Episode 12 | Part One: Prime Time

Gregory Shepard, an entrepreneur who's built and sold 12 businesses, a recipient of 4 private equity awards, TEDx speaker, and Forbes author. This is The Boss Podcast with Gregory Shepard.

I see thousands of deals from software to robots, and joining me today is an investor who thinks along the same lines as I do. Dakin Sloss. Dakin is the founder and general partner of Prime Movers Lab, a company that invests in breakthrough scientific startups that they say will revolutionize the world's most important industries and transform billions of lives. They just made news last week when they announced that they raised $245 million for its second early-stage investment fund. Dakin, welcome to the show.

Well, thank you, Greg, for what you're doing to inspire entrepreneurs, and thanks for having me on.

I appreciate it, Deakin. Before we discuss the newly announced second early-stage investment fund, I briefly described what you and your team do at Prime Movers Lab. So tell me, why does it exist?

Yeah, Prime Movers Lab invests in breakthrough scientific inventions that have the ability to transform billions of lives, and we really exist for 2 reasons. Science and service. And what I mean by that is there's this gap in the early-stage venture ecosystem where there's not enough capital. It's less than 10% of the capital going to hard tech, deep tech. These are things like energy, transportation, infrastructure, manufacturing, things that really matter to human beings' lives. 90% of the capital is going to like e-commerce and web apps and mobile apps. And while these things are important, I think the next 30 years are going to be defined by things that are actually happening in the physical world. And that's where we focus. And that's what I think can really make the average human being's life much better. So that's the first reason that we exist. And the second reason that we exist is I really think historically venture capital has treated founders like the product in a certain sense of leveraging founders in order to produce exits and financial returns. And our approach is quite different because I was a founder myself and I was disappointed with that approach. I really think you need to treat founders like customers where we're going above and beyond to help partner with companies and help partner with CEOs to make sure that they succeed. And we're in the trenches with them, rolling up our sleeves, getting things done, and providing them all the resources they need to win.

I love that. I'm a founder, too. I've done 14 exits, and I know that perspective of the banker's perspective or the VC or investor's perspective dealing with you as an entrepreneur, and you're not really getting the love. And the question of, how can I help you, doesn't come up too often. So, I think that that's a really good perspective. It's refreshing to hear that. I have to tell you that.

Well, thank you. Yeah, I mean, I was actually sitting with my wife kind of complaining, you know, like, VC is so broken, we need to fix these things. And she's like, you're an entrepreneur, fix the problem. And this is what we came up with to fix the problem. And I think thinking about it as you're in service to a founder is just a radical shift in mindset. And then there's a lot of common sense, easy things to do when you're taking that approach. That is probably not the typical approach, but If you, if you ask that question, there's a lot of good answers to how can we make sure that a founder not only is successful, but enjoys the process, right? I think it's really important that entrepreneurship isn't just something to produce an outcome, but it helps a person grow, it helps a person develop, it helps their community, their family, their ecosystem develop. And that, that kind of big impact that entrepreneurs want to have has to start with the individual, and with their team, and with the kind of culture that they build.

I agree 100%. I've been saying that the finance side of entrepreneurship is Fundamentally broken for a long time. And I put together some articles and have a book coming out and all that stuff about how to fix it. And you're in direct alignment with where I'm at. It's really great to hear this. But let's take a moment and step back and talk about your first fund, which was a $100 million investment fund. What did you do with that? Can you talk a little bit about what that fund was, what you did with it, what happened with it, what the thesis was, so on and so forth?

Yeah, thank you.

Yeah.

