1Mby1M Virtual Accelerator Investor Forum: With Semyon Dukach, Managing Partner at One Way Ventures (Part 3)

Sramana Mitra: If a team is strong, are you okay with investing before pre-product? 

Semyon Dukach: It takes more than a strong team. In my view, the team for this company was clearly the best in the world. There was no way that a team with more money could be stronger than this one. It was not a question of being strong; it was a question of being number one. In most of our investments, the product, revenue, and the customers are already there. 

Sramana Mitra: Let’s take one of the typical examples where you already have a product and revenue. What’s a good example of something that you want to discuss? What did you see when they came to you?

Semyon Dukach: One well-known company we invested in is a company called Brex. They were a young strong team. These were Brazilian founders who built several companies when they were teenagers. They built their first company when they were 15. They sold it and got $1 million.

They started another company but lost all the money that they had, so they had to move back into their parent’s home. They started a third one that grew large. They left to go to Stanford. Within three months of being in Stanford, they left and started another company which became Brex.

These guys were brilliant as entrepreneurs. We would have come in pre-product, but by the time our funds were raised, they had already launched and had extremely fast-growing revenues. We were fortunate to get in a little bit later.

The growth continued and less than a year later, they were worth $2.5 billion with their most recent round. That’s a story of extremely rapid growth. They had the ability to raise a lot of capital. 

Sramana Mitra: Are you looking for unicorn investments?

Semyon Dukach: In every investment that we make, we want to see a realistic path to multi-billion dollar outcomes. We will never invest to make five or ten times our money. It’s worthwhile, but it’s not something that we do. 

Sramana Mitra: What do you see in your deal flow at this point? If you look at 2020 and the deals that are coming to you for investment, what trends are you seeing in there?

Semyon Dukach: The immigrant founders who can easily get money from anybody tend to value our story more right now. They like the fact that we have a fund for immigrant companies. It’s something that they find appealing.

Sometimes, we are invited to participate to benefit the fund rather than to benefit the company. The founders are really strong that they are letting us in as a favor. Everyone is moving slightly slower. Even when people are about to raise larger rounds, they are more likely to choose the people that they like. We’ve seen growth in our portfolio overall.

A couple of the companies struggled with COVID-related things but quickly pivoted and began to benefit from the situation. The majority of our companies immediately benefited from the situation for various reasons. They benefited from the fact that people are online more and the fact that tech is progressing faster than before. 

Sramana Mitra: Have you seen new companies or projects that are specifically reacting to the discontinuity introduced by COVID? What are those trends?

Semyon Dukach: We led a pre-seed round for a company out of TechStars in Boston called Brio. They shifted a little bit. They were doing blood tests for people in gyms and firefighters. They were doing the online interfaces and connecting the labs to the consumer.

With COVID, they went to COVID testing. We ended up doing a $2 million round that we led in early March. The numbers of that company astronomically took off. COVID testing is a growing fast space. They are making millions in profit, which is unusual for a company to have within the year. They are generating the cash, so they don’t need to do another round.  

Sramana Mitra: Was the COVID testing their original technology?

Semyon Dukach: These guys aggregate a bunch of labs. They work with many labs and they provide the user interface and reporting layer. They work with organizations and enterprises that have to test large numbers of people. They coordinate all of that online. They don’t run their lab. By June, I was seeing all kinds of plans for pivoting because of COVID. 

Sramana Mitra: We did a case study in our entrepreneur journey series recently. They started the company post-COVID. It’s a mask and PPE company and they made $8 million in three months. 

Semyon Dukach: Some of the stuff is happening very quickly. It’s another story if they are sustainable after the epidemic ends, right? 

Sramana Mitra: You are talking about the Brazilian team. Good entrepreneurs can also figure out how to be sustainable. If they have a good core business, they can also figure out what they are going to do after COVID. Are there labs or particular departments at MIT that you have closer relationships with others? You talked about AI. Do you work with their lab? 

Semyon Dukach: I was in there years ago, but no, we don’t typically work with anyone in the university like that. We might go to the demo days for some of the startups. At the end of the day, we are not the engine. We are not the fund that is equipped to take a 15 or 20-year stance on a core tech like Fusion. That’s very far from commercialization. 

Sramana Mitra: I don’t think that is the domain of venture capital. 

Semyon Dukach: Exactly, but there are some funds that go longer like the Engine. They are affiliated with MIT. They have a longer time scale. We don’t do very much of that because we don’t have sufficiently large funds to support companies for that long.

Sramana Mitra: Thank you for your time.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Semyon Dukach, Managing Partner at One Way Ventures
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