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Venrock’s Bryan Roberts on the firm’s new $450 million fund, and where it’s shopping in 2021

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Venrock, the 51-year-old firm that started as the venture arm of the Rockefeller family, has closed its ninth fund with $450 million, the same amount it raised for its last two funds. The outfit, with offices in Palo Alto, New York, and Cambridge, clearly feels comfortable with the fund size, but it says change is otherwise a constant, given that trends and tech shift so fast that so-called pattern recognition can prove a liability if an investment team isn’t careful.

To learn more about what the team is tracking at Venrock — whose newest exits include last year’s IPOs of Cloudflare and 10x Genomics IPO, and the recent sales of Corvidia and Personal Capital — we were in touch earlier today with longtime partner Bryan Roberts, who has spent his 24-year career in venture with the firm.

Our exchange has been edited lightly for length and clarity.

TC: I talked with your colleague Camille Samuels earlier this year about aging biology. How big an area of focus is that for Venrock and why?

BR: It is one of many interesting areas of biology on a go-forward basis, along with immunology, CNS (central nervous system) and other areas [where they has been] little progress and great unmet need.

TC: Speaking of unmet needs, Camille also talked about why infectious disease isn’t good business for new companies, as are cancers and orphan diseases. As she explained it, with something like the coronavirus, it’s hard to get funding before it’s an actual problem; once a treatment is developed, it has to be sold at low cost, and then you hope you won’t have repeat customers. Do you agree, and do you think this needs to change?

BR: Yes, I think things need to change, but there are several issues. In the case of one company on which I lost a bunch of money — Achaogen, which made a successful drug for a big unmet need [but faced] screwy commercialization dynamics in the infectious disease space —  and for many historical [infectious disease] companies, the cost of a drug is borne by the hospital, not billed separately.

It has also been hard historically to get anyone to pay attention to much of anything from a preventive perspective – even more so in communicable diseases. Covid was, on the one hand, not a particularly hard biological problem to solve, but from an investing perspective, the issue was it was a problem tailor-made for an existent or large company to tackle, not a startup. Startups take 12 or more months to find their way out the front door, and the problem is largely solved by then by one of the very large competitors.

You saw this with Moderna. Its tech turned out to be specifically suited to vaccines — and then a pandemic hit.

TC: Venrock recently helped incubate a new microbiome startup called Federation Bio, which is the firm’s first bet on space. Why not move faster into this area, and how would you describe the size of the opportunity now? Is this something you want to delve into more aggressively?

BR: We did spend 12 months or so helping get Federation started, including my partner Racquel Bracken acting as the initial CEO. We weren’t compelled by the prior approaches and teams, and it is really the intersection of those two dynamics that get us involved in new projects.

In this case, a terrific academic, Michael Fischbach, had generated great data so we ran with it. We recently spent more than 12 months incubating a new gene therapy startup in the same manner – in the latter case, a couple of great academics generated exquisite cell type specificity — so we went out and found some leadership and just seeded the business.

TC: It’s one way to avoid crazy valuations. Where have valuations gone up the most?

BR: Everywhere, but especially for companies that appear — or actually have — reduced binary risk and become growth stage businesses [and that’s] across sectors.

TC: You focus on so much: biotechnology, diagnostics, genomics, healthcare IT, medical devices. What are some of biggest trends you’re watching in some of these areas, and where do you think you might be spending a little more of your time in 2021?

BR: Personally, I am compelled these days by first, value-based care in healthcare delivery — meaning it’s more efficient, there are better outcomes, there’s better customer experience — and mostly from full stack platforms versus point solutions. I’m also focused on biological insights and applications that new genomics tools — single cell; gene editing — can bring. Last, [I’m tracking what] novel therapeutic modalities can bring to really bad diseases. It feels like we’re in the first inning of cell and gene therapy.

TC: How do you think the new administration in Washington could impact your work?

BR: I think there will be lots of talk about material changes to healthcare and other stuff, but I think it will mostly be talk given the slim margin in the Senate, as well as the decreased and small margin [that Democrats have] in the House. I think it will be a positive in that a bunch of the silly stuff around the [Affordable Care Act] will fade to nothing and people can get on with trying to improve implementation and go build.

