Business as Usual: Draper Triangle Ventures

 

Transcription: 

 

So good afternoon, everyone. Happy Monday. This is Audrey Russo, President and CEO of the Pittsburgh Technology Council, joined here with Jonathan kersting, Vice President of all things media and marketing at the tech Council. And we're thrilled to kick the week off, because we're pretty excited about what is referred to as PV CA, which we'll talk a little bit about in a moment, and we'll welcome our guest. So just want to give a shout out to Huntington bank, thanking them for the work that they do and making sure that we're reaching the community and, and all the support that they've given through the times of the pandemic and beyond. They've been amazing partners. I would like to tell everyone that we're approaching our hundred and 50th, today's or 100 and 49th conversation that we've had. And it doesn't seem like there's an end in sight. But we are planning on trying to do some things that are a little different and fun as we approach what some called winter. We're not acknowledging that here. We like to say that Pittsburgh is all year long. Right, Jonathan? We've talked about everything about Pittsburgh being all outside inside all year long, nothing stops us. So we have muted your microphones. And then there's a chat that you can ask questions of our guests, and hopefully you will have some for him. So today we are welcoming Mike Stabler. He is the managing director of Draper triangles. He also serves as the chair of the Pittsburgh venture capital Association, and I use the acronym PDCA. So Mike, first of all, welcome, thanks for joining us. We're thrilled to talk about this week's events that are going on. And before we talk about the venture fair, which is part of PVC, a, let's talk about Mike Stabler the man like what do you do? What What have you done? What's been your journey, so that you can let everyone know why you have a lot of expertise in terms of the matter that we're talking about today?

Thanks, Aria, you know, happy to be here and happy to be number 149. Congrats to you guys on the longevity of this. It's been terrific. You know, I've been around Pittsburgh for a long time. I grew up in oil city, Pennsylvania, you know, a couple hours northward.

Whoa, whoa.

So I grew up wandering the woods and hunting and fishing and things like that. But, you know, after I went to college at Notre Dame, and and after I graduated, I came to Pittsburgh in 1980. Because I couldn't think of any anywhere better to go. And so actually, you know, I'm a, I'm an, I was an accounting major in school of all things. And I worked in public accounting for four years back in the early 80s. And then 36 years ago, I joined my first startup and working for the great, Don Jones. What was his second or third startup in international?

What was the name of it?

international cybernetics Corporation ICC, hired me, I was probably 26 years old, didn't know what I did. Didn't know. And, you know, the rest was kind of history. We sold that business, you know, 18 months later. And then I was, you know, blessed to have worked with Don and a couple more startups. And then in the 1990s. We started Draper triangle ventures with my partner, Jay and the. So we've, we've actually, our first one was 1999. So we've been actually a venture firm now for 21 years, just finishing up our third fund, and they've been pretty active, obviously, in Pittsburgh and investing in the market. And I've been, you know, we've we've been obviously big, big supporters of the Pittsburgh venture capital Association, pbca. And I've been on the board for I think, 15 years, and I've been chairman for a while. And so that's kind of my story. I've been around startups for a long, long time. And we've been pretty active in the, in the Pittsburgh market, and we're really bullish on things going on here. And it's, you know, things have never looked better.

Well, you know, Don Jones was one of the people at the table when the launching of the Pittsburgh Technology Council started and he was a very, very important figure in terms of the tech Council and actually back then we had a venture fund, and Don was involved in that. So he was he was an amazing man. And when we did our and I think Brian and Jonathan will have to remind me, but when we did our tribute, was it our 30th year that we did for tech 50 that we did footage which included governor Thornburg and included Don Jones. And it was right before he passed away. He was sick. It was the last footage that anyone had of a conversation with Don. So we've always felt gonna have tremendous connectedness to the work of Don, he was, you know, maybe you can just remind everyone how you got the name Draper?

