HomeInterviewsInventing the future with scientific breakthroughs: Interview with Tess van Stekelenburg from...

Inventing the future with scientific breakthroughs: Interview with Tess van Stekelenburg from Hummingbird Ventures

How is technology solving the biggest problems in the world?

In areas like healthcare and climate change, tech innovation tends to require a massive upfront R & D resource cost and a long timeline before generating substantial revenue. How do investors scout and support these deep tech ventures?

We recently caught up with Tess van Stekelenburg of Hummingbird Ventures’ Bio Team to talk about how her team are charting out a new category of investments across Europe and the United States, backing founders in biotechnology who are trying to solve some of the biggest challenges in healthcare and other deep tech frontiers.

Hummingbird is a global early-stage fund investing in founders building technologies with the potential to change the course of humanity. Their biotech portfolio includes Enveda Biosciences (computational drug discovery platform from medicinal plants), LatchBio (end-to-end platform for bioinformatics), Basecamp Research (novel protein design from extreme environments), Ladder Therapeutics (therapeutics for the undruggable ‘dark’ genome), and several others.

With a background in Biological Sciences and Neuroscience from Oxford University, Tess previously conducted research in Neuroscience labs, where she became fascinated by how new tools like optogenetics and CRISPR opened the ability to ‘read’ and ‘write’ biological systems at unprecedented scales. 

Tess shares her journey from academia into VC, insights into how deep tech is different from traditional tech and the Hummingbird thesis in deep tech and investing in biotechnology.

What first got you into investing? 

After graduating high school, I saved up money to visit a Biological Research Station in the rainforest of Borneo. When I got there, I was shocked by how little native rainforest and biodiversity was left across the island as much of it had been burnt down to make room for palm oil plantations. When I went on to study Biological Sciences at University later that year, I started learning about how microbes could produce palm oil in fermentation reactions and realized that almost any biomolecule can be made with biology. What got me into investing was the drive to build infrastructure and resources to translate scientific research in this field and work with talented people to build out technologies to solve large societal problems in climate and health. 

Like the Information Technology era was enabled by the drop in semiconductor costs known as Moore’s law, we are entering a Biological Era catalyzed by the price of sequencing and synthesis falling faster than Moore’s law. Since unlocking the genetic code of life, we are at a unique moment in history where we have the toolkit to do all kinds of things with biology like peer into a plant’s genetic sequence to see which parts are medicinal, or design crops to grow animal proteins in fields rather than cows. As a result, the field of biotechnology is scaling at unprecedented rates, and we are seeing countless new companies started every day

You are part of a team investing in ‘deep’ tech, with a particular focus on biotechnology. What does this entail specifically, how do you define ‘deep’ tech?

Some of the biggest problems in society like healthcare and climate change need new technological solutions that take time and engineering resources to develop. Examples of deep tech are photovoltaic cells in solar panels for sustainable energy generation, immunotherapies to combat cancer or satellite infrastructure for internet connectivity and agricultural surveillance. How we define deep tech at Hummingbird is technology that requires large upfront R&D before being able to generate substantial amounts of revenue. It’s a high-risk, high-reward model that’s often built on top of a scientific breakthrough from universities and research institutes. 

 What makes deep tech different from traditional tech? What are some of the challenges of investing and building in this space?

Accelerators like YCombinator and entrepreneurship books written by founders of the Internet Era have been lauded as some of the best training material for founders to avoid common patterns of mistakes. However, many of the resources available on building a company are geared towards software start-ups that can quickly iterate to find product market fit. In deep tech, where you often work with hardware: iteration cycles are much slower than in traditional tech.

Unlike traditional tech, you don’t have digital tools to obtain user insights and feedback is much less real time. In software you have market and founder risk, in deep tech there’s mainly technical risk. Coupled with the capital intensiveness of R&D, deep tech requires founders to unlock larger sums of growth capital in a much sparser investor pool than tech. In other words, deep tech is really hard.

Outcomes are much more binary than traditional tech but if it works, these technologies have the chance to completely redefine society.

If you think about it: much of our daily lives have been influenced by scientific revolutions, from the X-rays and CT scans in hospitals, to the commercial jets we fly on, to the internet and cellular data we use to send messages everyday – none of this would have been possible without scientific breakthroughs.

What is Hummingbird Venture’s investment thesis in deep tech? What will make you pursue a start-up for investment?

