The below is a full (unedited), machine-generated transcript of a Youtube session / podcasting episode I recorded in Q2 2022 with Chon Tang, founding GP of the SkyDeck Fund. You can view the video/listen to the podcast on Youtube, Apple Podcast, Stitcher or wherever you get your podcasts.
Erasmus Elsner 0:20
Welcome to another episode of Sand Hill Road. And I have a great guest with me here today, Shawn Tang. He’s the founding GP of the Skydeck fund. And I had in a previous episode, I think it was episode 17. I had Caroline Winnett, on the show who’s the managing partner of the Skydeck accelerator? And for those cohorts that go through the Skydeck accelerator, Shawn, you’re sort of the next person to talk to give us a two minute pitch about who you are. And what you do.
Chon Tang 0:51
Oh, no, I’m not sure that I’m ready for with a two minute pitch, but I’ll give him my very best, you know, the hardest thing for us is always consistently having to explain that while we sound familiar, we’re actually pretty different. So yes, for Berkeley, Skydeck is a is the official startup accelerator for UC Berkeley. Yes, our fund is the investment vehicle that writes checks into those companies. But as you really scratch the surface, that story is pretty distinct from lots of other players out there that build a similar bottle. It’s different in terms of the structure, it’s different in terms of the value proposition, the kind of companies that we go after the kind of investors that we go after. But But in short, what will we do is, as has already been said, we invest into each of these these companies, they come in on very fixed terms, we have a special hook for why they should be here. But once they come in, we read a check into that that on day one. So it’s right now for with flood two, which was raised earlier this year, we’re putting in 200k, for 7.5%. And then they spent six months here consuming, taking advantage of all the resources that we have at their their disposal, and then they pitch in front of 800 investors at demo day, they go off and they raise huge rounds. The one thing that I’ll point out immediately is that the investor is that the source of capital that goes into these companies, because people often have there’s some common misconceptions there. We’re not backed by the endowment when I backed by taxpayers, there’s not one penny, from the school that’s in this fund, even Brookley alumni are a tiny proportion of the investors, the backers of our company is our financial investors. These are institutional investors, their pension funds, there’s a sovereign fund in there. And these are players who really quite honestly, don’t care about broccoli. There’s no affinity there. But they’re doing this because they understand that we’re able to give our investors outstanding financial terms. And that’s why this is so exciting. You know, it’s a unique public private partnership, where the school absolutely benefits, the taxpayers will absolutely benefit the students will benefit the founders will benefit the VCs will benefit and the investors into our thought will certainly do quite well as well.
Erasmus Elsner 3:06
And one thing I didn’t ask you in the beginning is where does it find you today? Because for the people out there, Skydeck men I brought my my Cal sweater here today sky to sits on Shattuck Avenue right at the BART station, it’s sort of at the at the top of the building. Are you in the accelerator right now?
Chon Tang 3:23
All right, I am I live the intelligence of the lady. But I am in downtown Brooklyn, as we speak, we the building that we are in used to be called the power bar building for the folks in the area from 10 plus years ago. Now it is known as the skylight building, we have a giant sign on top of the building next to the scene from miles around from campus. That’s very, very important. And we expect that this building will be what we call the global hub for entrepreneurship for decades to
Erasmus Elsner 3:51
come. Yeah, I love it. I love it there. As I told you, I was a PhD visiting scholar in Berkeley for a while. And I think when you yourself were a PhD student, it was in the midst of the.com bubble. Take us back to those early days when you did what any good PhD would do, as the founders of Yahoo said, which is not to work on your PhD and rather start a startup. It’s
Chon Tang 4:14