TC: What do you make of the recent collapse of Haven, the joint venture of Amazon, JPMorgan Chase and Berkshire Hathaway to reduce the healthcare costs of their own employees? Would you like to see Amazon focused more — or less — on healthcare?

BR: We’ve long been bears [about its odds] for a bunch of the reasons folks cited over the last few weeks [including lack of transparency into healthcare costs].

I would love to see Amazon use its brand, delivery logistics excellence, and ability to compete at super-tight margins in healthcare. I don’t think it extends to real regulatory, privacy or risk appetite, but the company could be an awesome pharmacy/pharmacy benefit manager – and I hope they do it.

TC: Regarding Venrock’s new fund, have there been personnel changes? Will check sizes change? 

BR: We made Racquel Bracken and Ethan Batraski partners; it’s always fun when you can promote terrific young talent from within.

As for our high-level strategy, check sizes, and stages all remain the same. We’ve raised $450 million for each of the last several funds because we like that size and our culture and personality is way more focused on performance than on asset accumulation. It also feels really hard to raise increasing amounts of capital without affecting performance excellence.

TC: Healthcare has never been hotter. How much of Venrock’s capital is focused on healthcare, and will that change with this newest fund?

BR: We’re pretty bottoms-up allocation driven; we invest based on the projects we find and fall in love with. Life sciences usually ends up being around 30% to 40% [of capital invested]. Healthcare IT, which depending who you talk to in the universe gets lumped into healthcare or tech —  I confess those software-enabled services businesses feel much more tech like than biotech — usually ends up being about a quarter of the fund and there are no anticipated changes. The balance will go into tech — primarily tech and data-enabled software and services businesses.

TC: Has Venrock considered forming a blank-check company to take a company public, as more VCs are doing?

BR: We have not. I feel like most investors that have formed SPACs have done so more because of the compelling sponsor economics than a compelling, durable mechanism to get awesome companies public in a much more efficient manner than they otherwise might. It’ll be interesting to see how the economics change as the supply and demand of SPACs versus “great targets” changes and the SPACs get closer to the end of their hunting license period.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Virgin Orbit will launch first Dutch defense satellite in mission that will demo rapid response capabilities

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Virgin Orbit isn’t slowing down after joining the exclusive club of small launch companies that have made it to orbit – the company just announced that it’s flying a payload on behalf of customer the Royal Netherlands Air Force (RNAF). This is the first ever satellite being put up by the Dutch Ministry of Defense, and it’s a small satellite that will act as a test platform for a number of different communications experiments.

The satellite is called ‘BRIK-II’ – not because it’s the second of its kind, but rather because it’s named after Brik, the first airplane ever owned and operated by the RNAF. This mission is one of Virgin Orbit’s first commercial operations after its successful test demonstration, and will fly sometime later this year. It’s also being planned as a rideshare mission, with other payloads expected to join – likely from the U.S. Department of Defense, which is working with Virgin Orbit’s dedicated U.S. defense industry subsidiary VOX Space on planning what they’ll be adding to the mission load out.

This upcoming mission is actually a key demonstration of a number of Virgin Orbit’s unique advantages in the launch market. For one, it’ll show how the U.S. DOD and its ally defense agencies can work together in the space domain when launching small communications satellites. Virgin Orbit is also going to use the mission as an opportunity to show off its “late-load integration” capabilities – effectively, how it can add a payload to its LauncherOne rocket just prior to launch.

For this particular flight, there’s no real reason to do a late-load integration, since there’s plenty of lead time, but part of Virgin’s appeal is being able to nimbly add satellites to its rocket just before the carrier jet that flies it to its take-off altitude leaves the runway. Demonstrating that will go a long way to help illustrate how it differentiates its services from others in the launch market including Rocket Lab and SpaceX.

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As it hits $100 million run rate, The Pill Club adds former Uber exec Liz Meyerdirk as CEO

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Liz Meyerdirk made a name for herself at Uber as the Senior Director & Global Head of Business Development for the company’s Uber Eats business and she’s now turning her attention to women’s health as the new chief executive of The Pill Club.

