1Mby1M Virtual Accelerator Investor Forum: With Yipeng Zhao of Embark Ventures (Part 1)

Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Yipeng Zhao of Embark Ventures was recorded in March 2018.

Yipeng Zhao, Managing Partner at Embark Ventures, talks about the firm’s investment thesis, as well as broader industry trends and what should and should not be funded.

Sramana Mitra: Let’s start by helping our audience get to know you. What is your background? What is the focus of Embark Ventures?

Yipeng Zhao: I’m a Partner at Embark Ventures. We’re a Santa Monica-based early-stage venture fund that is doing seed and smaller Series A investments. Our investment thesis is around deep tech. We believe venture investment as supporting transformative technologies that are defensible. We write checks up to $2 million. Our sweet spot would be a half a million to a million dollars. We closed the fund early last year and made our first investment in March. It’s a brand new firm. I’m looking forward to talking a little bit more about our fund.

Sramana Mitra: How big is the fund?

Yipeng Zhao: The fund is $45 million.

Sramana Mitra: Are the LPs Chinese LPs?

Yipeng Zhao: We have a very broad LP base. We have Hong Kong and Chinese LPs and we also have US LPs.

Sramana Mitra: It doesn’t have a particular China angle.

Yipeng Zhao: Not really. I’m Chinese. I can definitely provide value in Asia. We can provide some Asian angle if needed, but the company doesn’t have to have an Asian angle.

Sramana Mitra: Talk to us a bit about what types of companies  you like to invest in.

Yipeng Zhao: I’ll start with our investment thesis. Our thesis is around deep tech or frontier technology. By that, we mean companies that have technology that are defensible. Typically, the companies that we are looking at are coming out of university research or company research. In terms of sector, we are broadly focused on three sectors.

One sector is cyber security, particularly enterprise-focused security. Another sector is automation. It’s basically technologies that make things more productive. That could be robotics, AI and machine learning, or even data analytics. It could be industrial or personal automation. That’s our second focus. In that sector, we are more enterprise-focused.

The third sector we are looking at is healthcare-related. That’s healthcare IT and a little bit biotech. The healthcare IT piece is very easy to justify. We invest in companies that are doing medical testing diagnosis. It’s still B2B. Overall, we are B2B-focused. We won’t say no to a B2C company if the company has amazing tech. Broadly, 90% of the fund is focused on B2B and enterprise.

Sramana Mitra: What about geography?

Yipeng Zhao: We are a Southern California-based fund. We spend most of our time looking at companies inside of California. That’s obviously Los Angeles area where we’re based. We also look at Santa Barbara and down to Irvine. We spend about 50% of the time in that location. We also spend a little bit of time in the Bay Area.

We have two companies that are headquartered in the Bay Area. For Bay Area deals, we never lead deals because we’re a little bit far away from there. We started getting into other emerging markets like Boston and Texas, but we haven’t really done any deals in Boston or Seattle. We have a venture partner in Boston. We try to spend a little bit of time in Boston as well.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Yipeng Zhao of Embark Ventures
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