dangerous because I know I at some point soon, I hope it’s not yet it’s sometime soon. The young uns out there will hear this story and be like, ah, there it goes. The Boomers, you know, they’re talking about ancient history. But certainly I think the the lessons that I’ve seen in the two cycles that I’ve experienced so far, I think they absolutely apply that. So you know, it’s really fun comparing the startup infrastructure ecosystem back in 98. So I graduated from Berkeley with a bachelor’s in ECS. And I think 98 compared to what the undergrads now are, like, you know, the undergrads now I think all of you out there listening, are in that age group. You get it. You know, I see high school seniors, college freshmen that are getting funded, right. I mean, like, you know, they come in with that mindset. They know what venture is they They know how this week this game works 20 years ago, you know, for those who are really at pretty much the heart of the valley, and I don’t think I was alone in this respect, I had no idea what startups were. And I remember the first time that I saw one of our one of the faculty at Berkeley, who I’m not going to name the had a company that was starting to do really well. And he showed up in a really nice car. And everybody said, Oh, wait, you can make money doing this. I mean, honestly, he was like the light logo. And at least for some of us, it was like, wow, I didn’t know that was an option for because for most of us, the dream was working at Microsoft, working at Intel, working at Sun like that was it, I went off to do my PhD at MIT. And over those two or three years, like that knowledge of wow, this, this is a unbelievable new method for value creation, that you could go from grad school or from school directly and, and take what you learn and create a massive company, that idea really started to set in, I still remember that I mean, on my floor, in my lab, I might see, there were probably called 100, plus grad students in computer science. And I might see, there’s probably a couple of us maybe two or three that really had interest in even exploring this right, which is obviously very different from how things are now, long story short, in the original.com. Bubble, which we did not know, was a bubble, we thought it was a rocket ship, I left grad school, I had a co founder from HBS. And with that parody, in the exciting days of 2000, it felt like we couldn’t fail. I like to contrast that for founders who are going through the journey. Now, every founder who listens to your podcast, they already know that there’s a high chance of failure, you know, they know the odds are against them, they’ve seen the statistics. And they just happen to believe that they have special skills that you know, to beat the odds in 2000. I think that and we were so naive, because nobody had seen this before. There was no grey hairs out there saying, hey, you know, John, I don’t know what’s gonna go well, instead, it was just, it’s a revolution.com. Internet is a revolution to how things are done. Obviously, the capital markets thought back to the founders thought that too, we were on the cusp of just this new era. And the sooner that you got in, the better it would be and then to leave grad school in the fall of 2000, filled with confidence and see all that crush within six months was just shattered. You know, I tell people a lot that back then it felt like learning that the Easter Bunny and setup bots were fake on the same day. Right? I guess we had a mental model that had carefully constructed over the previous five years about what the world was like and what the world was going to be. And I didn’t realise that it was all BS. Today is that short, your company’s worth X dollars if that company is worth, you know why that makes sense. Unless Y turns out to be a zero, in which case your company is also worth a zero. Right? So it was one of the most depressing periods in my life, honestly, and you know, this is something that I think a lot of founders will sympathise with, even though they haven’t thought about it. Like if you’re gonna attempt to start a company, odds are pretty good that you’ve been successful in life. So far, you did well, in high school, you did well, in college, you did? Well, your internships you did well, in grad school, you’ve gotten every job offer you’ve ever interviewed for. So you have this confidence? Of course you do. That’s what you were thinking I can change the world. But then to run square into this wall, where even now 60% Of the companies out there aren’t going to make it and pends on how you see, as they say, so it might even be more, but back then, you know, of the companies that were formed in 2,090% sales, right? So that absolute shock was unbelievable. But what was nice about that, and I always tell founders, is that, gonna do that earth shaking, value shaking, you know, a reset of my mental map, and have that giant failure was one of the best things that I could have gone through to get through at that stage in your career. Guess what? No more fear of failure. I got nothing left.
Erasmus Elsner 9:13
You were so transparent about it. And I think you mentioned on another podcast, how back in the day, everybody would raise on a PowerPoint without an MVP without initial traction without initial users and then to to see it all blow up in your face, and that you’re still carrying some trauma with us. I think any founder does to some extent. Let’s talk about how you then transitioned from being a founder to an angel and I think we were also co investors in circle medical we talked about a couple of years ago, which had an exit, but you have 35 Personal angel investments, two of them IPOs. So you’ve been writing a couple of great success stories there.