Yeah, sure. You know, so Draper triangle. I mean, we back when we were starting to find, you know, it was gonna be regionally focused, and we were looking for connectivity to the coasts. And, you know, Jay knew somebody that worked for Tim Draper, you know, third generation West Coast, VC. And Tim is at five, you know, interesting enough was looking for connectivity to Pittsburgh, and for CMU, and all the things going on here. And he was, you know, very early in starting a venture network of, you know, trying to, you know, create, you know, synergy across different funds, and give people connectivity to different markets. And so, we we partnered with Tim Draper back in 1999. And our first fund, and we were part of his, you know, join joined his network, and it's taken different, different forms over the years, you know, Tim's still very active in with his with his own fund now, after Draper Fisher dfj. And so, you know, Tim's a good friend of ours, and a big supporter of what we do, and he helps us when we're looking, you know, to get connected to different things in different parts of the world.

And he's definitely definitely an additive to to Draper. So awesome. So let's talk about the pbca. Okay, let's talk about that. And then I'm going to jump back and talk about some of the rock stars that you've invested in over the years, but I want I'm gonna start talking about PVC a, what's up this week, you know, give us an overview of the venture Association, what the what the objectives are, and what we should be tuning in for this week?

Sure, so I mean, the PDCA has been around, I believe, since the early 80s. And, you know, you know, some of the founders, you know, back then are no longer with us, unfortunately, as you mentioned, on and, you know, the whole idea with the organization originally with me today was to try to connect, you know, a place for networking for, you know, venture investors, not just venture capitalists, you know, I think the name is maybe a little bit misleading. They're trying to, you know, provide a platform for education, for networking, connectivity, you know, between entrepreneurs and investors, and, you know, educational to just to, you know, help people understand, you know, current trends bringing experts in. And also, you know, the other big part is to, obviously, the venture capital community here, in the investing community here in Pittsburgh is fairly limited in terms of size, and given even today with all the opportunities and things happening, also, to help, you know, educate and promote, you know, Pittsburgh in the, in the tech community here, and, you know, help be a networking in terms of, you know, investors from outside of the region to bring them in. And also the other the big element is to also more and more focused on trying to get corporate involvement in the startups here in Pittsburgh, which we've, you know, has always been a challenge for all of us, as you know, and, you know, more and more are trying to get, you know, the big companies here more vested in helping startups and, you know, helping them out and promoting the local region.

Well, you know, why do you think that Pittsburgh hasn't had the kind of proliferation of venture capital, given the fact that we've been doing this work? pbca has been around the tech Council has been around, the tech council had a venture fund, you know, that obviously, you know, expired, what, what is it? Let's go, what do you think?

Well, I think, you know, there's a, you know, obviously, to get scale and venture capital, you need to have institutional investors, you know, the pension funds and, and other large investors, in addition to foundations and university endowments, and a lot of their, you know, it's hard to have a fund that is regionally focused, because, you know, their, their advisors tell them well, it's not diversified enough, you know, they need to be national, and competing for deals on the coasts. And, you know, what we found is, you know, that's not really true. There's no, there's a, you know, great opportunity here in Pittsburgh. And, you know, even regionally here in the near Midwest, however you characterize this where, you know, it's still underserved very much from a capital standpoint, and great entrepreneurs, great research. You know, you Universities and a lot of great deals, that, you know, it's still very underserved. And, you know, still a lot of great deals to be done here. And it's just, you know, it's just hard, you know, institutionally to try to scale a big fund here. You know, because people think perhaps it's not diversified enough that you're not getting access

to economic development, right? We're not development, right. So what is on store for the week? What what's going on talk about the kinds of things, we put the link out there, Lexi put the link out there, so anyone can see what's up. But can you tell us like, what are some of the highlights of this week? Because you do a lot of different things. You do coaching you do? People do their pitch decks, and then you also have VC speak. I mean, it's really a myriad of activities. So can you talk about that?

Yeah, sure. So, you know, this week, will be the, I guess, the 13th. Through adventure fair, wow. Going back to the early 90s. And we've been doing them in 18 months cycles, because of, you know, you know, having a fresh deals and enough, you know, time for people to get interested in sponsorship and all the things but, you know, this one will be the first virtual, you know, just given the realities of COVID. And everything. Obviously, we can't bring all the people together as we'd like to. But, you know, you know, historically, it's been a great, a great event. In terms of, it's been a great networking event. So it'll be interesting to see how this goes off. But interesting enough with the fair, which starts on Wednesday,

