Heavy Hitters: The Digital Industrial Podcast

Trevor outlines how having a sector focus, and associated domain expertise, provides a prepared mind that allows him to both underwrite investments quickly and provide sector-aligned value back to their portfolio companies, where he thinks the venture asset class is headed between sector focused funds and generalist funds, why Blackhorn expanded its multi-stage investment capabilities from seed-to-growth with an opportunity fund that provides the ability to ‘play through’ with investments throughout the lifecycle of a company, how specialized growth equity (and SPACs!) has a key role to play within some of the sub-sectors involved with industrial innovation, and we finish with some tech trends of “What’s hot and what’s hype”.

Travis explains how they saw the opportunity to build an architecture, engineering and construction (AEC) and real estate focused network of investors to launch Building Ventures to invest in ‘sapling-stage’ companies, helps define what the terms Built Environment and Builtworld mean to them, outlines why buildings and the associated construction process of making them have a massive role to play in sustainability efforts going forward, why he feels the term “Constructuring” is indicative of how construction is evolving to be more like manufacturing settings, and how he thinks about the end game for startups in this Builtworld sector.

Bryan has easily been one of the most active investment bankers within the digital industrial ecosystem, and he kicks off the discussion outlining why he believes Desktop Metal’s SPAC in late 2020 was the catalyst that set off the record level of dry powder in the capital markets to target the digital manufacturing ecosystem. He walks us through how 8 months after Desktop Metal’s SPAC there have been 61 transactions and ~$7B in transaction volume; which is on par for the entire history of investment in this category. Of those 61 deals, 22 deals and $5B were in public equity (SPACS, Follow-ons, IPOs), 22 deals and $1.3B were in M&A, and 17 deals and $420M were in private markets. We then discuss why we both feel this current flurry of manufacturing investment activity both is not a bubble and is structurally very different than the digital manufacturing wave of 2013-2014 (3D Systems, Stratasys, Protolabs, etc.), and how SPACs specifically have re-emerged in the capital markets to fill a growth-stage investment gap that existed in this category. Finally, we wrap up with a ‘What’s hot and what’s hype?’ section on innovation trends Bryan is seeing in the market.

Gina leads the DHL Americas Innovation Center, a 28,000 square foot, state-of-the-art facility in Chicago where customers, partners, academia, and thought leaders can experience the next generation of logistics in an interactive showroom environment. From her vantage point helping create the logistics of tomorrow, we discuss what logistics innovation is hot and what is hype, why DHL’s recent sustainability pledge to be emissions free by 2050 is a critical initiative, how to deploy and actually scale innovation within challenging real-world logistics environments, and why we should all be preparing to advance the topic of the future of work within these supply chain environments.

Supply chain tech startups raked in $7.7 billion in venture funding in Q1 2021, an increase of 90.6% over last quarter and a staggering 355.1% year over year (Pitchbook), and transportation & logistics subsegments were a major part of that activity. Mike & I discuss the innovation journey Ryder took to launching Ryder Ventures, what trends and technologies his team are focused on, how he defines and approaches last mile innovation to meet ever-increasing customer experience requirements, and where he sees the broader transportation and logistics ecosystem headed to further engage in the startup ecosystem.

Guy’s unique background, blended between deep tech and capital markets, guides us through a fun discussion on the topic of “Deep Tech”. We define what “Deep Tech” is, outline why we’re already living in a ‘Present Future’ surrounded by these technologies, evaluate how the future of work will be impacted by these innovations, and then bring it all back to how the capital markets are exploding with funding growth in this category to meet the opportunity ahead.

Family office direct investing into the private markets, and the venture capital asset class specifically, is at an all-time high. Cindy joins us to outline how the Perot Jain office leverages its extensive industrial operator network and physical infrastructure footprint to gather market intelligence on real-world pain points to invest behind, how their broader platform leverages all of its resources to drive tangible value back to startups targeted at those pain points (hint: they’ve actually developed a master-planned smart city, Alliance, Texas, that also serves as a supply chain & mobility testbed for startups), and finally why she feels family office direct investing is here to stay.

Ram has deep experience on both sides of the tech startup and incumbent table, and he brings that experience to help drive SAP’s current SAP.iO corporate innovation platform efforts. We discuss why when SAP kicked off SAP.io in 2016 it all started and ended with thinking about how to drive value to their customers, how SAP.iO has become a gold standard in corporate innovation via activating multiple levers internally and externally (internal corporate venture investing through SAP.iO Fund, SAP.iO Foundries accelerators, SAP.iO Venture Studio efforts, and external venture investment partnership with Sapphire Partners), how his team is leveraging a confluence of innovation trends (open source, API, Ai/ML, platformization) to both support customers on their digitization journeys and drive strategic value and interesting insights back to SAP across different industries and lines of business, and why its critical to take an open ecosystem and platform approach where curated partnerships can flourish with integrations connecting customers and startups.

Julian was ahead of the curve in identifying the e-comm wave that is now transforming our industrial supply chain, and he founded Schematic Ventures to go all-in on that shift to better compete in a venture capital asset class that is only getting more and more competitive. We talk about his transition from being a generalist into a very focused specialist investor, how sector specialization compounds learnings and benefits to his network and within the portfolio, why he is adapting his fund construction strategy to adapt to the emerging pre-seed category and ballooning seed-stage round sizes, why VC specialization benefits decrease as you enter later stage growth investing, and how investors in this sector must take both a grounded exit outlook and an optimistic outlook as to where new addressable markets may form over time. Finally, he even throws in some tactical advice on fundraising for founders in these sectors.

Dynamo was one of the very first sector-focused VC funds that lasered in on supply chain. Santosh outlines how they leverage that sector focus to add value in 3 distinct areas at the pre-seed and seed stage when founders truly need a trusted partner (not just capital), how having a focused 'prepared mind' provides him an advantage in helping founders navigate these complex industrial supply chain settings, and why fund size drives fund construction strategy in a VC asset class that is blurring the lines of how a ‘seed’ round is defined today. We wrap the episode outlining why early-stage VC is still all about carefully evaluating the human element behind the team.