Chon Tang 9:52
So I’ll give it a little bit more about my career trajectories. It all feeds really nicely into the kind of work that I am doing now. So after The trauma stayed with me for five, six years, and I, and I didn’t want to read the press, I didn’t care anymore. And I was like, turn, you know, if.com came on on the news, I would turn off the TV. But then, you know, five, six years later, that urge really came back. It’s just that, that creative process, and I think all founders out there understand this, that failure process of looking to change the world and build something, it’s cost to you. So I wasn’t ready to be a founder again. But I had a little bit of capital, and I said, You know what, I want to be an angel. So I sat across the table, I learned by joining a couple of angel groups, just a fascinating experience that I really actually, you know, it’s become kind of less of a thing, because so much is done on Twitter now and on AngelList. But I actually think that there is something here about an angel group that that I encouraged angels to seriously consider it’s a great wiggle room. So I made 10 investment back then I was quite fortunate to attend, I actually did end up going public, but professionally, actually, what I was doing was not a professional angel investor, I actually started to run my own quant hedge fund, right? So not gonna go into great detail about that. But the idea was, was pretty simple. The 2008 financial crisis crisis mark, it doesn’t quite finance in grad schools. It was like, Hey, let’s be stumped. That’s not priced correctly founded because I had lost my fear of failure. I said, I’d love to go build a fund. Like why wouldn’t I the fact that no one else does, that didn’t really concern me. So ultimately, code, I started to trade, it was working. And so I did that for about six years starting fundraising. And that was also not easy, which is something that I I carried over to the VC world. And I think I understand how the capital markets work, I understand what it takes to convince a LP that give you their money, they are giving it to you in the most sacred of ways, it’s actually different from why a customer might give it to a customer might might buy your product is it helps them in a number of ways. The only reason a LP gives you money, just because they want you to make them more money. That’s it. So that’s sort of very pure experience, where all of the packaging, there was no storytelling, it was just like, show me how you’re gonna make me more money than that person be where person seeing you. But so I left that career, although my fund was highly successful, because sight, logically, the pressure just builds and builds and builds, especially since I was placing the 1000 trades with hundreds of millions of dollars on the line, every single day. And that fear of my code crashing was just overwhelming, walked away, and got back to Angel investing, where I got very active making 20 Plus investments in one year, which required me to see a lot of deal flow. I was advising at all of the major accelerators on the West Coast, I would fly down to LA, you know, just just to meet, meet some companies, I didn’t have a job it was it was this and playing golf, you know, and that for as met coming back to my alma mater, at Berkeley, and Berkeley Skydeck was already a, you know, an excellent platform back then under Carolyn’s direction and they they approached me and said, hey, you know, it, should we fund if we could build build a fund here? Like, do you think that’s possible? Because if we had the fund, we have more more deal flow to companies will grow faster, all good things. My thought at the time, quite transparently. And I’ve told Caroline this and I’ve told the campus this so I am not embarrassed about seeing it here. But I thought the time was at that’s not a great idea. Because it where’s the edge? Right for every Brookley accelerator out there. There’s one at Stanford is when a UCLA is when a CMU UT Austin, not just in the US right now it’s global, every school on the planet with a decent engineering department has a platform like this. And as VCs, as capital market, investors, you’re gonna go where I make the most money. So with that in mind, why would I invest in any vehicle that was tied to one and small pool? A great pool, don’t get me wrong, I love broccoli. I love the talent here and the entrepreneur ecosystem here. But it’s one small pool of 1000s. But I said, Hey, happy to give back happy to help out. I knew how to stand up. Have fun, because I’d done that before. And I figured we would just go find some Cal alumni who go to this goes to football games and wear sweatshirts, and we would go get some beers and Washington Cal basketball. Why not? Let’s do it, but I never thought it ever be more than 5 million $10 million. That’s what a lot of these vehicles tend to be. And then and then from from that, that point I, you know, that will be it. I would put it 50% of my time to do that. And that’s it. Surprisingly, three months. It’s the process inspiration,
which is something that I think founders understand, right like you you go into a business knowing that you have an idea for what you want to do. Oh I’m not sure if the best one, but you keep your ears open that you’re thinking about your competitive advantage. You’re thinking about market pain points, and then boom, that one day you wake up, you have a cup of coffee, and it hits you. Why don’t I do it? This one? So it’s very useful for us was, you know, what was the constraint that I just said, Well, if you’re just investing in Brooklyn, it’s a small pool of 1000s of pools. And not just that the best of Brooklyn aren’t tied to you. They can go anywhere. They’re going straight to Sequoia and excel, and, of course, the YC and 500, you know, so that that didn’t work. But you know, what Berkeley is amazing at Berkeley, it’s not just a source of talent, Berkeley itself is one of the best, it is the best acceleration ecosystem in the world. I mean, there’s a reason why Intel hub, and it’s really much of the valley came from this kind of a culture from this ecosystem. It doesn’t matter where the idea comes from. You come here, and you’ll get the talent and the support that you need to build it into a massive business. So when that hit, it was like, wait a minute, and why do we? Why are we constrained yourselves? We identified a group of founders that we realise the rest of the valley was ignoring, or to a large degree was unable to invest in and I’m talking about the 6 billion people who have lives have not live in the US. Okay. Now, the US is obviously at the forefront of so much of this work as much of the world’s best and brightest, do you come here for grad school, but certainly not all of them. There are billions of people around the world who are great technologists and engineers, they’ve seen your podcasts, they’ve seen the videos on YouTube, they read the tweet that read the books, they have access to AWS, that access to GitHub, and access to TensorFlow, they have the ability to build a product as good as anybody that’s already clearly clearly in, in the body. Right? And yet, when you talk to us, founder and for those of us who have spent any time having that conversation, you’re already know that just because you’re not from the US, that hurdle, that bar is 10, exciting. Tenants, or at least 10, it takes at least at the early stage, right? So all the capital is here, all the talent is here. But when you show up with your perfectly in pitch deck, where your where your market vision is perfect, your product vision is perfect. Your traction is as good as can possibly be considered, how would you really raise all that is great. But then when the VC gets to the team slide, and it’s two PhDs for Polad. It’s an engineer from a car company in Germany, they lose interest, right?