we have, you know,

traditionally, a bunch of, we have a number of different panel discussions. And presenters, it starts kicks off this Wednesday morning. And 11, I believe, with a life science discussion about COVID. In no supermarket and startups, Larry Miller from innovation works is going to be moderating that panel. But I think most importantly, you know, what happens is, is that we have a venture connection event to two of them over two Wednesday and Thursday, the fairs Wednesday and Thursday, this week. And we have 75 companies that are going to be doing one on one pitch sessions with a number of we have over 70 different venture firms and investors that are going to be represented. And so it's a pretty much pretty, pretty nice match. We have almost as many investors as we do companies that are going to be pitching. So it's a series of 10 minute pitches introductions. Obviously, with 70 different venture firms and investors, most of them aren't from Pittsburgh. So it's a tremendous opportunity for, you know, local entrepreneurs to, you know, pitch their, their company and get some exposure outside of the region as well as to local investors.

There's also a

rock stars, who's the keynote? You have some keynotes, right?

Yeah, the keynote. And I'm gonna get his name wrong. It's he's a gentleman from the west coast who wants good, which is very interesting. The will be. he's a he's a very consumer focused in his his name is Sid jar is with tech sweetheart. Group. And he's very interested in Pittsburgh, he's come here quite often. He has a venture fund. But what's interesting is, he's a very fascinating guy, and I think people are gonna really enjoy this talk. But one of his big things is he's very consumer product and consumer company focused, which is pretty unusual for Pittsburgh. And I know there's, we've often struggled with consumer oriented kind of retail online retail, that there's been some some successes but very interesting guy, I think people are gonna find his his talk fascinating, but very good guy.

So what are there any Are there any companies that are coming from outside of Pittsburgh?

Yeah, that's the other nice thing about being virtual, you know, the, it's, we try to be very selective, and we have, you know, committees of people who are knowledgeable of things that try to screen there's an application process for companies and we try to screen them and make sure that, you know, the companies that we do, you know, have, you know, pitching to investors are investment worthy, you know, from a story and in a company perspective, and so probably two thirds of the companies are from Pittsburgh, Western Pennsylvania at large, you know, from our region, you know, third of the presenting companies are from elsewhere. I know, I have two different sessions, I'm meeting with 10 or 12 different companies. You know, one of them's from Toronto, one of them actually is from the Bay Area. But you know, for the most part, they're local businesses, but local startups, but there is a, there is a number of companies from outside of the region, about a third of them. So probably, you know, 25 companies who aren't based here, but you know, are attracted to the fact that they have an opportunity to speak up to, you know, 75 different investors.

So, you know, if I remember correctly, you had a at Draper, you had a pretty significant exit, which and a cool company that was based out of Cleveland. Right, and they participate in, I think they were acquired by Oracle, if I remember correctly.

Yeah, that was toa technologies.

pbca, did they get any of their exposure through PVC? They didn't. But it was a classic,

you know, story. I met them first. They were in an incubator in Cleveland, the Beachwood Development Center, which is no longer there.

Wait, I was gonna say there's no incubators in Cleveland now

to is really a group immigrants. That, you know, two Renaissance men one was an architect, the other was a, a flute, a concert, flute, flutist, and they had this great idea. And we invested in 2005, and nine years later sold the company to Oracle for over half a billion dollars. So that was a great one.

Yeah, that's great. Did you get them to move to Pittsburgh? I don't remember that.

No, they couldn't move here.

But it was funny, because they were both from Israel originally. But you know, they, they both still live in Cleveland. They love it there.

That's great. Yeah, they can they can live really well. That's great. So what, um, so what else about pbca? Do you want everyone to know should if people are listening today, and they're entrepreneurs, is it worth their time

attending the event,

it is just because I think the content from the speakers and the panels is speed is is very, very good. There's a lot of there's a couple of networking sessions as well. A virtual cocktail hour and other some other networking events that people are going to be parsed off will give people an opportunity to, in smaller groups be able to interact and at least introduce themselves to, you know, some of the the investor attendees to the to the event, you know, in terms of the companies that are presenting that's already been closed off, because there's some preparation that needs to happen there.