And we're definitely, we're definitely in great alignment there. And I think what's so cool is that philosophy actually produces amazing financial returns as well. So it's not like an either or, you know, the first fund has demonstrated that our first fund is on track to be the best performing fund of 2018. Basically, we invested in some of the most important problems facing humanity. So we have 4 different companies that are kind of breakout winners from that fund. Momentus, which is the first in-space infrastructure company, and they've already announced going public via SPAC merger. shortly. And they're basically making space a place that entrepreneurship can happen, which has huge implications for us down here on Earth in terms of communications, imaging, security. We have a coronavirus vaccine company, COVAX, which has announced $2.8 billion in vaccine presales. And they basically have the most effective, safe, affordable, distributable vaccine. So it can actually serve underserved communities in Latin America and Africa and Asia, that otherwise aren't getting access to kind of vaccine supplies that are being consumed by the first world. We've got Heliogen, which, you know, recently announced a $40 million DOE grant to support their mission of converting much of the energy industry to solar heat, particularly for industrial applications. And this is a company that literally has the ability to change an $8 trillion industry and make it possible to produce abundant energy without any of the side effects of fossil fuels. And then we've got Upward Farms, which is feeding the planet using aquaponics. So they're doing indoor vertical farming in a way that's quite differentiated from any of the other players because they cultivate the natural ecosystem. They're using fish farming as well. And so these are just kind of some examples of the companies there. But in whole, we went after big problems that we thought could really make human beings' lives better. And as a result, that fund is marked up quite a bit. And by the end of this year, we're going to be sending quite a bit of money back to LPs from the exits that are happening from a couple different companies going public.

That's amazing. I gotta tell you that Space Perspective, which is the ability to fly into space and look down on the Earth, I signed up for that a long time ago. You didn't even mention that. But that's like, to me, the coolest one you have.

Well, thank you. Yeah, that, that's, that's one of our early Fund 2 investments out of this fund that we just announced. I'll have to follow up with you after this. We're just starting to do kind of Official ticket sales there. So, we—

Yeah, please do. Yeah. So, I have a— all of us, all of the investors that are in our fund, we all have registered. We're all excited to go as soon as possible. And then, you also have another really cool— the Idea Lab Studio. So, you have your own incubator. Can you talk about that a little bit?

Yeah. So, just to clarify there. So, Bill Gross, who's built and exited $7 billion companies, he's the most successful startup founder in history. Nobody else has done that, $7 billion companies from scratch. He's the CEO of Heliogen, which I mentioned, one of our Fund 1 investments. He's also the CEO of Carbon Capture, one of our Fund 2 investments that's working on direct air capture for CO2 from the atmosphere. He runs Idealab Studio, that's his incubator. And he's built, and he has an amazing track record. He's built 140 companies that have successfully exited. And he's got, I think, I can get the statistics wrong, but it's his incubator. And then we're a partner in that, we're an investor in that. And we've backed him in a number of his companies. I mentioned 2, also in Energy Vault, his energy storage company. So, yeah.

That's incredible. I mean, you are a rock star. So, let's talk a little bit about this $245 million second early-stage investment fund. What do you hope to accomplish with this fund? And is it in line with your greater thesis or just a continuation of it or in a different direction?

Yeah. I mean, in a certain sense, 3 years ago when I started Prime Movers Lab and raised our first fund, people thought I was kind of crazy going after all these, you know, what people would call moonshot ideas. It turns out that maybe I wasn't quite so crazy, or crazy in a good way that could actually produce results. So this fund is really just recognizing that the opportunity is much larger than what we were able to capitalize on with our first $100 million fund. This is where the world's going. The most important problems we face as humanity and as a civilization are how are we going to get abundant clean energy? How are we going to move people around both on land, in sea, in flying? What's the infrastructure going to look like that delivers clean water to billions of people across the planet? How are we going to feed people in ways that are good for the environment, good for people, particularly as billions of people in India or other countries are kind of coming online and increasing demand on food production? How are we going to extend our human lifespan? So, a lot of what we do is in the biotech world and longevity and neuroscience. Those are all the areas that we're investing in with the second fund. So it's the same thesis as Fund 1. It's just allowing us now to do more companies. So whereas in Fund 1, we had 15 companies, we'll do 30 companies in Fund 2. And I've been really fortunate that some of the folks who are venture partners with us in Fund 1 have joined as full general partners in Fund 2. So one of my partners is Suzanne Fletcher, who used to run the Stanford StartX Fund, was basically running the Stanford startup ecosystem. worked with hundreds of entrepreneurs there. Brandon Simmons, who worked with me on a couple of my previous companies. Anton Brevde, who was a CEO of Aceta, a YC company working on industrial equipment. And Caleb Bell, who has a lot of biotech experience, has built some companies and been a venture investor in that ecosystem. And so, really thrilled, you know, as an entrepreneur, and I think of building a VC firm as an entrepreneurial activity. You know, as an entrepreneur, something's going right if you look around at everybody and you're like, why did all these people sign up to work with me? They're so impressive.

