1Mby1M Virtual Accelerator Investor Forum: With Greg Borchardt of Caerus Ventures (Part 2)

Sramana Mitra: Let’s then talk about the investment thesis. This is your second fund. You’ve already used this investment thesis and invested your first fund in a bunch of companies. If you could take us through a few examples that illustrates how you think about your investment thesis and how the companies you’ve invested in fit with that investment thesis, that would probably be the best starting point to understand your unique investment thesis.

Greg Borchardt: To be honest, it’s been a bit of an evolution. Our first fund was a smaller fund. It was a fund in which we built our track record. We took a more generalist approach. That fund was approximately three or four years ago. We’ve been making investments out of that fund over the past three to four years. We’re just about fully committed that fund. We’ve just been doing follow-on rounds into our existing portfolio companies at this point.

What we learned in the first fund is that we really had an expertise in the connected hardware space. I ran a few startups. I grew up in the consumer electronics manufacturing industry and have spent a bulk of my career prior to moving to the investment side in the consumer and enterprise electronics manufacturing space.

We started to see a mega trend emerging where CPUs are starting to get embedded into every consumer, industrial, and medical device and are creating efficiencies and personalization that’s never seen before. All hardware devices are becoming smart and connected. Traditional hardware devices are now being powered by software. Hardware technology is no longer a one-time sale.

There are true opportunities for recurring revenue streams and strong use cases for the Blockchain, which is an emerging technology that everyone knows. If I look at our first fund’s portfolio, two companies come to mind. One is a company called Sculpt. It straddles the medical device and the consumer health and wellness technology space. I met the founder at an angel event. They were at the point where they were generating revenues. They had this medical device in the market. This is going back to a time when all of the activity trackers were just coming on to the market.

We weren’t necessarily interested in those products. We felt that they were becoming commoditized. There are a lot of me-too products. What’s interesting to us about Sculpt was they were not just tracking activity, they were measuring results. Their focus is on quantifying muscle health. The origin was in a medical device that was being used by top pharmaceutical companies and researchers to quantify muscle health as it related to neuromuscular degenerative diseases.

When I met them, they were looking to cross over into the consumer space as well because they saw a strong use case for the same technology on the consumer side. That was an interesting thesis for us. We got involved very early on. We invested in the seed round and led the A round. They subsequently raised the B round. The people that participated after us was a larger West Coast venture capital firm and another was a large Chinese strategic global manufacturing company.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Greg Borchardt of Caerus Ventures
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