187. Transformative Tech for Old World Industry (Jim Kim)

187. Transformative Tech for Old World Industry (Jim Kim)
Nick Moran Angel List

Jim Kim of Builders VC joins Nick to discuss Transformative Tech for Old World Industry. In this episode, we cover:

  • Quick Backstory/ Path to founding tech?
  • Big news a few years ago that Formation 8 decided not to raise a fund 3. What happened with Formation 8 – why the decision not to raise fund 3?
  • Tell us about the thesis at Builders.
  • Why do you think these old world industries haven’t been re-invented?
  • I’ve worked in some old world industries myself… that move quite slowly. I’m curious if you think the timeline is a bit longer for tech companies to scale in these industries, if, for nothing else than the decision makers are much more methodical? 
  • What are some of the key technology characteristics you’re looking for in the companies you back?
  • Aside from technology, what are the other key ingredients your hunting for?
  • Vertical integration… building your own brand and own the customer relationship vs. serving many others as a component provider?
  • What percentage of your new investments are serial founders vs. first-time and how does your approach differ with each?
  • You’ve stated that “Synthetic biology will be the most important enabling technology of our lifetimes.” Why?
  • Talk about some exciting innovations in the science and data space and what industries will they be most beneficial to?
  • How do you measure success with the companies in your portfolio and how do you help them get to that place?

Guest Links:

Key Takeaways:

  1. Through the experience of building his own tech startup and raising venture capital, Jim realized that he really wanted to be on the other side of the table – being a part of multiple different companies and learning about how they plan on changing the world is truly fascinating to him.
  2. Jim started out in tech doing early stage industrial and technology investments.
  3. What differentiates Formation 8 from other VCs is their cross border approach, they’ve built out teams in Shanghai, Beijing, Singapore and Korea to invest in the best tech companies in the US and bring them over to Asia for business development.
  4. Using this cross border approach was a key component of their strategy at Formation 8 and helped them get into some very competitive investments at lower prices.
  5. Jim states that you don’t make money by just following the herd, in any area of this industry – you need to find what truly differentiates you to be successful. That was the key lesson he learned at Formation 8. 
  6. At Formation 8 they had a massively successful fund 1 and also fund 2 where they raised $450M. Jim and his partners still continue to manage both high performing funds together.
  7. Jim began Builders VC after he and his partners at Formation 8 came together and decided to take advantage of their varying/unique styles of investing and create their own separate platforms.  
  8. When looking back, they could have gone on to raise a fund 3 and built a mega fund but, being that the bulk of Jim’s experience is in Series A early stage investing it didn’t make sense for him. He states that a mega fund is not necessary during the early stages, in fact it is a detriment. 
  9. Builders VC was created with a focus on being truly differentiated, building a strong team and maintaining a traditional series A approach.
  10. Jim shares 2 keys points on how he was able to differentiate Builders from other firms – 1. Investing where other people haven’t. 2. Looking at the biggest industries where IT spending is low and tech had not yet penetrated.
  11. They found that the antiquated industries where IT is not being utilized to it’s full potential is where they want to invest. Specifically Agriculture, Industrial Tech, Real Estate, and Healthcare.
  12. The reason why these antiquated industries haven’t been reinvented yet is because in most situations a specific business model has been used for generations therefore the willingness to adjust and use tech solutions has been minimal.  
  13. Today, we are beginning to see a shift into the new generation who understand technology more and are willing to adopt new methods or technologies to transform the space. Jim feels it is a great time to get into these old world industries. 
  14. With synthetic biology we are able to develop products that have the same novel properties, that perform better and in a way that is less harmful to the environment. This has the potential to do things that we have never seen done before and provide massive benefit across material science, chemicals, industrial and even the healthcare arena. 
  15. In healthcare, synthetic biology has been used to manufacture drugs and the precursors to create some of these drugs. To be working with entrepreneurs that are creating the platforms that will ultimately lead to these new products being developed is massively exciting for Jim.