Erasmus Elsner 17:49
So it’s a little bit like you were arbitrage in commodities before. And you found this pattern. You know, the market is underpricing, a certain type of founder, that if you’re at this ingredient, which is this relation, or this time spent in the valley, where you can shape and form it, then you can sell it at a premium to the next stage investors.
Chon Tang 18:10
You nailed it. I mean, I knew that would make sense to you because of your back background as well. I think people on Wall Street, get this right, you love for Miss pricings the restaurants for a reason, right? And then you figure out what the reason is, and then you fix it, and then you make money. So that was it. It was just amazing when we started to have that conversation with Foreign founders. So it’s also amazing when I talk to the VC, as you probably know, you know, our flood one was backed by some of the biggest VCs in the valley, Sequoia Mayfield’s here in Kansas will investors in fund one, not the the partners to funds work, but we’ve also spoken just about every other fun worth speaking to in the valley. And when I tell them that story, they’ll kind of nod their heads. No, yeah, I would not dispute that. You’re absolutely right. I see that pitchside come in. And I hit delete. Right now. So what is perfect to do about it, let’s miss by just to miss speaking about that briefly. I think everybody here who’s in venture will, in started playing will will see the appeal. So there’s three main colours. The first one is really team. You come in to PhDs from some school in Europe, or or nice in Europe, in Argentina, in Singapore, right? We are very global. You come in the first day you spent six months in Berkeley. Thank God, that word mostly done with COVID. So if you spent six months in Berkeley, the first thing is team. We surround you with so much for foreigners as the advisors, including the co founders of Tesla and DoorDash. We have 1000s of people on campus MBAs, current postdocs, undergrads and grad students and our faculty. Were happy to serve on your advisory boards. So if you leverage that properly, in six months, you’ve transformed your team, fundamentally. Okay. The second piece is go to market that we all know that investors love traction and US investors in particular value traction in the US, they want to know if I invest in you. And I’m going to help you I’m open up on my contact list, I have a little decks to help you get connections here. How can you grow? Right? So if you have any traction, much harder, you look at a lot of other venture funds or accelerators. And the network is whoever has the GP is. And obviously, if you’re Sequoia, your network is pretty impressive when you’re the GP there. But if there’s chance, accelerator, my network is decent. But let’s talk about what we have here. This is the broseley. Network, if the 500,000 Berkeley alumni, 80% of whom are still in the Bay Area. They’re not just attacking me, obviously, we’re well covered in tech, but also in entertainment, in sports, in government in healthcare, you want to be the hospital? No problem. You’re gonna need a restaurant, you got it. Right. Go on LinkedIn filtered based on school, there podcasters have Hadley, right. So we can reach out to them on behalf of Berkeley and say, Hey, go Barron’s. We have a company that would love an hour of your time. And this is we’re asking for this because this is how you can pay back your alma mater. Right? Share your insights, hear their story. And by the way, this company does well, UC Berkeley will benefit financially. This is another unique angle of that public private partnership that we have going on 50% of the GP carry share goes back to prison. And we didn’t do that. Like you’ll hear that they the mind to me that goes Oh, you did that to try and LP capital. No, as I said 98% of our investors couldn’t care less if, frankly, didn’t exist them. All right. A nice thing to say. But that’s the truth there is to get money, who I want to incentivize that up carry share the 500,000 alumni out there, who are now willing to lead some time to any of my foreign founders, and to help them find their way.
Erasmus Elsner 22:05
I love that aspect. I discussed it with Caroline already that you have this 50% Carry share with the University, which is absolutely unique, maybe talking a little bit about the last vintage that you just raised. So it’s the softer, more fun the 60 million fund, which was just recently announced. So in the first vintage, you had Sequoia you hadn’t matrix yet Sierra ventures Canvas sort of also for them, I would assume it’s sort of like their Scout programme that they get early access to a lot of deal flow. And then they can lead the series A when, when things are a bit more evolved. How was the fundraising for funds to and sort of what you touched upon it on the LP base, there’s a sovereign wealth fund, there are some pension funds. But how hard was it to convey the story? Yes, this is not the typical seed fund story.
