For the company that calls itself “the first audit in deep technology,” the latest audit SOSVThe latest $306 million fund took a little longer than founder Sean O’Sullivan would have liked. This is probably less of a reflection on the company than an indictment of the macro environment: Ask any VC and they’ll tell you that the past two years haven’t been the best time to raise money.
“Given our track record, our return rates, our proven track record of success, all the unicorns that have come out of SOSV in the past, you’d think we would have closed it in three months,” O’Sullivan told TechCrunch. recent interview. Instead, it took about a year and a half, with the most concerted effort occurring in the last six months, according to O’Sullivan.
“The attention that’s out there in the market is the highest we’ve ever seen it,” he said.
Despite the painstaking and time-consuming process, SOSV managed to achieve a new milestone:
At $306 million, the new fund makes it one of the largest early-stage deep-tech venture capital pools raised in recent years.
“We’re focusing and doubling down on deep technology,” O’Sullivan said. “This concentration allows us to address an ever-expanding opportunity within climate because there are so many industries in climate.”
Market caution is a reality of high interest rates, but for O’Sullivan, it’s also a sign that deep tech investment isn’t moving fast enough. Many investors have realized that the effects of climate change on the entire economy present a number of opportunities. For O’Sullivan, investment in the sector is also imperative.
“This is truly a war effort. We need to stop pretending this is just another investment topic of the day. This is an existential crisis for the planet,” he said. “So we’re tackling it with that intensity and that speed that we think the rest of the industry needs.”
The speed and intensity could mean placing more bets than before, as some companies and accelerators do. O’Sullivan takes a “less is more” approach.
“We’re seeing other people going in a different direction where they’re trying to cover the whole landscape with about 200 companies in a cohort,” he said. “Instead of the accelerator point of origin, we’re more like a studio these days. We’re doing fewer companies, more like 80 deep tech companies a year. And we’re bringing more capital and more attention and more service to them.”
Continued focus on biology
O’Sullivan said that more than a decade ago, in the days when SOSV was more like an accelerator, only about 20% to 30% of startups in its programs were able to find further funding. This bothered him, and over the years he changed the company’s approach, including opening the Hax and IndieBio programs, two SOSV programs that nurture deep-tech startups by giving them space to create and experiment in addition to operational support.
The result, O’Sullivan said, is that 60 percent to 70 percent of companies now find funding after SOSV’s initial upfront checks, which range from $250,000 to $500,000. In general, every $100 million the company invests in startups attracts about $2 billion in follow-on capital, he added.
SOSV’s new fund will continue the firm’s focus on human and planetary health, an emerging trend among deep-tech investors who have recognized that the two sectors are closely intertwined. O’Sullivan said SOSV plans to invest about 70% of the funds in climate technology companies, 25% in health technology and the remaining 5% will be earmarked for opportunistic investments.
Limited partners participating in the new fund include a mix of family offices, institutional investors and corporate venture capital, the latter of which contributed 25% of the total capital.
“The reason it’s so high is because so many companies are the ones who need these carbonization technologies,” O’Sullivan said.
The company will continue to seek startups with a range of technologies, from robotics to minerals and biomaterials to biomanufacturing. SOSV will continue to focus on those using biology to address climate change. O’Sullivan believes that, in many cases, biological processes will win out. “Biology can be 30 to 300 times—even 3,000 times—more effective than chemistry at reducing the greenhouse gas output of these systems.”
Climate “is really a natural global problem. To deal with that, you need a greater level of efficiency in your means of production,” O’Sullivan said. “We have a special place to serve because we’re in deep technology, because we really get into biology, we get into chemistry, physics and electronics. And all this is necessary to change the means of production.”
