High quality, credible team
Tractable large market
Differentiated, defensible technology and product
An answer to “Why now?”
An understanding of what the company needs to learn
As part of our series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing Spencer Maughan, co-founder and partner at Finistere Ventures. Spencer heads the Silicon Valley office based in Palo Alto, California. Previously Spencer has been an entrepreneur-in-residence at Kleiner Perkins Caulfield and Byers working with the Green Growth Fund on AgTech opportunities. Spencer was also an investor at Venrock, a Venture Capital firm with >2b dollars under management. Spencer has been a company founder and entrepreneur. Spencer also sits on numerous boards including being a catalyst member of University of Wisconsin’s WARF accelerator program, an Advisory Board member of CSIRO, Australia’s peak science organization, as well as an advisor to the ARENA-sponsored Renewable Energy Venture Capital Fund managed by Southern Cross Venture Partners. Spencer has a BSc and PhD in Genetics from the University of Melbourne where he was a Melbourne Research Scholar with funding from Bayer CropScience. Upon finishing his PhD, Spencer was named a Marie Curie fellow at the University of Cambridge (UK) within the Institute of Biotechnology. Spencer holds an MBA from Stanford University’s Graduate School of Business where he was the American Australian Association’s Macquarie Bank Fellow.
Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?
My backstory was, like many others, a search for impact. I began that journey on an academic path as a career scientist working on two things 1) the genetics of plant growth and 2) malaria drug resistance. It was rewarding work, but it left me impatient — I wanted to see technologies broadly adopted, quickly. This led me to entrepreneurship, Stanford and Silicon Valley.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
There are so many great books, and I think it is important to read broadly. One book that had great impact was “The Selfish Gene” by Richard Dawkins — it is a classic. I read this in my undergraduate years, and it was a key reason that I did a PhD in Genetics. The beauty of seeing the momentum natural selection brings in the ebb and flow of genes was exciting and to be able to wed life science with mathematics and the positional nature of genes was a breakthrough for me in finding my early direction.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
Especially in these times, it is hard to surpass Abraham Lincoln when it comes to quotes. After losing the IL legislature, he remarked, “The path had been worn hog-back was slippery. My foot slipped from under me, knocking the other one out of the way, but I recovered myself & lit square, and I said to myself, ‘It’s a slip and not a fall.’”
It’s a slip and not a fall’ is important because we get knocked around so much that it is important to remember that you can recover and continue looking forward.
A second quote (wrongly attributed to Lincoln and Mark Twain) that I live by is, “Better to remain silent and be thought a fool than to speak and to remove all doubt.” Management talks a lot. Board Members talk a lot. Venture Capitalists talk a lot. Most of them should “remain silent” and only say things they know. Or, better yet, take the time to ask well-thought-out questions about things that they would like to know. It would move the needle much further and much faster if we all stuck to this.
How do you define “Leadership”? Can you explain what you mean or give an example?
Leadership is setting strategy and then empowering others to achieve goals. Leaders can’t be in an ivory tower, but they do need to have the mental space to look at all the data and thread the needle of where a project or organization needs to move. That is all about creating and communicating a strategy. Once that is in place, a leader has to provide the tools for others to do the tactical jobs needed to effectively implement the strategy and reach the goals laid out by it. It’s important to realize that the team owns the results in this structure and the leader owns the failures … it can be a rough job.
How have you used your success to bring goodness to the world?
I try to make sure that there are a number of non-profit organizations, especially in education and science, that I can help. Currently, I help the University of Wisconsin (Madison) with some of its commercialization initiatives, and I am also a fellow at the University of Sydney (Australia) within the United States Studies Center.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
Gosh, there are an absolute multitude of touchpoints that matter in bridging gaps. I think recruiting more women, minorities and people of color as investors is critical. I think groups like the Kauffman Foundation have begun to really push on these themes and could play a large role in supporting greater investor opportunity. As an aside, I also think that it is critical to make quality STEM education available and non-threatening to women, minorities and people of color.
Can you share a story with us about your most successful Angel or VC investment? What was its lesson?
I think the greatest success story was an investment that the team I was part of made in Nest. Nest was a massively scaling consumer product company that Google acquired for 3.2B dollars. The striking lesson is that it is people that build things. The Nest team was the best team (quality and depth) that I have seen pitch.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
The failures are the most important investments. They teach you longer lasting lessons. Lessons that, through humility, open you more to better financial stewardship. Most investors remember their first real loss. Mine was a plant biotechnology company that ended up failing due to misrepresented science. It can be hard to spot this by looking at data, but what I realized was that going deep during due diligence on interviewing personnel (beyond just the management) usually can reveal if something is being over-hyped or not quite right. Especially in this pandemic, that lesson bubbles up to me all the time since we can’t visit on-site so we’ve had to innovate our diligence.
Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.
It was pre-pandemic, and it had become obvious that one of the two principal technology platforms was not going to result in a product. There had been a lot of money invested in it, and so there was a lot of hope driving a lot of good work to try and pull it back from the brink. However, that would have thrown good money after bad. Instead, we pulled together a war room for a week of strategy discussions and to reorient the entire effort around the other technology pillar. The lesson: You need to overcome the temptation to hold onto your original hypotheses and hopes for too long — way after the data is in saying you were wrong. By being open to being wrong, you can keep moving forward and embrace that the right thing to do might be to re-strategize and carve a new path.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
The best example of this was funding Beyond Meat in one of its early rounds. I had met with them and was enthusiastic about the company and the idea that the consumer was changing. However, I was more junior and the partner I was working with at the time asked “what do we know about CPG food companies?”. I went away and worked on answering that but ultimately was shot down at the full IC. It would have been a fabulous investment, but it did teach me that if you really believe in something than you need to pound your fist on the table. Investment is for the bravely opinionated!
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.
1. High quality, credible team
2. Tractable large market
3. Differentiated, defensible technology and product
4. An answer to “Why now?”
5. An understanding of what the company needs to learn
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
It would be to more rapidly move agricultural technology platforms and practices to the developing world. This would tackle nutrition and income for a huge number of people globally.
We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. 🙂
I love to meet people and hear their story so it would be almost anyone. But if I had to pick someone I didn’t have easy access to, I would pick the President. It would be great to hear how he is thinking about some of the agencies and their technology spending across health, food and the environment — I think there is a great opportunity in these troubled times that shouldn’t be squandered.
This was really meaningful! Thank you so much for your time.