Chon Tang 22:53
Yeah, so fund one was 23. Point 5 billion. And when you think back to where we were in 31, this global story was a vision. It hadn’t been done before. There is no track record with history, lots of companies had gone through probably come out of that booklet before, but anybody with some insight would have said, well, that’s not to be your portfolio. So I don’t know how that helps you. So fun. One was really going after people who would understand the vision, which is why, you know, very grateful to the VC partners, and certainly some high net worth and some corporate investors. But they all had the same vision. It was like, I don’t know that let me money for this investment. But I just think that this would be a really interesting source of deal flow. So let’s do it on that on that count. And, and I think it’s worked out there are quite a few investments that have been led by those on funds. But for fun, too, you know, that’s not scalable and fun with the business that I want to be in. I don’t want broadly to be a captive pipeline to any specific investor. So for fun to the visual was always Hey, we need to graduate you said it’s the sophomore fun. But I think of it as you know, really, a massive shift in maturity towards hate Google will be the LPS for the runway. Right? So now we have three, four years of fact record sub exits, obviously not very much that what you’re investing at the stage that we invest in, but we have now have some data we have specific companies that we can speak to these guys came in, they got this for Brookley. They’re worth a that they went out now they’re worth 10 A right so so that was that allowed us to have the conversations we were actually expecting to get out to probably close into that was the original timeline that we had something happen in 2020. I think we’re all pretty aware of it. So it disrupted our plants. But we all could do it like everyone else. Just you tread water, you wait and see how things evolve. And then last year, we felt like the window was opening. Again, I should mention here that Sequoia has also been a really important part of our fundraise. So even though Sequoia is no longer investor in like two we formed a very strategic partnership. where they said, Hey, John, we’re going to open up our decks and introduce some of our investors to you. And as you can imagine, when so quick calls, you know, people tend to listen, so very grateful for that. But beyond those connections, it was also just funny people, you know, we’re still early from a LP GP perspective. Fun three is when it really gets easy is now you have the exits to validate your performance. But I have to say, I mean, fun one proof performance is spectacular. You know, that thesis that we’ve just been talking about both, you know, we spend less time talking about the overall look stuff from the global peace. But there’s also a lot of overlook stuff in the UC pipeline as well. These are not necessarily the sharpest stories, what they come in, because their PhDs coming from from school. But we’ve really shown that we’re good at this, right, that has translate into very strong font to and I should explain a little bit more fun one, we did 40 copies per year, been two samples 3x, the size of font one, we’re not three axing the programme, okay, we’re writing a bigger check what we’ll do more of the following ones. But we were very explicit that there’s no way that we’re going to change the nature of our programme, there’s a lot of other booksellers that will go on date, but there’s a couple massive, you know, amazing brands, amazing platforms, where the founders experience will be fundamentally different. So even though it’s a $16 million fund, we’re still only going to invest in 40 companies a year that the current number, and we’re gonna have 400 plus advisors surrounding 20 companies at any given time.
Erasmus Elsner 26:43
Yeah, I mean, I just talked to a founder who went through the first batch of YC, and through the last batch of YC, and he has the full arc, you know, he was part of the the key code team, the the Twitch team back in the days 2005 batch, and now, you know, obviously being part of this huge batch. So I’m a big fan of keeping the batch size small and actually being able to deliver on the value add that the accelerators are promising for taking a good chunk of the company to make it worth for the founders talking a little bit about portfolio construction here, you’ve touched upon this a little bit, obviously, you have a long J curve being sort of the first check in, you know, investing at the precede stage. And then taking it all the way through with a pro rata rights. How do you think about portfolio construction?
Chon Tang 27:33
Excellent question, because it is one that I think about a lot is one small correction, we’re probably the only Seed Fund in history that didn’t have a J curve. We never had a drug. And that’s because the value proposition is so compelling to the companies that are coming in. It’s an arbitrage play, right? So these are companies that are raising at 6 million, 8 million pre in their home markets. And they come in and allow us to invest at a, you know, to 2 million Korean fund one and now 2.6 mil in a bun too. So we never had a Jaykar
Erasmus Elsner 28:05
on a technical level, does it mean that when you write the initial check, you can already write it up to basically the validation that they’ve raised with other investors?