But I know I think,

as I mentioned, there's a number about, you know, obviously, investors from out of the area, in some some virtual networking events, at least will give people an opportunity to introduce themselves, and maybe make some connections. Because the thing about the fair in person has always been more about the networking than anything and, you know, hopefully, we can continue that, you know, in the virtual format, and maybe even expand on it, but it's definitely worthwhile. You know, it's unique in that there's going to be so many investors, you know, at participating.

Well, what, um, you know, the thing that I liked about the venture fair is that it gave people regionally beyond the region a, coming to Pittsburgh, they would come to Pittsburgh and get to know us, what do you think, are some of the biggest trends right now, in terms of opportunities? Is there any sectors? Are there anything that you're bullish on?

Well, the you know, obviously, as a region, you know, this is pretty staggering. If you go back and look at the, the VC numbers in Pittsburgh for 2019 you know, it's really really staggering the amount of corporate VC money and you know, the inner innovation works and he Why put out their annual you know, study of you know, VC investing using the pitch book deals but you know, there's there was over over 3 billion invested in Pittsburgh last year, but what's interesting is the when you really look at it, it was heavily swayed by the by the time his vehicle investing, you know, corporate deals VW. And so, you know, we've we've participated that as well. We have great company that came out of Nash out of the natural robotics Engineering Center locomotion, economists trucking, that has had some great news recently, in terms of their first successful pilot the first commercial order with NASA logistics. And there's some other big news there, it's going to be announced in the very near future. So the autonomous the autonomy space has, has, has really, you know, sparked a ton of investment here. And, you know, I think, you know, a lot of that breeds, you know, other spin offs and things that happen. The National robotics Engineering Center has been a huge asset out of Carnegie Mellon, we're also industries in rd squared robotics that came out of and reki you're gonna Pettersen the CEO should have him on at some point, Audrey, because he's great to

talk about, you know, what's going on in terms of,

you know, robotics, but now there's, there's so there's so much great things going on here. So many great things in terms of the startup community. And which pails you know, a little bit by the fact that we don't we don't have a lot of venture capital here. So we have we all have to do everything we can to help these startups get funded. And, and, you know, we're, you know, Draper, and, you know, the next thing we're doing will be all be a big part of it. Mm hmm.

Well, you know, are there you mentioned that there's going to be a panel on life sciences. And just over the weekend, I saw this great slide. I don't know if it came out where it came out of it came from an investor. And it's a it's a, it's a one slide, and it talks about what's underhyped, you know, and what's neutral and what's overhyped. And I love this because it validates what I've been thinking about. And it talks about what's really under hyped and where the opportunities lie, include Life Sciences, life sciences as as an that is a lot of the research that comes into our region. Are we going to see some new life sciences, we've had some interesting people on our show that have been in the, in the life sciences space, where I feel like, there may be some big opportunities for us here in Pittsburgh in life sciences. Do you have any comment on that? I was going to also talk about a couple of the other ones. That or I think of the opportunities, and I sort of agree with that. Jonathan, who did we have on the show, the woman who's running the life sciences company, cyto,

Risa Whalen was on the show, Satan agents. Yeah, very exciting stuff.

Right. And so essentially, she's using just a core team and then brokering out by using other labs and other scientists to help solve some problems, which is it, which is really an interesting model in life sciences, Are there going to be a bunch of life science companies that will be presenting at PVC, a,

there, there, there, there are in to your point, it is, you know, amazing, the amount of interesting, you know, technology and life science in the life science area. You know, principally you know, coming out of the University of Pittsburgh, hey, you know, not to discount CMU, there's some interesting life science, things that that happen there as well. But obviously, you know, UPMC, and the Pitt connection, there's so so many interesting things that are going on, there are a number of I don't know the percentage, but in terms of presenting companies that are pitching this week, there are a number of life science companies and a number of locally based life science companies that are presenting. The other thing that's interesting is part of the event. That has been great in the past, and I think it's gonna be really good is on Thursday, starting at 1030 is the university you know, Tech Talk technology showcase where it's actually a judge competition. And actually, very interesting decision aside that the three judges this year are all are all women. And I think there's 13 or 14 presenting companies in the university technology showcase, a number of those are from Pitt, and a number of those are life science companies. And there's actually surprised money, it's not big, but you know, help some of these professors who are working on things to get, you know, to, you know, help help launch their business and get things going. But so that that's a very interesting, you know, part of the whole event this week.