Our thesis is centred on the founders at the helm of driving these technologies out. While we do look for technological breakthroughs, a technological insight by itself is not enough to build a generational company. You need a special type of talent to see it through.

At Hummingbird, much of our thesis is to understand what makes people tick. In other words, the ‘why’. What drives them to solve this problem? When everything fails what gets them up to keep going at it with the same force? Some of the things we look for are delusional visions, resilience and a capacity to attract some of the world’s best talent. 

What are some European startups that you work with?          

We are a European fund that invests globally, with a large chunk of our portfolio in Europe. Our European portfolio includes Anima Health (online triage for doctors speeding up the clinical workflow 10x), Automata Tech (leading robotic automation platforms for the life sciences that handled the bulk of the UK’s COVID testing), Basecamp Research (Oxford spin-out building out a metagenomic database to characterize functional proteins from extreme nature) and Ladder Therapeutics (computational drug discovery platform to illuminate the uncharted regions of our genome).

With the long R & D timelines, especially in biotechnology: what are the milestones you would expect?

This is a great question! While traditional tech or SaaS rely on a few core metrics that serve as quick insights for investors to benchmark execution over time, it is much harder to do this in deep tech. In the earliest days, we typically look for an initial proof of concept that either displays an order of magnitude achievement over what can be done today or an initial validation of a new mechanism of action.

Once that initial proof point is hit, we look for ‘value inflection points’ where value is unlocked in incremental technical achievements. Once a foundational technology has been built, there are different ways a deep tech company can develop. One option is that they pursue their own internal products in a ‘full stack’ approach, similar to Apple’s PC, Impossible Food’s heme protein burger or Moderna’s mRNA vaccine. The risks of this approach are much higher as the team is making a complete bet that their technology is superior to any other techniques.

Yet the payoff of this approach is arguably the largest, because if their technology is superior, it also means they are the only ones in the world to be able to produce the end-product with this approach.

With this approach, the milestones will take longer and equate to how far along they are in stages of development: in drug discovery for example this could be the number of bioassay hits, how many preclinical candidates, how many clinical candidates, etc.

A different approach a deep tech venture can take is the ‘partnership model’ where a company outsources their platform to others before developing its own internal products. These partnerships usually provide early revenue streams while also validating the platform. However, it could also be a distraction if there is too much customisation required. The third option is to entirely provide the technology being developed as a service to others and generate immediate revenue. Depending on which route a team takes, we look for different milestones along their respective track.

What advice can you give to founders of deep tech startups and those interested to pursue it? 

Indirect competition is a real threat! A company can spend several years developing a new drug modality or biological product but ultimately be outcompeted by a team pursuing an entirely different approach to reach the same end-functionality. If you take cellular agriculture, plant-based meat and precision fermentation as methods to reach the same goal of replacing animals from our food system – consumers ultimately will care less about what technology made their product as long as it tastes good and it’s not prohibitively expensive. Time to market, quality and cost are big factors in determining what technology will prevail.

What is the current innovation and investment landscape of deep tech in the EU? What emerging trends do you see in the EU and globally? 

Having spent time across Europe and the United States, I’ve observed large differences in the investor appetite for technical risk. There is a much more mature funding landscape around scientific institutions in the United States with strong pools of capital for later stage funding which deep tech requires to reach mass market scales. While Europe has an abundance of strong scientific institutes such as Oxford, Imperial, ETH, Wagening, Delft and Max Planck, it lacks the cultural mindset to translate the research that happens here into companies. My first job at university was analyzing scientific patents across technology transfer offices in Europe to evaluate market viability. Many of the institutions I visited had predatory spin-out terms and took up significant chunks of ownership, without contributing much to the end outcome. As a result, so many great ideas are locked up at these institutions and never reach their potential. One trend I am seeing across Europe that is solving this is the formation of new student led-organizations like Nucleate UK or other accelerators targeting academics like Deep Science Ventures and Entrepreneur First to create ecosystems for them to spin-out their work.

More globally, one trend we are seeing is that more and more talented young people are moving into deep tech. Ultimately people want to leave an impact on the world and building the next SaaS is less fulfilling solving big societal problems.

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Maricel Sanchez
Maricel Sanchez
Maricel Sanchez has over 10 years of experience in various fields including trading, supply chain management, logistics and manufacturing. As well as helping startups to raise funds, she is an award-winning public speaker and the current President of Toastmasters Nice, a bilingual club that promotes public speaking and leadership.
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