The belief that software is the answer to society’s problems is central to our wired age. If the current program doesn’t work, the next innovation will be the fix. No problem is too complicated that software cannot solve, either now or in the future. “There’s an app for that,” as the saying goes.
James Wang, with an M.S in computer science specializing in AI/ML, and work history at places like Bridgewater Associates and Google X, seems an unlikely voice to question that mindset.
“Although there have been amazing things that software investments have brought to the world,” Wang says, “there are limits to how much yet another software-as-a-service is going to revolutionize our lives going forward—and the lives of our children.”
Following his introduction to the deep tech movement in 2015, Wang shifted his attention to what he calls “frontier technologies” and joined Creative Ventures, a deep tech venture capital firm. Deep tech refers to high-tech innovation in engineering or significant scientific advancements.
Their success can be attributed to five factors.
1. Solve Critical Problems
MORE FROMFORBES VETTED
For one, Creative Ventures invests in deep tech solutions that focus on how to solve the world’s most critical emergencies.
To date, Creative Ventures has invested in startups related to healthcare costs, labor shortages, and climate change. Aging populations, especially in the developed world, and sustainable power sources are two related areas.
2. Invest in Startups Whose Needs Match Your Expertise
Creative Ventures recently closed a $50-million fund. Part of this success is the belief that a company needs both technological and business expertise to thrive. Several staff members have subject-related PhDs, and the company focuses on investing in startups that overlap with Creative Venture’s expertise and knowledge. This enables the company to ensure they adequately support the startup beyond the financial investment.
3. Focus on the Research, Not the Charismatic Leader
One of the challenges with funding deep tech startups is that they’re more complicated than their software-based counterparts. In addition, deep tech tends to require more initial funding and longer research and development periods.
“Ultimately, software investing is all about founders. You can basically rewrite your code, retarget your Google AdWords, and be in a different market practically overnight,” Wang said. “With deep tech, it involves the physical world, biology, and technologies where you need to get the market right from the start. Additionally, the founders tend to be first-time founders – often PhDs – where success requires more guidance and hands-on involvement from the investor.”
Creative Venture-backed startups have a survival rate above 80 percent. Part of that success is a focus on research rather than personality.
“We fully pre-define our investment criteria for all the companies and areas we invest in before we ever meet a company. That means there may be hundreds or even thousands of hours of work before a single meeting with a startup. When we finally do meet, we’re able to ask good questions, give good advice, and really understand what we’re looking for and what will work versus just being swayed by a charismatic founder or clever pitch.”
4. Don’t Fall in Love with the Technology
Another key to the company’s success is its mantra: Don’t fall in love with the technology. The technology, after all, isn’t the goal but instead a tool to help find a solution to a specific problem.
5. Diversity is Strength
Creative Ventures is a certified minority-owned fund by the National Minority Supplier Development Council. Eighty-six percent of its investments have gone to first-time founders, one-third to women founders, and almost half to founders who come from underrepresented groups.
Wang acknowledges that deep tech isn’t for everyone, given the requirement for deep subject matter expertise.
That being said, the critical problems Creative Ventures addresses aren’t going away and are only getting more severe. The venture capital firm will continue to seek actionable technologies today that will revolutionize the lives of people today and generations to come. The market turmoil has not changed anything and, if anything, has created even more urgency and opportunity.