Chon Tang 28:14
No, no, we wouldn’t work up to their last round that I think that I think our daughters would have a real problem with that. But no, just means that these companies are often in a position where when they get to Demo Day for them to raise more, you know, six 810 It’s kind of a default, you know, I mean, so in terms of the portfolio construction, you know, I’ve my view of Ventures is, I think, pretty distinct from the vast majority of VCs that I know, I don’t think about ownership. I think about having an edge. Okay, I read all of the arguments for ownership and for powerline, and more. And I think it makes sense for certain types of funds. That is sort of context. But I would go as far as saying that for 90% of venture funds out, it doesn’t apply to them. And I wish that they understood that from a portfolio construction point of view. When I talked to one of my investors, I explained to him, Look, we have real alpha, we have an edge. The first horse of the edge comes from the fact that we’re investing these mispriced assets. Right? That’s the first one. So obviously, we’re going to do well there. And the second source of edge comes on the first check the first follow on check after our pro VCs array term sheets on the basis of knowing them for a week for a month. Right there. Their level of insight is not really enough, sometimes they overprice it which means we pass in some cases they utter prices significantly. The wishes will go into that mean we’ve noticed founders for not just knowing though, we don’t really sit, eat, play with them for six months, months. We know that well. So those are my two sources of edge and I’m going to leverage that for the A A for the B for the C. So I don’t have an edge over Sequoia Ida, don’t don’t give me money to invest in MDA give it to them. But I can assure you that my edge in the two stages that I just talked about, my edge is more acute, significant, lasting, that anyone else, no one else in the valley can match it. Right? Sequoia, Andreessen benchmark, these are all funds that I certainly respect the heck out of and they do amazing things, but they do it in their stages. I do it in my say,
Erasmus Elsner 30:36
and just on a technical level, again, have there been situations where someone you know, didn’t go through the accelerated programme, and you thought, you know, they have a strong relation to Berkeley, we could bring them sort of into the ecosystem, we could have had them at the earlier stage. But now they’re already let’s say, Series B, writing a small check there, and you get allocation because they know you and they want to have you on board. Have there been situations like this? Yeah,
Chon Tang 31:00
we we definitely do some of that. So I have to wear multiple hats. When I think about what I want to achieve here, there is the I want to make money from every investment. And then there is the I want to build the ecosystem has. So there are certainly companies that are red hot, that are about to explode, that we have special access to because we are this unique hub for venture activity in the Berkeley ecosystem. That for me to invest in it, I mean, I don’t think I have an edge over whoever led that route. Right? I mean, whoever led that round, they set the terms, they did their DD, they won that deal, you know, for whatever reason, they have an edge, and there’s a reason that they exist, and people give them money, right, I’m just gonna follow by having this company in a scatter ecosystem helps the rest of my portfolio. So one classic example, is sci fi, sci fi is a piece of work they spent out working on risk five instruction set. So this is open source instruction centres can be a real competitor for x86 and an art, right, and very exciting stuff that lives eats and breathes vertically. And it was clear to me as a technical person as well, that this is an idea that a platform that could disrupt the industry, and its time had come and we had a chance to invest in it. But more importantly, now the Sci Fi, people had more reason to spend time with our companies. Right? So sci fi this year, just based around and now they’re worth $2.5 billion, but I still have the ability to get the founders to come by and hang out and share their insights and their connections. So those types of investments we will do, but I will expect to make money from that investment.
Erasmus Elsner 32:46
Archer Gotcha. Yeah, that’s super interesting, I think makes a lot of sense to just bring them into the ecosystem in one way or another. Whether it’s as an LP or writing a small check at the seat, then let’s talk about some of the great success stories. And you mentioned some of them deep scribe, which has just raised 30 million series, a led by Index Ventures, then prophecy, a low code platform, which raised from inside and Super Note, which I think is actually a proof in the pudding kind of success case of a foreign company, going to the Berkeley ecosystem. Originally from Armenia, very technical team, they raised I think, a 14 and a half million round, led by base 10. Talk a little bit about some of the success stories you had so far in fun one, and as it’s shaping up for fun, too.
