20VC Why Raising A First Time Fund Is Like Raising A Seed Round, Why We Need New and Different Fund Models & Why Longevity Is The Most Rewarding Place To Invest with Laura Deming, Founding Partner @ The Longevity Fund

In this episode, Harry Stebbings interviews Laura Deming, a prodigious talent who, at just 14, was accepted to MIT, dropped out to join the Teal Fellowship, and founded the Longevity Fund, the first VC dedicated to funding high-potential longevity companies. Deming has raised $26 million across two funds and has backed groundbreaking biotechnology firms such as Unity Biotechnology and Precision Biosciences. She also established Age1, a startup accelerator for longevity companies. The conversation delves into Deming's unorthodox entry into venture capital driven by her passion for longevity science, the challenges of raising a first-time fund, the importance of founder-driven value in biotech, and the investment landscape that includes an influx of capital yet faces misconceptions about market timing and risk. Deming's approach emphasizes early-stage investment, opportunistic diversification, and the significance of co-investors in supporting biotech ventures.

• Laura Deming is a founding partner at the Longevity Fund.
• The Longevity Fund is the first VC dedicated to funding high-potential longevity companies.
• Laura Deming has raised $26 million across two longevity funds.
• She has backed companies like Unity Biotechnology, Precision Biosciences, Metacrine, Navitor, and Alexotherapeutics.
• Prior to starting Longevity Fund, Laura was accepted to MIT at age 14 to study physics but dropped out to join the Thiel Fellowship.
• Laura also founded Age1, a four-month startup accelerator program for longevity companies.

"I'm thrilled to welcome Laura Deming, founding partner at the Longevity fund, the first VC dedicated to funding high potential longevity companies."

This quote introduces Laura Deming and highlights her role in pioneering venture capital investment in the longevity sector.

• Laura was interested in longevity and ways to extend healthy human life since childhood.
• She started the Longevity Fund while at MIT at age 16, aiming to fund scientists in this field.
• Laura moved to California and began what became the Longevity VC about seven years ago.

"It was a bit of an unconventional story. So I was really interested in longevity and ways to make humans live longer, healthier lives. Since I was a kid. Actually, when I started the fund, I was at MIT. I was 16 at the time, and I really wanted to be able to fund more scientists to do this work."

Laura's quote explains her early interest in longevity and her unconventional path to founding a venture capital fund dedicated to this field while still a teenager.

• Longevity involves understanding and potentially controlling the aging process.
• Advances in the past three decades have shown that aging is malleable and can be genetically controlled.
• There are significant differences in longevity among different animal species, with some showing increased fertility and decreased mortality over time.
• The key question is to what extent human longevity is fixed and whether it can be influenced by potential drugs in the future.

"So we now know that it's possible to genetically control aging, that aging is malleable."

This quote summarizes the recent scientific understanding that aging is not a fixed process and can be influenced through genetic control.

• Laura's interest in longevity was sparked when she found a webpage by Cynthia Kenyon discussing aging science.
• The page described the control of aging in a worm species through genetic mutations, implying potential control over aging in other species.
• The possibility of applying this knowledge to humans, despite the longer and more expensive testing cycle, was a significant motivator for Laura.

"And basically what it implied was that we're able to control aging and just modulate it like we can just decide how long we want certain worms to live and tune their parameters to fit that."

The quote captures the moment Laura realized the potential of controlling the aging process, which drove her passion for the field.

• Young founders are becoming more common in biotech.
• Despite the increase in biotech venture capital, the number of companies started has remained stable, suggesting a talent limitation rather than a funding issue.
• There is a hunger for young founders with new company ideas in biotech, indicating a possible need for better education to encourage entry into the field.

"I used to think that young founders weren't really seen in the space much, and the problem there was funding wasn't available and the climate wasn't right."

Laura's quote reflects on the changing landscape in biotech where young founders are now more welcomed, but there remains a gap in the number of new companies being founded.## Career Paths for PhD Graduates

• Biotech PhD students typically see limited career options, often restricted to industry work or academia.
• There is a general misconception among biotech PhD graduates that starting a company requires significant initial capital, which they believe is beyond their reach.
• Education on the actual capital requirements and the availability of venture capital could encourage more biotech entrepreneurship.

