Lehr is VP of strategy and business development at UnityPoint HealthRead more...
Deng focuses on biotech investment at Joyance and is also a venture partner at Social Starts
Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh, how times have changed! While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We're highlighting key members of the community to find out.
Jun Deng is a partner at Joyance Partners.
Deng has over a decade of experience in biomedical research and over five years of investment experience in venture capital. Prior to Joyance, she led biotech and medtech investment endeavors in venture capital firms. Deng is an entrepreneur herself, and is passionate about education and innovation. At Joyance, she focuses on biotech investment and leads the “lab projects.” Jun enjoys identifying innovative technologists and entrepreneurs and helping them build dreams from scratch.
Deng received her PhD from UCLA. She is also a venture partner at Social Starts and an investor at HealthTech Capital.
VatorNews: What is your investment philosophy or methodology?
Jun Deng: Joyance Partners is a young fund, it started in 2017, and before that we had a long history of investing for Social Starts. We have a couple funds under the Social Starts name, which, for a couple of years, have been ranked by Pitchbook as a top venture capital firm under $100 million. We’re very proud to be a small fund like that. Social Starts captured that the social mobile was the next biggest impact in the world, but Joyance has a different focus; it’s focused on personal experience, personal happiness, and what we call, “delightful moments.”
I get a lot of questions asking what a "delightful moment" is, and my funding partner describes it a way to get away from stress. It's technologies or things that make people a little bit happier, more joyful, more confident, calmer, less subject to anxiety or pain. Something like yoga, like the aroma of coffee or wine or endorphins from exercise, dancing. All of those are examples of delightful moments.
VN: What are your categories of interest?
JD: We see a whole different range of sectors that fit into our thesis. For me, I’m the bio partner, so I look at life sciences companies, things like genetics and genomics, approaches that serve as the basis of personal diagnostics and personal health. I also look at molecular techniques or cellular-based approaches that change how the body works, as well as neurotech and neuroscience approaches that assist people and let us see what the brain is thinking and seeing, perhaps indirectly. My other partners look at AR and VR robotics that deliver that delightful moment experience. So that’s the core thesis for where Joyance invests.
VN: What's the big macro trend you're betting on?
JD: We are a very data driven team. We have created software to track social impact, we have social signaling approaches, we have databases. So, we, as a group of geeks, find people from science and technology backgrounds who really focus on data. So, we don’t predict what the next big impact is, we track the data and signals and let them tell us. Once a year we get together and look at the research, the whole range of study, to understand what’s going to happen.
For our funds, because people come from a tech background, because our thesis is delightful moments, we mostly look at a cross discipline approach. For life sciences we have a few sectors of focus; one is digital health and the personal diagnostics that empower people. We see a whole range of tests and diagnostics that are lab-based but are becoming home-based. Second is genetics and genomics; the primary genetics interpretation has been really well adopted and well understood by big companies, but we are seeing a lot of people focusing on the second degree of interpretation to make sense of the complex genetic mutations with the onset of disease, and use that as a tool for personalized medicine. Third, we also see neuroscience and neurotech as a way for paralyzed people to become more empowered, to be able to communicate with the world. We’re seeing longevity becoming a new trend as well.
VN: What stage/series do you invest in?
JD: We are very different than the other typical venture fund since we focus on what we call the “moment of inception.” Both Social Starts and Joyance are set to become the very first professional investors for entrepreneurs to seek. We hope to become the go-to brand for when they seek help, for when they start to establish their company. If we do the job perfectly, we could be the very first professional investor and we want to be there at the very beginning. We feel like we need to have that mindset to be very helpful and geographically distributed, so we have be on the ground. That's also how we’re different from other funds, who call themselves Silicon Valley funds or LA funds; we are geographically distributed. We have full time people based in LA, Austin, Tokyo, Houston, Silicon Valley, New York City, San Francisco, and Portland. So, wherever we see the new technologies and startups are emerging. Soon we’ll start a new location in France.
VN: What kind of traction does a startup need at that stage?
JD: We currently look at a lot of companies that don’t necessarily have traction. I look at a lot of life science and healthcare companies and at that stage they are have been grant supported for decades, probably they have accumulated decades of knowledge and brain power, proprietary technologies, and we see a strong defensibility of their technology and science, so that’s a big differentiator. We want to see if their product has product market fit that’s going to solve people’s problem and make people more empowered.
VN: What other signals do you look for? Team, product, macro market?
