Cutting-edge science and the future of venture capital
Recent article by Sam Lessin The end of venture capital as we know it has received a lot of attention in the startup community. Lessin argues that a monumental shift in startup investing is coming to fruition, as software has already eaten the world and large institutions continue to enter the software venture capital market at an unprecedented rate. I think he is largely right. I believe that today, the future of venture capital is a revolutionary science that is transforming billions of lives in sectors like energy, transportation, infrastructure, manufacturing, agriculture and human augmentation. . Over the next two decades, almost every layer of our physical world will likely be reshaped, and the best venture capitalists in these fields will not only be poised to deliver phenomenal returns, but will also make a massive contribution to creating a better world for them. generations to come.
In the energy sector, technology that tackles climate change is a rapidly growing trend, but still underestimated. In the past, investors have felt jaded by overpriced clean energy solutions, which have failed in large part because they have failed to provide a cheaper alternative to existing energy sources. This is no longer the case. Revolutionary advances have taken place over the past decade in research into nuclear fusion, energy storage, solar power, and countless other areas that will produce power at a fraction of the cost of coal or natural gas in most parts of the country.
As the world turns to these cleaner forms of energy, industrial processes are likely to undergo a radical transformation at the same time. While these changes may take time given the existing infrastructure, the returns to investors can be significant. New platforms for power generation, storage and transmission will emerge as category leaders and present opportunities for start-up investors who have the technical expertise to assess them.
At the same time, a transportation revolution is underway, with supersonic commercial airplanes, electric aviation, self-driving cars and space. Each of them is a massive transformation of the fundamental infrastructure of our civilization. These revolutions could fundamentally change the way people build cities and communities, make new goods (perhaps in space), and get to work.
Already this year, electric vertical take-off and landing (eVTOL) providers Joby Aviation and Archer Aviation have gone public, signaling a new era in urban air transport. (Full disclosure: Prime Movers Lab is an investor in Archer Aviation.) Each of these advances could impact other industries. For example, eVTOLs are already being adopted by large farms to fertilize and monitor crops. In the years to come, they could find other applications, such as fighting forest fires and last mile delivery.
Meanwhile, human health is undergoing an even bigger – and more nascent – change. For too long, Western medicine has focused primarily on treating the symptoms, not the causes. However, with major advances in modern biology occurring at an unprecedented rate, many are developing a more holistic approach to treating disease and aging. The COVID-19 pandemic has also shed new light on the mental health epidemic across the country. Fortunately, understanding of neuroscience is also accelerating rapidly, heralding a new era of integrated mental health. Advances in brain-computer interfaces and vaccine development platforms are some of the most exciting areas, and they are at an even earlier stage of this cycle than the other industries I have mentioned.
The impacts of these advances are only just beginning to appear in public markets, with the current wave of Special Purpose Acquisition Company (SPAC) transactions. While many criticize SPACs, investors should expect this trend to continue for longer than most people realize. In the second quarter of 2021, there were still more than 400 pending after-sales services. Even when a major market correction occurs, I believe that companies that have developed true breakthrough solutions will not only survive, but thrive. That’s why recognizing the difference requires a deep technical understanding of the industry.
Likewise, breakthroughs in space, robotics, semiconductors, communications, synthetic foods, and advanced agriculture continue to transform the landscape. Needless to say, for venture capitalists who have the technical expertise to invest in these cutting-edge technologies, this is an exciting time to partner with breakthrough startups.
Dakin Sloss is the founder and general partner of Prime Movers Lab, the world’s leading partner of cutting-edge science startups.