Chon Tang 33:36
Yeah. So you’ve already named some of my favourite companies from fun, why did we just spend all day just going through the list, but I’ll give you one that I really like to talk about, because it highlights both the challenges that global founders face and the unique value that we bring. skylum is a satellite communications company. So they tackle the problem that as more satellites go into Leo, RF bandwidth, there’s only so much of it, we’re going to run out. So their platform is building optical communications from satellite to Earth. And there’s a couple of different ways that it can be deployed. But it’s a very exciting idea. But the problem is that the founders were based in Argentina now for most of us had no idea that Argentina had a space industry and the idea that there could be interesting satellite technology could be Argentina is just too foreign. I would hit pass on that email. But because of what we do, we dug a little deeper for it. It turns out that Europe has done a lot of their satellite construction in Argentina for decades. So there is a thriving cluster for that kind of work and these guys were veterans of that industry. The problem was that while their idea and made sense and had legs, investors in Argentina are not prepared to take the risk of investing in a you know preceded it associated around for a company that’s going to do Change the way that salads communicate, that’s that’s way too much risk. Same time, the vendor, the valet, who would absolutely back that kind of thing. They know that in the back one from Argentina. So there is this, you know, holding pattern, where if there were just two pages and broke, they would have been a different story. Well, we saw the opportunity, we hustled to make it happen. And there’s some really interesting stories there some of the hoops that we had to jump through, but we made it happen, they came out here. As soon as we invested in them, they were able to raise like a million from other investors in Argentina, in Latin America, because now that i Oh, we get down now that there is a Silicon Valley investor behind this now, they think it’s credible, I want it. That’s great. And the six months that they spent here, we helped him with with our connections to NASA to Planet Labs, I mean, I don’t want to take too much credit, because really, it’s the founders that do the hard work. But obviously, as you can imagine, the Berkeley brand, the Brooklyn ecosystem for what they’re doing, was a very nice way of breaking it through. And since then they have collaborations with the Air Force, they’re talking to a variety of satellite constellations, I don’t think I’m supposed to name them. So what but but you know, there’s a lot of stuff that’s in the pipeline there, they have 90 people now here in Oakland, and there they are working on a phone can’t say too much about AI either, but they’re working on a very interesting funding round, that will probably put them at the top of our rankings, in terms of all the companies that have come through. And what gives me great pleasure about that whole story is not just the financial performance, because because I see that as a byproduct of what we do. What gets me really excited about that story is that this company would exist if it wasn’t for us, right, would not have gotten off the ground. If we didn’t do the hard work and said, This is our thesis. This is the kind of founder and the kind of investment that we want to make.
Erasmus Elsner 36:58
Talk a little bit about the programme itself and touched upon it with Caroline, obviously, you have, you have this intense programme, where you link them up with professors, where they have VCs coming in from the network. But what are sort of the challenges we all know the price is on Shattuck Avenue, it’s a pretty large hurdle still, what what are the day to day hurdles to get the best founders to join the programme?
Chon Tang 37:21
I would say, first of all, I love the programming here, as the founders love the programming here. But I always feel like there’s not as much value digging into what there is, everybody knows what accelerators do. You know, it’s all about giving you advice and giving you help, and etc. And all I can say about that is that we do all that. And we do it with real hard, real compassion. Everybody involved here, our founders. And when you talk to the people that have gone through our programme, like, I think that’s the thing that gives me so much pleasure and confidence that we’re doing the right thing. It’s not about the financial returns, which I definitely show the LPs, and that’s what they care about. But if I was walking off the street, and I was going to invalidate this thing, I would just want to know how the boundaries feel. And the founders love us. They really do. I can’t tell you, the number of times I’ve been told, Hey, I’ve been through multiple accelerators. And not only is this the best, I didn’t know, and it certainly could be like this. You know, I’ll talk a little bit about like, it’s where the differences are there so that people can kind of, you know, compare it to their current experience. The first thing is just that we really, really, really care. I know, I know, I’m kind of repeating myself. But that show shows up in a lot of ways. You know, like there’s, it’s very rare that a email slack to me or to the rest of my team asking for introduction, or asking for advice. It’s very rare that that goes more than like, two hours on answering an unread. It’s very rare that someone asked for an intro to someone that we know, we’re somebody that even a second degree that we kind of like oh, yeah, no, that’s a good idea. Yeah, the next time I see him, I’ll ask him, if he’s, he’s open to conversation. That’s not what we do. We say, okay, got it. I’m gonna jump on the phone right now. And I’m going to try to make that that out. And so let’s try to quantify by the value of that is so so clear. The second part was, you know, what the question was operational challenges that might make it hard for a global founder to plug in. And I have to say that after doing this for four years, it’s actually much easier than I originally thought it would be. You know, I mean, I sort of had a mental image of you know, as you said, rounds visas, right dealing with time zones and hiring here like there was a lot of things I thought would be a real roadblock. But when you walk into it, it’s actually nothing not bad i mean housing, where she went through the process, believe it or not, what we’re actually going to going to work with someone to build out a house and make it sky doors, you know, be like, like what they do at launch house, right? Like we were gonna do that for our family. But then feel bad for partners because they went to the effort of actually putting it out. The families can I say it was Airbnb, it’s convenient. We’re adults, we’re professionals, you know, this is fine. And then on the visa side, obviously, you know, I’m anxiously anticipating the day when visa policy in the US will catch up to what’s good for American interests. But for the founders out there, actually not that that bad D. O one, visa is very approachable. For folks who are here on visa, obviously, you can get the J one and to do that, op t. So of the 100 plus companies that we’ve done it, I mean, it can be a pain in the ass, and then we have to leave the country to apply for a new visa. But for all intents and purposes, I think the obstacle for foreign founders has never been any of that stuff. The obstacle for founders is this is all for foreign founders is always been I don’t have a network. And and so that’s where we provide that we’ve really scaled back and support all those other pieces, just network
Erasmus Elsner 41:03
to wrap things up as we’re running against the clock. You mentioned that in the beginning. I mean, you sort of stumbled into this gig read, you never set out to be a venture capitalists and you thought you would do it for 50%. Now you’re the venture capitalists in residence at Berkeley at a public university. What sort of the future the perfect future look like for you?