"If you ask a biophd student, typically they'll say, oh, well, I might be able to go into industry or get a professorship, but they don't really consider entrepreneurship."

This quote highlights the narrow career vision biotech PhD students have, often overlooking entrepreneurship due to misconceptions about capital requirements.

"It's really an education point that large amounts of capital are required in this space, but they're not all required up front."

This quote clarifies that while significant funding is needed in biotech, initial requirements are much more manageable, and there is a willingness from investors to support new ventures.

• Biotech founders are typically more cautious and scientific compared to their counterparts in other sectors.
• Scientific validation in biotech can take longer due to the need for correct conditions and comparability.
• Consumer sector founders can rapidly test and adapt through live A/B testing, which is not as feasible in biotech.

"I think that biotech founders tend to be a lot more cautious and scientific."

This quote reflects the inherent caution of biotech founders, owing to the nature of the industry that demands rigorous scientific validation.

"In biotech to get correct conditions and be able to compare things, sometimes it takes a bit longer."

This quote acknowledges the longer timelines required for scientific testing in biotech, which influences the mindset and approach of founders in the industry.

• There is a surge of capital investment in biotech, driven by its significant potential impact on health and society.
• Investment excitement can lead to misaligned expectations regarding the payoff timelines.
• Historical success stories in biotech, like immunooncology, took decades to mature, suggesting that correct scientific bets can still face long waits for financial returns.
• Market timing is challenging in biotech due to the protracted development and approval processes.

"I think biotech is really fascinating in that it's one of the most important things you could possibly invest in."

This quote underscores the high social and market potential value of investing in biotech, especially compared to consumer apps.

"But I think there might be a difference between the expected payoff timelines and kind of the actual payoff timelines for some part of that excitement."

This quote points out the discrepancy between investor expectations and the reality of biotech development timelines, which can lead to misaligned investment strategies.

• Investing in longevity is seen as less risky and more likely to succeed due to broader testing opportunities and the general applicability of the pathways involved.
• Therapeutics in the longevity space have the potential to treat multiple age-related diseases, increasing their chances of success.
• Speed to clinical trials and efficacy once in trials are optimized in longevity-focused investments.

"I literally thought it was the least risky, most likely to work part of biology in general."

This quote explains the counterintuitive belief that longevity is a less risky and more promising area for investment within biotech.

"The therapies that we invest in sort of work in all the diseases."

This quote highlights the broad applicability of longevity-focused therapies, which can be tested across multiple diseases, improving their likelihood of success.

• Traditional biotech investment models, such as building internally and funding internally, have mixed views among investors.
• Some believe this model increases the likelihood of success and equity stakes.
• Historical value creation in biotech suggests that a founder-driven approach can be highly successful.

"It's great for the vcs for certain parameters."

This quote acknowledges the benefits of traditional biotech investment models for venture capitalists in terms of control and equity.

"But I think it somewhat loses track of where the value has been created in biotech historically."

This quote suggests that despite the perceived benefits of traditional investment models, historically, biotech value creation has been significantly driven by entrepreneurial founders.## Founder-Centric Approach in Venture Capital

• VC firms often select specific pathways and pursue them, but a founder-centric approach is distinct in its focus on the individual founder's potential.
• Belief in the importance of founders is based on the unpredictability of a company's trajectory and the critical role of the founder in navigating it.
• Genentech's initial stance against certain areas, which later became major revenue streams, highlights the limitations of a rigid investment thesis.
• The success of companies in Laura's first portfolio was attributed to unpredictable circumstances and the decisions and resilience of the founders.

"But I think there's a large difference between really appreciating the selection of a wonderful founder and going behind them."

This quote emphasizes the distinction between simply recognizing a good founder and actively supporting and investing in their vision and capabilities.

"It's the places that they thought they'd never go into."

This quote illustrates how initial biases against certain areas of investment can be overturned by the evolving success and direction of a company, driven by its founders.