The move comes at a perilous time for the remote delivery of women’s healthcare as the Supreme Court has taken steps to limit the provision of sexual healthcare to women in recent months.

“Women’s health care has never been more tested than right now,” Meyerdirk noted in a blog post announcing her new role. “COVID-19 has upended access to care; dozens of states have—and continue—to try and limit women’s choice; and last year, the Supreme Court voted to uphold the rollback of the ACA contraceptive mandate decision, a stunning move that could end up impacting as many as 126,000 women who previously received covered contraception through employer-based health insurance.”

A seasoned corporate executive, Meyerdirk is hoping to navigate The Pill Club through these treacherous times. “These events have shown that reliable, safe, and affordable access to women’s health and birth control is
just one more vulnerability in our health care system,” Meyerdirk wrote.

Liz Meyerdirk, chief executive of The Pill Club: Image Credit: The Pill Club

As it faces an uncertain legal environment on some fronts, the company couldn’t be in a better position financially.

The Pill Club, which is profitable and now has a $100 million run rate, is now ready for its closeup with Meyerdirk at the helm.

The company has managed to make its mark in the crowded world of online prescriptions and refill fulfillment by focusing specifically on women’s health and ensuring that those services are available to as many potential patients as possible.

“We’re now serving hundreds of thousands of women nationwide with 20% on Medicaid,” says Meyerdirk. “We prescribe in 43 states and the District of Columbia.”

For Meyerdirk, the background she had in logistics and fulfillment from her time at Uber Eats made the transition to the pill prescription and delivery service natural.

“There is a heavy logistics element to it,” said Meyerdirk.

As Meyerdirk takes the reins of the company, she said there’s a few areas that The Pill Club will expand into beyond its focus on birth control and contraception. “There are areas that our customers are asking for,” Meyerdirk said.

These areas include, initially, dermatology. Last year the company launched a delivery service for contraceptives and women’s hygiene products like pads and tampons.

As it continues to expand its product suite, it’s also growing its executive staff. The company not only added Meyerdirk, but also David Hsu as chief financial officer and Jeremy Downs as senior vice president of growth. Hsu joins the company from Honey, where led the $4 billion acquisition negotiations with PayPal, and Downs comes from Uber Eats, where he spent five years leading growth.

“We need sustained, long-term access to women’s health care, not just a bridge while the pandemic persists; and we need coverage for essential health services like birth control and prenatal care, regardless of whether or not you’re insured,” Meyerdirk wrote. “Reproductive care has and continues to be an essential part of our business, but there are countless opportunities to serve women in all of their life stages from puberty to menopause.”

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BlackCart raises $8.8M Series A for its try-before-you-buy platform for online merchants

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A startup called BlackCart is tackling one of the key challenges with online shopping: an inability to try on or test out the merchandise before making a purchase. That company, which has now closed on $8.8 million in Series A funding, has built a try-before-you-buy platform that integrates with e-commerce storefronts, allowing customers to ship items to their home for free and only pay if they choose to keep the item after a “try on” period has lapsed.

The new round of financing was led by Origin Ventures and Hyde Park Ventures Partners, and saw participation from Struck Capital, Citi Ventures, 500 Startups, and several other angel investors including Christian Sullivan of Republic Labs, Dean Bakes of M3 Ventures, Greg Rudin of Menlo Ventures, Jordan Nathan of Caraway Cookware, and First National Bank CFO Nick Pirollo, among others.

Image Credits: BlackCart

BlackCart founder Donny Ouyang had previously founded online tutoring marketplace Rayku before joining a seed stage VC fund, Caravan Ventures. But he was inspired to return to entrepreneurship, he says, after experiencing a personal problem with trying to order shoes online.

Realizing the opportunity for a “try before you buy” type of service, Ouyang first built BlackCart in 2017 as a business-to-consumer (B2C) platform that worked by way of a Chrome extension with some 50 different online merchants, largely in apparel.

This MVP of sorts proved there was consumer demand for something like this in online shopping shopping.

