Set in the US General Catalyst is one of the largest risk capital companies worldwide, with a varied portfolio of companies in various industries, including healthcare.
Alexandre Momeni, a partner at General Catalyst focused on AI infrastructure and health/bio, sat down with MobiHealthNews To discuss the perspective of the investor on financing emerging technologies, the risks related to these investments and the potential for technology to change society as a whole.
MobiHealthNews: What do you consider when investing in emerging technologies?
Alexandre Mommeni: In the first place, at General Catalyst, when we invest in the early stage, and I know you will hear this from every investor, but it is true, we just really focus on the founders. Often, especially if you concentrate on Frontier Tech, the founders have a Ph.D. In that space, many years in the best institutions will spend the construction of technology in that space and they will have a huge unfair advantage for every knowledge you can come up with.
The most important thing, I think, is really focused on the founders, understanding what they have actually achieved, not only where they have been, and what their pace is of learning and some kind of intuition they have about the direction in which the world moves.
What fascinates you, I think, we all invest in technology, especially when we invest at the border, the fact that when technology suddenly goes from science to engineering or a kind of that CUSP, you usually start seeing, a pretty important platform change in the world. And so you start to be confronted with all these exciting additional questions, what are, what are the products that can be built on top of this? And how will business models work to bring this technology to the world?
Our role as ventop capitalists, if you want, becomes more relevant because we can draw lessons from history and play lessons about the way in which markets are functioning today to better understand how the world of tomorrow will be architated.
Brain-computer interfaces are of course very vogue, but have been around for many years. We recently invested in a company in that space. And of course there is invasive in the BCI room and there is non-invasive. These are very different levels of risk and will therefore serve different populations, at least to start.
But whether it is on the medical side or on the side of the consumer, we have a fixed conviction that today the technology has evolved enough that we are probably less than a decade removed from real, at least like reading BCI and then possibly read and writing that I think some of the more invasive companies are doing today. That is exciting if you think about all the different producer experiences and equalizers that could create it for society.
At the same time we have a responsible innovation thesis and we have to ensure that when we invest in this space, we do this with founders who are basically in what they try to achieve and tailored to our values. Because, as with any technology, especially with a here, which effectively enters the brain, we want to ensure that we support companies that use it to create both economic and social value instead of using them for nasty or destructive means.
MHN: What fascinates you most about these technologies, and what makes you nervous as an investor? Are there types of technologies that interest you in which you will always consider investing?
Momeni: We are currently looking at most BCI and surgical robotics, including autonomous robotics. We spend a considerable amount of time to look at the development of medicines and the design space of medicines. So what excites us as a whole are companies that usually develop, software, but we also look at hardware that can create a meaningful step change in society in the way things are currently being done.
The question that is important to ask is: “So what?” If we have this breakthrough, so what? And when the answer to the “So what?” Is this a profound impact on the world, we will be enthusiastic.
Just like BCI, if it works, it will have a profound impact, not only on patients who are currently suffering from disabilities, but actually on the whole world of computer use. Because if you can stream your thoughts and mind to check and communicate, is it really logical to have mobile phones as a form factor? Or computers? Or something else?
And so the entire pile will probably be reconsidered around this new experience that removes friction in the human experience. Today, for example, we have to use a remote control to control our TV. We had to write each other through an interface to work together effectively and to function as families or societies as a whole. You know that the whole starting point can be questioned as interfaces of the brain computer work and we understand how we can rebuild and redesign the entire experience around it.
What makes us nervous is, look, one comes clear from a risk perspective. These are companies that are again quite risky. The quality of the success is quite low. They are sometimes fairly capital -intensive, so you have to invest more money while you take more risk.
And so the way we try to think about these things is happy, we have a big fund, and we try to follow a portfolio approach that we believe that it is fundamentally important in each fund to take a certain number of bets that are a higher risk, but where the payment for economy and society can be enormous. And we will balance that with things that we think are still incredible opportunities that will do super good, but probably less risky. So you just have to think about it in terms of portfolio construction.
And the other that makes us clearly nervous is just about when these companies ultimately get unintended consequences from some of these technologies, and simply ensure that we are really thinking about it. And that is something that we try to tackle directly in our dedication process.
In terms of how we perform due diligence and look at these things, we in fact try to spend a lot of time with academic institutions and companies that build on that limit. There is a small community of people who have been in space for a long time and have learned, due to a lack of a better word, they have really learned by burning hundreds of millions of dollars in some of these laboratories. They have seen it.
Part of the pleasures to be an investor is that we spend our time on people who are 100 times smarter than we do.
I think that’s the interesting part: we learn from them and are part of their stories. Usually you will notice that to be really good, you have to be good in three things: you have to be strategic, you have to work at the right height and you have to be able to simplify things.
This is a space that is super complex. It is very easy to get lost in the details. After a low value problem, it is very easy that it just looks shiny. Those three things are a great founder in this space.
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