"I think one of the reasons that we're excited both the longevity and through our accelerator age one to back, earlier stage founders, is just having seen so many of the greatest companies, and even in our first portfolio, so many of the best outcomes be driven by kind of really unpredictable circumstances."

Laura explains that their excitement for backing early-stage founders stems from witnessing the significant impact founders have on the success of companies, often in unforeseen ways.

• Laura found the LP fundraising process confusing and disorienting, especially as a young dropout from MIT with no prior experience in raising financing.
• Initially, she attempted to contact billionaires directly, under the assumption that they would be potential investors due to their capital resources.
• Pitching a first fund is likened to pitching a startup company, with the initial investors likely to be angels or personal connections.
• The importance of generating deal flow before raising a fund is highlighted, presenting a challenge for new VC fund managers.

"I think pitching your first fund is a lot more like pitching a company than it is a fund in its later stages."

Laura compares the process of raising a first fund to that of raising seed capital for a startup, emphasizing the personal and early-stage nature of the endeavor.

"But I think the process for raising your first fund is a lot more like raising a seed round for a company than it is like any kind of mature venture fundraising process I've seen."

This quote reinforces the idea that the initial fundraising for a venture fund is more analogous to a startup's seed round, with a focus on personal connections and individual investors rather than institutional ones.

• Laura reflects on her early success in science, which gave her a sense of resilience and preparedness for the challenges of raising a fund.
• She acknowledges the difficulty of raising a fund without a clear context or understanding of the expected timeline and effort required.
• Laura's experience underscores the importance of perseverance and the expectation that significant challenges will arise in the pursuit of ambitious goals.

"But, yeah, I definitely think that raising your first fund, it's a pretty tough go, especially when you don't have much of a set of anecdotes to rely on that give you context for how long it should take or how hard it should be, or even feedback on kind of what you're doing, right or wrong during that process."

Laura discusses the challenges of raising a first fund, which is compounded by a lack of context or benchmarks to guide the process and evaluate progress.

• Unity Biotechnology's discovery was a turning point for Laura, providing a tangible example of the type of investment they were seeking.
• Demonstrating concrete progress and showcasing a strong founder and compelling science helped to convince investors to commit capital.
• The tangible, actionable deal flow was critical in gaining investor confidence, especially with the ambitious goal of longevity science.

"And that was the first time that it clicked for people. I think, when they saw kind of the concrete progress that was being made, that's people have decided, okay, look, we can really come in and do this."

Laura recounts the moment investors were convinced to invest, highlighting the importance of showing concrete progress and a strong investment opportunity.

• Laura's fund tracks 60 to 90 different mechanisms of longevity and invests opportunistically across various biological mechanisms.
• The portfolio includes a mix of platform companies and therapeutic approaches, as well as diversification in biological and cell molecule categories.
• The fund's diversification occurred naturally due to the rarity of finding alignment of all factors in a single investment opportunity.
• As the longevity space grows, there may be more strategic portfolio allocation, but currently, the fund operates with an opportunistic approach.

"So without even consciously really pushing for it, we're diversified across almost every axis you could think of."

Laura explains that their diversified portfolio came about naturally due to the nature of the longevity investment space and the opportunistic approach taken by the fund.

• The longevity space requires careful consideration of reserve allocation due to uncertain milestones and potential lack of downstream investors.
• Laura's fund concentrates capital into the best companies, reflecting an approach that balances diversification with strategic investment in standout opportunities.

"And so we love to have. I think eventually, as the space grows, we'll probably think a lot more constructively about what exact proportions of our portfolio might be best allocated to different things."

Here, Laura indicates that while the fund is currently opportunistic, there may be a shift towards more deliberate portfolio allocation strategies as the longevity space matures.## Early Stage Investment Focus

• Longevity Fund is primarily focused on early-stage investments.
• They allocate a portion of their funds for follow-on investments but emphasize the importance of the first round.
• The majority of value is expected to come from the initial investment round.

"So in our first fund, we didn't even expect to invest that much in subsequent rounds, we were really focused ones."