Ouyang credits the earlier version of BlackCart with helping the team to understand what sort of products work best for this service.

“I think, in general, for try-before-you-buy, anything that’s moderate to higher price points, lower frequency of purchase, where the customer makes a considered purchase decision — those perform really well,” he says.

Two years later, Ouyang took BlackCart to 500 Startups in San Francisco, where he then pivoted the business to a B2B offering it is today.

Image Credits: BlackCart

The startup now provides a try-before-you-buy platform that integrates with online storefronts, including those from Shopify, Magento, WooCommerce, Big Commerce, SalesForce Commerce Cloud, WordPress, and even custom storefronts. The system is designed to be turnkey for online retailers and takes around 48 hours to set up on Shopify around a week on Magento, for example.

BlackCart has also developed its own proprietary technology around fraud detection, payments, returns, and the overall user experience, which includes a button for retailers’ websites.

Because the online shoppers aren’t paying upfront for the merchandise they’re being shipped, BlackCart has to rely on an expanded array of behavioral signals and data in order to make a determination about whether the customer represents a fraud risk. As one example, if the customer had read a lot of helpdesk articles about fraud before placing their order, that could be flagged as a negative signal.

BlackCart also verifies the user’s phone number at checkout and matches it to telco and government data sets to see if their historical addresses match their shipping and billing addresses.

Image Credits: BlackCart

After the customer receives the item, they are able to keep it for a period of time (as designated by the retailer) before being charged. BlackCart covers any fraud as part of its value proposition to retailers.

BlackCart makes money by way of a rev share model, where it charges retailers a percentage of the sales where the customers have kept the products. This amount can vary based on a number of factors, like the fraud multiplier, average order value, the type of product and others. At the low end, it’s around 4% and around 10% on the high-end, Ouyang says.

The company has also expanded beyond home try-on to include try-before-you-buy for electronics, jewelry, home goods, and more. It can even ship out makeup samples for home try-on, as another option.

Once integrated on a website, BlackCart claims its merchants typically see conversion increases of 24%, average order values climb by 51%, and bottom-line sales growth of 27%.

To date, the platform been adopted by over 50 medium-to-large retailers as well as e-commerce startups, like luxury sneaker brand Koio, clothing startup Dia&Co, online mattress startup Helix Sleep, cookware startup Caraway, among others. It’s also under NDA now with a top 50 retailer it can’t yet name publicly, and has contracts signed with 13 others who are waiting to be onboarded.

Soon, BlackCart aims to offer a self-serve onboarding process, Ouyang notes.

“This would be later, end of Q2 or early Q3,” he says. “But I think for us, it will still be probably 80% self-serve, and then larger enterprises will want to be handheld.”

With the additional funding, BlackCart aims to shift to paying the merchant immediately for the items at checkout, then reconciling afterwards in order to be more efficient. This has been one of merchants’ biggest feature requests, as well.

Image Credits: BlackCart; team photo

The funding will also allow BlackCart to expand its remotely distributed 10-person team to around 50 by year-end, including engineers, product specialists, customer support staff, and sales.

More broadly, it aims to quickly capitalize on the growth in the e-commerce market, driven by the COVID-19 pandemic.

“[We want to] take advantage of the favorable macroeconomic situation to scale as quickly as possible,” Ouyang explains. “We’re hoping to get to around $250 million in transactions through our platform by the end of 2021. And this would be driven by both engineering and sales hires, and just pushing it up,” he says.

Longer-term, Ouyang envisions adding more consumer-facing features to BlackCart’s platform, like on-demand returns where a courier comes to the house to pick up your return, for example.

“Our firm is excited to partner with BlackCart as it makes try-before-you-buy the standard in online shopping,” said Prashant Shukla of Origin Ventures, who now sits on BlackCart’s board, as result of the new financing. “Its underwriting technology provides merchants with peace of mind, and its best-in-class consumer experience delivers significant sales and conversion lifts. Digital Native generations expect to be able to shop online exactly as they would in a retail store, and BlackCart is the only company providing this experience,” he adds.

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