JD: Our approach is a little different because have a very diverse team. I come from a science background and we have another PhD who looks at companies from an informatics perspective. Then, our founding partner, Bill Lohse, he’s a really interesting person. Our Managing Partner, Mike Edelhart, always calls him a capitalist Buddhist. He is very calm and he’s sold companies himself; he’s a serial entrepreneur, he worked for Softbank previously as an executive, and he is also a very successful investor, before he started Social Starts and Joyance. He was in the the first round of investor in Pinterest, when they were going to be Amazon for the cell phone. That was their first pitch and business model, but he was able to identify a great entrepreneur. So, for every company that we feel like the tech has the defensibility and differentiator, we’ll introduce that entrepreneur to Bill, and Bill will look at the person from his or her family history, their training, their personality, and everything to understand whether this person is a winner, whether they could be a strong entrepreneur who can lead the team, how the team interacts with each other. So, he’s looking at it from a leaders perspective and then we have Mike, and a few other MBAs, law grads, to look at it from a legal and business perspective. So that’s our approach.
VN: What do you think about valuations these days? What's a typical Seed pre-money valuation and Series A?
JD: We do analysis of that every year. Valuations are going up and up, that’s what we see for seed round, Series A, Series B for the past couple of years, but, actually, for companies at the very beginning, valuations don’t that change much. That’s why we, from our internal analysis, we have a focus of investing at the very beginning, because we think that will give us the best returns. Second, valuations for the early stage and the growth stage have been going up, but as we’re seeing uncertainty in the public market, so we think this year probably is going to be a correction. That's also because there are new policies coming out for investment, so the foreign investors will step back or be quiet, so there will be less money to compete from the overseas market.
I can also talk about the lab project I’m leading, which is very, very early stage, so valuations sometimes go as low as $2 million. Most of our investments are below $20 million valuation.
VN: There are many venture funds out there today, how do you differentiate yourself to limited partners?
JD: We are set to be very different than the typical venture capital firm. The first thing is, as I mentioned previously, the geographical distribution. Right now we are spread over the United States, as I mentioned, we are full time in different cities. We want to capture wherever the most active innovations, the most active entrepreneurships, are happening. That is also because we focus on the moment of inception investment and, in order to be there at the beginning, we feel that we need to be on the ground where startups are likely to appear. So we’re not in one place, that’s the number one thing.
Number two, our data approach. We have our Chief Analytics Officer leading our team of interns to do statistical research to create our proprietary technology to track social signals, to track new companies spinning off. We get to see tons of companies; we probably evaluated 4,000 companies over the last year. We meet probably meet 10 percent of the companies and we invest in less than 1 percent. This whole technique, the goal that Mike set up, is to help the team be aware of every brand new company that is within our focus that we have identified.
The third thing, as I probably covered a little bit, is that we are probably one of the most active early stage venture firms in the world. Social Starts was set up to be that way and so was Joyance. Our goal is to identify unique and extraordinary impact related to health, and our thesis is also quite unique; a lot of entrepreneurs feel a lot of synergy with our thesis, this personal experience and personal happiness factor. It’s done really well for us in terms of connecting with entrepreneurs.
VN: There are many venture funds out there today, how do you differentiate your fund to entrepreneurs?
JD: A lot of different ways. Almost every entrepreneur will ask us, 'What is your value add to your portfolio companies?' The first thing that Bill and Mike always say is that we want to have the mind of being helpful. To be helpful means we’re always there and we don’t take control. We are the early supporters and, while many other VC firms are getting into the early rounds, but that’s not their core focus, but the very early rounds is our core focus and we know that things are going to change, like an entrepreneurs’ plans are going to change. We don’t take control, but we provide as much help as we can.
We have sales training, a lot of our senior partners are really great sales people and have sold companies, have been CEOs of public companies, so we do sales and strategic training twice a year, east coast in New York and west coast in San Francisco. A lot of our portfolio executives flew from other parts of the country to attend, it’s a whole day event, and we go through all the strategies of how to run the company, how to do sales management and stuff like that. We have lots of events throughout the year; last year we had a happiness oriented conference, we’ve had blockchain oriented conferences, we had different parties in San Francisco and New York to mingle our LPS, our ecosystem, our friends and families, our portfolio companies, together to create synergy, to create opportunities for them to know each other. We are also trying to differentiate ourselves by setting up a database of others VCs that we know that we can help on future fundraisings, help hiring and with marketing as much as we can.
Another thing that I think is really worth mentioning is we have strategic partners in Japan that we can introduce to anyone they want to know. In 2019 we’re expanding to Europe, so, worldwide, we have this diversity on our team: we have Japanese partners, I was born and raised in China, and soon we’ll be European-based as well.
VN: Name a couple of investments you're super excited about and why.
JD: We have actually made 34 investments so far. We’re really fast, probably one company every two weeks, that kind of pace.