That's incredible. I remember reading the press release and it said, investment fund raises $245 million to support dozens of breakthrough scientific disruptors ready to transform billions of lives. So, it looks like you're aiming low, huh?

I think I'm going to get the quote wrong, but actually one of our other partners is Tony Robbins, who's a good friend. And basically, he has like a great quote that, you know, life supports more of whatever supports life. And we as humans tend to be poo-pooed a little if we go for big goals, you know, because we might fail. But every failure is actually just a step along the path to success. And I think by going after big things that can really be meaningful and having the right intent to contribute and to serve something much beyond ourselves, resources show up, great team members show up, great opportunities to connect with folks like yourself show up that wouldn't show up if we just went after something small. And so some people do that kind of stuff for like ego reasons or to feel important. I think we're really doing this just because we want to have a big impact. And this is, this is this amazingly unique time in human history where Already today, we have the technology to solve every material challenge and problem that everyone on this planet faces. And now we just need to actualize that. And it takes the willingness, it takes, it takes a willingness to kind of do the work to make that happen. And it takes a certain level of caring, I think, to, to really view, view us all as part of a shared human family.

I love that. And so that is your, as Simon Sinek says, your why. And so energy, transportation, infrastructure, computing, All of these things are the inspiration to get through to your why, which is helping us evolve as a species and the Earth itself. And I wanted to ask you another question, kind of coming off the side of that a little bit. How has the pandemic either shifted or maybe even changed your focus, or has it at all?

Yeah. I mean, I think thematically, it's brought biotech to the forefront even more. That's one thing that it's done. We actually happen to be a remote venture capital firm from day one, so we have 20 people spread out around the country. And we don't have a physical office. So it didn't change things for us from that perspective. There's some ways in which our diligence process shifted and evolved as everybody else went to remote work that we were evaluating too. But thematically, I think you've seen this big uptick in investing in healthcare and biotech that we're definitely continuing to participate in. I think the other thing is, I think For all the challenges that the pandemic has produced, and it's obviously, we see a lot in the news, the conflicts and the tensions that are going on in the world, there is also this kind of unique thing going on of how often are we all so directly aware that we're having the same shared experience? We may be reacting to it differently. We may be arguing and fighting about it and have different perspectives about it. We're all having the same shared experience of no matter what economic situation you're in, no matter what race you are, you're dealing with a global pandemic. And that's, that's That's the same for everybody. That opportunity, I think, has brought even more focus to the kind of mission that we're on of how can we get together and solve really big problems together. And I think it's helped us build some momentum for, for that mission and for that vision. It certainly obviously helped us in terms of being able to attract more capital. And then I think the other, the other theme that the pandemic has kind of brought about with all the stimulus capital that's gone on is we've seen a lot more demand in the public markets for growth investment opportunities, which is And that's part of why we're getting some really phenomenal exits here for our companies in that, in that economic climate.

That's so cool. All right, Dakin, hang on for one moment. We have to stop right there. But coming up in my chat with Dakin Sloss, the founder and general partner of Prime Movers Lab, Dakin talks about the importance of being founder-friendly.

People get too caught up in the role of investor and founder. Who cares? We have a business, we have a mission we want to achieve. Let's do it together. What do you need? What do I need to do? Let's make it happen.

Learn more about the BOSS Business Operating Support System at bossstartupsience.com, or you can reach Gregory Shepard at gregoryshepard.com. This has been a production of Forbes Books.