Chon Tang 41:24
What a great question. Yeah, it’s funny, because I’m not sure if you saw this, but there was an article about me being like quant fund days, that was, like I said, that’s all hedge fund manager. thing. Now I’m the accidental VC. Like I think most great founders, I just stumble into things. When the opportunity pops up, I will say that I am extremely optimistic and excited about the future of what we can build here. When you think about the resources that we’ve been talking about so far here at Berkeley, the alumni base, the talent on campus, the adviser pool, we’re not close to tapping even a small small percentage of that, right like, so even though I want to stay focused on the 20 commits per batch. Right now, I can see a future where we go up to 30. I see a future where we go up to 35. I don’t think we’ll ever do 300 400 company cohort because that’s a different feature. But I can easily see something where we run, for example, six cohorts per year, where they’re staggered, right? So they’ll come in, and then there’s a demo day every two months, right. And there’s there’s a new batch that was coming in every two months. That’s a vision that I think is absolutely viable as a VC, we’re always thinking about macro trends for the companies that we invest in why I think we should think about macro trends for Vc as an industry, there is not a lack of capital in the valley, but that number is only going to go up because we’ve seen outstanding performance from this as a category over the last 10 years. And yet many institutional investors have only put in 5% 10% of their portfolio into venture. So that’s got to go up, that’s going to go up, there’s no lack of people willing to be VCs in the valley, as I’m sure we’re well aware. So that’s going to keep going up. The only thing that’s not going up is the number of founders in the Bay Area. Berkeley and Stanford are not going to add more PhD students. There’s only a pool of a couple 100,000 people have that VCs like to tap into the macro sense for me is that 6 billion people around the world I’ve talked to founders from Kazakhstan. I’ve talked to the founder from Cuba, believe it or not, this is not going to stop in Germany. This is not going to stop in even Egypt or Nigeria. There’s talent everywhere. We know this when we read a scientific journals, right? You read the papers, papers that come from all over the world. And yes, startups aren’t that it makes no no sense to me. So we will be, I think, a global hub, we are committed to making that that possible. We’re committed to providing the kind of support that that class of founder needs. We’re attracting advisors here, who believes in the mission. I’ll give you one more example. Many of these highly technical founders that are coming in, they know they’re not the right CEO. Right? Or at least, if the vice CEO, they know that they’re not the head, the right person to sell this thing in the US. They’re desperately looking for a business co founder that could join them and really help them drive to go to market in the US right? We can help with that. We are going to help help that. So imagine a entrepreneurs first type of a model where we will build up a database of talented entrepreneurs in the US who are looking for a product and a technology that they can combine with right back hello to micro from a man Bro perspective, the bottom line is as long as humanity has problems, as long as venture believes that the right combination of capital and technology can solve those problems, as long as venture is concentrated in a small geographic region, and there’s a lot of reasons why that has been why I think it’s going to continue a unearned rent. Like what we’re building that bridges that gap is something that all of us should embrace, should encourage, and and I think will benefit from
Erasmus Elsner 45:35
love it with this, I’m gonna leave you because I think you have a meeting, hopefully the founder meeting someone who you can support and go Bears and go go Skydeck and everybody applied to Skydeck. This is probably your time for the call to action. Where can they find out about Skydeck? When is the next batch? When can they apply?
Chon Tang 45:56
So our batch 14 starts on Monday. So I’m extremely excited about that. But a lot of ways one of the best cohorts that we’ve ever had most competitive cohorts certainly. And then batch 15 was probably starting early November, if I remember my counter triathlete, so for our founders who are six months away from being prepared to come to the US. This is the perfect time to really sharpen your story. You know, we have partners around the globe as well. There are incubators that we work with and they can help you sharpen up your pitch help you really think through the market size. Have we been through the competitive advantage so that way you lie to us even more competitive. Perfect.
Erasmus Elsner 46:38
Thank you so much.