Today’s newsletter highlights a fantastic podcast with Maureen Stancik Boyce and Amy Salzhauer – both Managing Partners and co-founders of Good Growth Capital, one of the premier early-stage VC funds.They share insights on what makes them so uniquely successful when to comes to finding, cultivating, and assessing complex science and technology start-ups. Founded in 2015, Good Growth Capital has also been at the forefront of diversity. On this podcast, they discuss how diversity has given them an edge in sourcing extraordinary entrepreneurs and how it contributes to the success of their own partnership.
• 5 min. read •
About Good Growth Capital
The five managing partners at GGC have started 18 entities worth billions of dollars. It was actually a very natural transition; for example, Maureen and I spent decades looking for the most important, most impactful pieces of science and technology anywhere, and starting companies around them. And now what we do is we look for the most important ones and most impactful pieces of science and technology to invest in them. So the team brought together people with a huge amount of operating experience. We have the fund operating experience and the operational experience to really drive our investments. When we are looking at an investment, we’re looking at how and whether we can drive that company towards a really profitable exit that will return significant capital to our investors within 4 to 7 years. That operational experience is one thing that is driving significant returns for LPs.
Is there a time when you can say ‘this company is a clear winner’?
I think we can say that we see things to determine if we should continue. We look for large market size. We look for founders who have certainly had successful startups before or, if not, by people who surround themselves with people who have done it before. We look for defensible technology. And if it is not with a patent, then it is with know-how — so we know it is defensible and that others cannot enter the market. What we look for are entrepreneurs who are coachable — nobody knows everything. This is the first time anyone has created this; we want to make sure that the managers can be open to receive input from others and that they will step aside when needed to.
You know, Maureen often says: ‘We’re looking for superior defensible technology companies that fill pressing societal needs.’ And then we’re also looking for companies that will have an exit within four to seven years. It is a very specific investing strategy. It is something that clinicians wanted yesterday. That every company we do diligence with says, “can I have it?” — that when you talk to the customer, it is clearly transformative and important for them.
“We are looking at understanding deeply — not just the science and technology but what is going to be the growth path of that company; how we can help it grow and bring it to an exit.”
How would you describe your ability to understand very complex investments?
We only invest in things we really understand. So if you look at the venture partners and advisors, that is another 15 people who started another 30 companies with a huge amount of technical and operational expertise. We are not just surrounding the fund with PHDs; we are looking at understanding deeply — not just the science and technology but what is going to be the growth path of that company; how we can help it grow and bring it to an exit. That is a really specific set of skills. If you look at our fund, we are one of the only funds of this size that has this incredible amount of expertise surrounding it. So we are able to invest in, source, and diligence very complex pieces of science and technology that are really important and growing rapidly, earlier than most other funds.
“We have never lost a deal; we are in every single deal we want to be.”
LPs are often looking to co-invest in deals directly with venture firms, is that something you do?
We have over a hundred co-investors. It ranges from A-Z, starting with Amplify, to Bolt, to Greycroft… and on-and-on. Top-tier funds that are fighting for allocations. And we are already there. So I think expertise is really important; it is key to know what you know and not invest in things you do not understand. We welcome our LPs to co-invest whenever there is any room in the round. Half of our deals have had co-investors. So we are happy to bring those opportunities to our LPs. I’ll just add that we really pride ourselves on our strong relationships with our LPs. We love our investors, and we pride ourselves on having great communication with them. We’ll even fight for allocations in an oversubscribed round for our LPs.
Tell us about your unique network in the southeast and nationwide for sourcing deals?
We are one of the only early-stage tech funds in the southeast. And certainly one of the only deep-tech funds, so we see so many interesting fields that pretty much nobody else is looking at. As said earlier, we mentor these companies very early and are looking for important pieces of science. Scientists are usually not the right people to run a company. So, throughout the southeast, we have some structural ways we speak to people who are pitching. If you look more closely at our team — Maureen is surrounded by lots of people who are at MIT but then if you look at our fund, you will see that we’re sourcing and capturing deals from other regions. I think that is because we are a fund that is originating really interesting deals, and CEOs want our expertise in helping to build their companies. We also have co-investors bringing us deals from all regions, and we have our CEOs themselves recommending us to other CEOs — we have never lost a deal; we are in every single deal we want to be.
What kind of relationship/input do you bring to companies you invest in?
For example, Skyhawk therapeutics, I sat down with the founder every other week for 9 months, working on her pitch deck because it was very complex technology, and she understood this. Even if I’m not an expert in the field, I said: “I want to be able to understand this. Make it in a way that I can easily understand it.” We introduced her to the VCs, to the angels, to the scientific advisory board members, we looked at the IP platform. And we said, ‘This is not just for rare genetic diseases, this is much broader.’ And based on that, ‘this is the amount of money you should be raising.’ That is what we do.
Another example, Radical Plastics is a company creating biodegradable plastic films naturally, and economically, which is the big difference here. So it is an additive put into the existing manufacturing process that renders the plastic film biodegradable in a natural environment. Again, we worked with them to figure out what was the right amount to raise. We worked with them to introduce them to other investors from the board. I am on the board, and we continue to work with these two women founders to see how we can grow and strengthen the company.
We have a lot of examples, but basically, you could summarize it to, ‘we’ll take everything from really important technology that hasn’t developed its IP strategy and needs someone to do the licensing… to introducing companies to customers, to manufacturers, to board members.’ We really can run these companies and take an active role… We’ll put together the next round for them if they need help doing that. So to the question “where do we begin and end?” we just keep going with them!
“We have a team that can do just that (…) take that scientific vision and turn it into a successful business strategy.”
How has diversity played a role in your fund and how has it given you an edge?
A third of our CEOs are women, and a third of our CEOs are people of color. So we are really expanding our portfolio to look at the best deals, blind to gender, blind to race.
I think it is important to know that we don’t give them any preference. We give them the opportunity. As we mentioned earlier, we see about 10,000 deals a year. And our first fund is outperforming. Maureen and I have been partners for a long, long time, and we started multiple companies out of MIT, Harvard, Cambridge, Columbia… and in the course of doing that, we raised millions of dollars, pitched more than a thousand times for capital and we never once pitched a female decision-maker at any fund. Expanding who’s investing naturally expands who ends up with capital. It is easier to envision somebody else as a CEO when you’ve been there. It’s also maybe more inviting for those founders to come in. As we are diverse ourselves, we are more inviting to those diverse founders, which also plays into our strategy.
What do you look for in the founder’s you invest in?
We are not looking to invest in charismatic founders, we are looking for superior, defensible, impactful science and technology. And so, we are not looking for the founder to be charismatic, we are looking for them to be knowledgeable. As we do that, sometimes we encounter knowledgeable founders with incredible ideas but who’s science is so difficult to explain. We have a team that can do just that, like Maureen who is amazing at understanding how we can take that scientific vision and turn it into a successful business strategy.
What has made your partnership so successful?
We know each other’s strengths and weaknesses having worked together for so long. We respect each other so much that we know how to disagree and challenge each other. We work on so many interdisciplinary deals so we depend on each other. We are actually compensated across all our deals. And the same thing with our venture partners and our advisors, we have incentivized all of the teams to work with each other for the best of every single company we are working for.
About our speakers:
Maureen and Amy have been working together in Private Equity for over twenty years. They originally founded their first venture capital fund – Ignition Ventures in 1999. Maureen is a former IBMer and holds a PhD from MIT. Whilst Amy holds an MBA from MIT and a Masters from Cambridge University.