And that's, that's great. That's good to hear. And then that the number one that this slide shares, which I agree with, is the most under hyped and biggest opportunity is an agricultural tab.

You know, it is it's drawn out, it's getting more and more attention. We haven't seen a ton of that, obviously, in this market. You know, there's a, you know, five seasons you know,

obviously with the indoor

farming and their robotic

farming You know, we haven't

seen a ton of that in this market. But nationally, certainly there's more and more interest in it. And honestly, it's like Penn State. And you know, you'd think you'd see more and more of that, you know, you know, more and more companies in that space.

Yeah, we've seen it like with pit moss and with bloom fit field AI, just as a couple of, you know, just some a couple of examples that are, you would say, they're ag tech. And then the other two, which I'm which one is no surprise is security. Right. Anything on the security side and space?

Yeah, obviously, robotics here in the space side.

But even just beyond that, right, we're seeing a proliferation of space every everywhere. So I don't know if that's if you're bullish on any of these domains.

You know, we've, we've been

cybersecurity investors over the years.

We invested in out of our second fund a company bid armor, which we're seeing you

Oh, right, Patrick. Right.

Which, you know, was it was

acquired back four or five years ago. Right.

And,

oh, and this is Cybersecurity Awareness Month.

Oh, is it? Okay, I didn't know that.

I didn't know. Okay.

The we've got a very interesting cybersecurity company in Columbus, Ohio, as well called aware, which is interesting. It's kind of

taken off with

the whole COVID. And the work from home, they do security around enterprise collaboration, you know, things like Slack, and Yammer,

or, you know, that Columbus, Ohio is a suburb of Pittsburgh,

you know, it is it? I get it. It's only three hours away. It's an easy drive. But

yeah, but I mean, as soon as we have a little loop, it's up. It's 10 minutes.

Exactly. Looking forward to that.

So as we wrap up, what what are the some of the most important things that you want to articulate that perhaps I have not captured?

Well, I think, you know, it's a most important is, you know, I'm I'm very bullish on the Pittsburgh tech, startup ecosystem. And, you know, my partners and my firm, firm believers that it's great, because, you know, you've been around for a long time, and you think back 20 years ago, where we were in this market, and how far we've come. But, you know, frankly, never been in a better position. In terms of interesting opportunities, and technology, given the all the things going on here. So just, you know, you know, you know, Pittsburgh, it's always been slow and steady. And, you know, we continue that, but there's just, I think this is a very interesting time in terms of the future of what can really happen, because there's so many great things here. And the startup communities never been in a better spot from, you know, in terms of support and community involvement. And, you know, hopefully the the venture fair this week, we'll, you know, continue to help support.

Yeah, we'll definitely help put an eye on Pittsburgh, and the cohesion of the tech community and see what the opportunities are for sure. It always helps with our, with our national exposure. And that matters, because believe it or not, you know, now with now with COVID, and working from home, and some of the shifts in the way people are thinking, you know, it's definitely going to be a new world in terms of how people think about sense of place. So sure, exposure.

Yeah. Do you guys do a great job? I mean, you're obviously one of the big oars in the water here is we, you know, try to promote Pittsburgh and keep things keep things rolling. But you know, thank you guys for keeping keeping this event going. You know, this is tremendous.

Well, thank you. I everyone. bvca check them out, check out the Three Rivers venture there. If you're an entrepreneur, if you're interested in even if you're an angel, and you're an angel investor, and you're interested, it's worthwhile to see the kinds of companies that are out there, what they're working on what some of the trends are, and get to know some of the people who are, you know, against all odds building, building the future for you know, that's, that's what entrepreneurship really is. So I want to thank Mike Stabler for he's the chair of PV of pbca. He's been very active in the community for a long time. So if you don't know him, you can probably find him on LinkedIn. He's easy guy to get ahold of and if you have any questions, don't hesitate and I appreciate it. everyone's time. We will be back here tomorrow. Thank you, Jonathan. Thank you, everyone else, stay safe. And thanks again, Mike Stabler.

Thank you.

Transcribed by https://otter.ai