Caroline, this is a good wrap up. Thank you so much for for taking the time and talking to us about about skydeck.

Caroline Winnett 20:23 
It’s been great speaking with you so much. Thanks. So we’re on our own moonshot trajectory. Join us