Last week, we talked with Kindred Ventures, a small, nine-year-old, San Francisco-based early stage venture firm that, despite investing in a lot of nascent startups — more than 100 to date — takes a generalist approach, investing in AI, climate tech, consumer internet companies, crypto deals, fintech startups, health startups, mobility startups and the outfits developing tools and infrastructure.
It’s a little like trying to boil the ocean, yet the firm’s two managing directors — Steve Jang and Kanyi Maqubela — have had enough success that Kindred’s investors last year agreed to let them up the ante considerably. Indeed, after closing a $56 million fund in 2019 and a $101 million fund in 2021, Kindred last year closed a $200 million fund — plus, for the first time, a later-stage fund to back growth-stage companies in Kindred’s own portfolio and outside it. For the latter, they raised $112 million in commitments, bringing their total assets under management to $550 million, including some special purpose vehicles that they have raised along the way.
The outfit’s biggest wins to date — Uber, Coinbase, Postmates — have come from an angel fund, but the outfit has no shortage of promising newer bets, including on Humane, a still-stealth startup founded by former Apple team Imran Chaudhri and Bethany Bongiorno that received a seed investment from Kindred, and whose $100 million Series C round in March was also led by Kindred.
We talked about a range of things with Jang and Maqubela and we’ll have a podcast from that chat available soon; in the meantime, excerpted below is part of our discussion that centered on the future of startups, and whether the ongoing advancements in AI will mean more of them, or far fewer.
TC: Because people are so interested in all things AI right now, can you talk a bit about the companies that you have funded?
SJ: We’ve focused a lot on frontier technology over time, and going after 10- to 20-years-story-arc companies. Humane is one of them. We’ve invested in a company called Hourone AI, which is a video AI company out of Tel Aviv in Israel. We’re early investors in Tonal, which has used a lot of computer vision and machine learning historically and is now upgrading a lot of what it’s doing in that area and bringing forward a lot of AI-related features. We have companies that are in robotics; we have companies in supply chains. They’re all tapping into the opportunity that they’re seeing, with not only generative AI but industrial AI, too.
On the generative AI front, there are these foundation model companies, as well as, right now, many more application layer companies, hardware companies, infrastructure and tooling companies. But over time, it’s still not clear to me whether we’ll have four companies in the world or four bazillion, given how empowering AI appears to be.
KM: Oh, gosh, there will be way, way, way more companies. It’s part of the trend of moving up the abstraction layer and allowing more people to become builders. It used to be the case that if [wanted] to build something, you needed to have a certain skill set, which was actually confined to a really reasonably small segment of the population. But that first wave of computing gave everybody superpowers and each subsequent wave since has only given further superpowers. And so what we’re now looking at — and you’re seeing this almost across the stack — is cardiologists that can interface with really complex large, real-time datasets and do really interesting manipulations of them without having to code. You’ve got designers that can design full-stack websites and full-stack platforms and applications on the web without having to code — and that’s just at the level of code. There are so many other ways that intelligence is compounding because of these systems, so I think there’s going to be a massive explosion of new startups that are enabled by the fact that we are now allowing more people to have access to more extremely sophisticated leveraged software tools.
Are you at all worried that this explosion could destroy the venture business? Where is the scale if everyone is capable of running their own company with these tools?
SJ: This question was asked a lot right around the time of AWS and iOS and Android. These three things were all launched [around the same time] and people wondered: does this mean that anyone can start a company? The ability to get started is much easier, which is good for society.
As for investors, the day of having pretty controlled access to startups and this phony network play in your favor — based on pedigree and brand — maybe that game has opened up. What we love about it is that it gets many more entrepreneurs into building their product ideas out, and I think that’s overall great. So I think for the old guard that might be problematic, but for the new guard of investors, whether it’s angel investors, small seed funds or or large lead seed funds, this is great.
But if everyone has these super sophisticated new tools, doesn’t everything eventually become commoditized?
KM: We actually had a discussion about something similar last night. I guess the first thing to think about is: there are probably an infinite number of ways to customize information, particularly when it comes to media and content, and that customization actually results in extraordinary consumer surplus and extraordinary power for the end user. The ability to consume highly personalized content, to create highly personalized content, to have that content be flexible — applied across industry, by the way, so in health care and care coordination, communication, mental health, friendship, social networking — is really, really powerful.
The other thing that I think is worth noting is we are in a really interesting place right now. Steve mentioned a period of time when this amazing confluence of new platforms all came to market at the same time. Then there was a pretty long period after that, where we were all just sort of enjoying mobile and SaaS. Now, we’re going to need a new way of thinking about how business models get activated, new metrics and new benchmarking, and that’s really exciting, particularly for an early-stage investor who’s focusing on products and the starting point of innovation. But it is going to look different than the last cycle and that’s by design the same way that the mobile and SaaS were very different from the first internet cycle, which looked very different than the cycle before it.