I can talk about a few companies that I’m personally involved with that really excite me. One is Flux Bio, which uses magnetic sensing to bring the power of magnetic-grade in vitro diagnostics to a patients’ home. It’s one of the first technologies to target in-home tests. What’s really interesting is the two co-founders; the CTO of the company is professor Shan Wang at Stanford. The same technology is used and approved by the FDA for oncology tests at hospital labs, so it’s a mature technology, but here the CEO has taken the small molecule part to apply to the personal wellness market. The CEO is very interesting as well; I’m sure you heard about the book Bad Blood, he is the whistle blower of the whole Theranos thing, Tyler Shultz. I like him a lot, he’s a person who really has the guts to be honest to anyone and to be honest to himself, and that’s an essential quality for the personality and character to be an entrepreneur.
I also made an investment in a company called Noctrix, a medical device company. The second most prevalent sleep disorder is called restless leg syndrome. A lot of people haven’t heard about it but it’s actually more prevalent than most people think. It’s affecting a lot people, it’s an embarrassing disease where you have his urge to move your legs that can prevent a person from falling asleep. When the symptoms are worse the person is very much bothered and can’t fall asleep three out of five nights out of the week. There are no effective treatments; people use dopamine promoters or nerve pain treatments and 30 percent of them are reportedly taking opioids, so they’re very unhappy about their results. The founder is a fellow of the Biodesign program out of Stanford, so he has decades of experience of working at large medical device companies, inventing technologies, writing patents, bringing medical device technology to the market. We have a lot of faith in this person. They have done an initial trial and they’re seeing that their device targets the nerve and knee cap, and they’re able to use their patented waveform is able to crutch that urge and sense of moving their legs. In the future they can do a formal clinical trial to prove that this is effective in treating this disease.
Another company I really like is from a founder who is a longtime friend of mine and who also has been a professor as UCSF radiology oncology for two decades. He has one company called ACCB in Beijing, China, where he was the CTO and co-founder. ACCB is helping tons of hospitals in China to set up pathology labs. Now he is starting this new company, called Singularity.ai, using artificial intelligence to assist pathology diagnostics. People always talk about AI applications in medicine, but it has to be integrated into an area where doctors disagree with themselves. The AI has a superior rate of providing better results, faster results, that’s how the FDA can get that cleared, and those kinds of products can be easily integrated into the healthcare system. For him, he obviously has a very strong academic background and also his previous company can be a distributor for the technology. So we feel like that’s a great opportunity for us.
I can keep talking about a lot of different companies. I’m excited about many of them.
VN: What are some lessons you learned?
JD: Over the past few years I’ve learned to never say never. Entrepreneurs can sometimes really surprise you. I’m a young person, I’m a junior partner on the team, and I have been learning a lot over the past few years. I think that being humble is important character trait for both VCs and entrepreneurs to work together, build great stuff, identify good technologies and help them become successful. I always tell myself that entrepreneurs know more than I do, I have that mindset of being there, learning from them, identifying the technologies that fits in our thesis and working with them and trying to be helpful as much as I can.
VN: What excites you the most about your position as VC?
JD: I have always been a people person, so I love this job that gives me a lot of opportunities to see the forefront of technology innovations. I am forced to learn quickly and learn about different fields. There’s so many different technologies, so many new startups, so many new things to learn about and that really excites me. And being able to help the entrepreneurs, that gives me a sense of helping to create something, being part of the something that could be impactful, that could change people’s lives, that sense of satisfaction is also important for this job for me.
VN: What is the size of your current fund and how many investments do you typically make in a year and
JD: For Joyance, right now it’s a $20 million fund, and for Social Starts it’s a $60+ million fund. The two funds are separate, but they’re very cooperative; they are both managed by Mike Edelhart and the teams work collaboratively. My main appointment is with Joyance but I am also a venture partner for Social Starts, and for a lot of people it's vice versa. We study areas together, we look at deals and refer deals to each other.
VN: Is there anything else that you think I should know about you or the firm or your thoughts about the venture industry in general?
JD: I would love to meet entrepreneurs, especially in the life science and digital health areas. They can find out a lot about us on our website, where we do a lot of blog posting and talk about our investment approach, our areas of focus. We have all our portfolio companies on our website so I encourage people to find out more about us and reach out to to us. I’m reachable at both by email at email@example.com, as well as LinkedIn.
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Related Companies, Investors, and Entrepreneurs
Joined Vator on
Social Starts is a $20M+ venture fund family. We support entrepreneurs whose companies serve the Social Construct, that change in human behavior generated by social/mobile technology. We invest at the moment of inception and Series A in 5 primary areas: media, marketing analytics, social platforms, mobile commerce and Internet of Things software. Our team has developed dominant media, research and tech companies in the 3 modern tech revolutions – PC, Internet and Social. Our portfolio companies benefit from the resulting rich perspective and world-class connections, a mutually supportive community of more than 130 fellow start-ups, and support from our LPs, who include leading figures in software development, marketing and media from 3 continents.
Joined Vator onJun has over a decade of experience in biomedical research and over five years of investment experience in venture capital. she is passionate to help those entrepreneurs use cross-disciplinary approaches to solve issues with broad impact