This quote highlights the fund's strategy of concentrating on the first round of investment, implying that they believe the first round is critical for setting up a company's future success.

• Longevity Fund selects co-investors with a strong track record.
• Co-investors are expected to provide support and help attract new capital.
• Strong co-investor relationships are seen as a source of stabilization as the fund grows.

"We just really strong select for amazing co investors and try and help the companies that we're excited about raise from people that we really trust and respect."

The quote underlines the importance Longevity Fund places on choosing co-investors who are not only financially robust but also trustworthy and respectful, indicating a strategic approach to investment partnerships.

• Longevity Fund has not experienced a lack of downstream investors for their companies.
• They acknowledge the potential risk of new investors quickly exiting the biotech sector.
• The fund remains cautious and takes investor stability into account when forming syndicates.

"I mean, I'd say empirically for us, it's not been true. All of our companies that have wanted to have been able to attract full on capital."

This statement refutes the commonly cited concern about the scarcity of downstream investors in biotech, at least from Longevity Fund's experience, suggesting that there may be misconceptions about investor interest in the sector.

• Laura Deming's favorite books are "Novakov: Notes from the Beheading" and "Mark Twain's the Mysterious Stranger."
• These books are chosen for their exploration of what it means to be in a book by renowned authors.

"Probably the two books, Novakov notes from the beheading and Mark Twain's the Mysterious Stranger."

The quote indicates Laura's literary preferences and suggests an interest in meta-narratives and the craft of storytelling by acclaimed writers.

• Laura Deming advises against recommending medical therapeutics without solid evidence.
• She believes in the basics: exercise and a healthy diet.

"I don't want to recommend any medical things. I think there's some evidence for certain therapeutics, but it's not solid enough that I recommend taking any of them."

Laura's response emphasizes a cautious approach to health hacks, prioritizing well-established health practices over unproven medical recommendations.

• The most memorable LP meeting for Laura was when a mentor agreed to invest early on in their journey.
• She expresses gratitude towards early believers in their fund.

"Most memorable is probably just the montage of all the LP meetings where there was kind of like a raised eyebrow, sort of glossy gaze and then a complete lack of focus in the subsequent 55 minutes."

This quote reflects on the challenging experiences of fundraising and highlights the significance of early support from investors who show confidence in the fund's vision.

• Laura believes that action often precedes motivation.
• This philosophy suggests that taking the first step can lead to the motivation needed to continue.

"I think it's one of the most powerful underutilized acts about humans."

Laura's quote underlines her belief in the power of initiating action to create momentum, a principle that can be applied to both personal and professional endeavors.

• Laura would like to see more diversity in fund types.
• She feels that the industry is constrained by a perception that new fund structures are difficult to raise.

"I think the diversity of fund types. I think we've been artificially constrained by a perception that it's hard to raise a new structure of fund because lps just kind of like amorphously won't like it."

This quote suggests Laura's desire to innovate within the venture capital industry by exploring different fund structures, which she believes could unlock additional value creation.

• Laura has learned the importance of measuring progress and iterating quickly.
• She emphasizes the need for rapid adaptation and improvement in the VC industry.

"It's possible to measure progress and iterate a lot faster than you might think. And it's really important to do that."

The quote conveys the lesson that Laura has learned about the value of agility and responsiveness in venture capital, which can lead to better outcomes for investments.

• Laura once tried a diet consisting only of bacon for a month.
• This experiment expanded her thoughts on physical resilience and dietary possibilities.

"I once tried eating only bacon for a month, and that was before I was vegetarian."

Laura's personal experiment with a bacon-only diet shows her willingness to explore unconventional ideas and challenge preconceived notions about nutrition.

• Longevity Fund recently co-invested in System1 along with Pfizer Ventures and CRV.
• The investment was made due to the potential for genetically distinct models of brain diseases and the quality of the founders.

"So we just had system one announce their round. We're super excited to be co-investing in them along with Pfizer Ventures and CRV."

This quote reveals the most recent public investment by Longevity Fund and the reasons behind their decision to invest, indicating a strategic choice based on scientific potential and founder capabilities.