1Mby1M Virtual Accelerator Investor Forum: With Andrew Cain McClary of KdT Ventures (Part 2)

Sramana Mitra: Just to double-click on what you said, would you fund a company that has a good level of technology and a good understanding of the business, but still needs another half a million to a million for product development?

Andrew Cain McClary: Absolutely. The earlier in the stack I go, the better I understand the company and its goals. In the end, my job is not only to support that entrepreneur but also to return money to my LPs. The larger the opportunity for ownership is, the earlier that you go.

As a true seed investor, I can’t be afraid of going early as long as certain conditions are met around what those real performance benchmarks are going to be to enable future funding as well as where those tailwinds are pushing that company forward.

Sramana Mitra: You clearly have a deep background in medicine and you’ve done a lot of stuff in the biosciences area. You mentioned that you’re also interested in doing stuff outside of biosciences. Where does that interest come from? What is the thesis behind that interest?

Andrew Cain McClary: The building blocks of what I call the physical layer – what you’re eating, what you’re sitting on – are built on the same scientific principles. Those principles are that there are certain laws of physics and biology that dictate how the physical layer is developed and how it functions.

If you think about it, just like the chips in computers and how we manipulate electricity to write operating systems and applications on top of that, it’s very similar in biology. Genes are essentially just code that is encoded by DNA. At which point, you can actually use that in a variety of different ways throughout the physical world. It’s all interrelated.

The fact that we can increase yield or perhaps create crops that are more resistant to abiotic stresses like drought or pest infestation is really all just a biological conundrum that can be solved through manipulation of that source code.

Sramana Mitra: Your thread is biology.

Andrew Cain McClary: Exactly. Chemical is exactly same. A lot is derived from the petrochemical industry. It turns out that using microbes to produce a certain chemical is a reprogramming of that microbe. We’re in a time right now where biological operating systems and some of the first applications built on top of those operating systems are being designed. It’s only enabled by where technology has brought us today.

Sramana Mitra: Interesting. What about geography? You were at Stanford, but you moved.

Andrew Cain McClary: I now live in North Carolina outside of Asheville. I’m still in San Francisco quite often. I’m in Boston every two to three weeks. I’m entirely geographically agnostic. That’s something I wrote about to my LPs when I was raising the fund. I find that to be very important for two reasons.

One is you can actually capture significant value in companies when you’re outside the traditional spheres of entrepreneurship. Secondly, I think that technology is unbelievably democratizing. In my vertical, quite a bit of technology comes out of academic centers. Those academic centers are not necessarily in those traditional spheres of influence.

That being said, there are amazing entrepreneurs that feed back into those entrepreneurship cycles. These hubs of influences are Boston and San Francisco. That’s why I still travel there quite often.

Sramana Mitra: Your fund is new. You probably don’t have a lot of deals that you’ve already done. If you could talk a bit about your past work, what are the highlights of what you’ve invested in? Give our audience a feel for what kinds of things have interested you in the past?

Andrew Cain McClary: My first investment in 2010 was a life science tools company that was acquired. That when I mistakenly thought that this was just so easy. I thought that you just invest in a company, and they get sold. I then invested in several different companies in the Nashville ecosystem in healthcare IT and quickly learned how difficult the investing side of things and the company-building side of things was.

That’s why I continue to try to learn the trade both on the entrepreneurship side of things as well as venture. That led to an investment in 2013 alongside Innovation Endeavors, which is Eric Schmidt’s evergreen fund in a company called Zymergen. I was on call when I wrote that check. The CEO pulled up in the hospital and I gave him a check. SoftBank just invested $130 million in them last year. I was first money in alongside Innovation Endeavors.

That is a prototypical synthetic biology company where synthetic biology means genes are code. We can do all kinds of interesting coding tools or manipulations with those genes to make microbial species do really interesting stuff for large chemicals and agricultural producers. I also have a personal investment in a computational pathology company called PathAI.

I was a pathologist in the hospital. I was literally just a wallpaper matcher. I pushed slides underneath a microscope and matched them to wallpapers in my head. It turns out that computers, not surprisingly, can do that a lot better and can pull out a lot of novel data from those pictures. That was a personal seed investment last year. They just took in $11 million Series A from General Catalyst. Those are some personal investments prior to the fund.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Andrew Cain McClary of KdT Ventures
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