1955 Capital is Weaving the Tech Web Worldwide
Andrew Chung founded venture capital firm 1955 Capital in 2016 to be a conduit. Its reason for being is to connect the most promising technologies being developed in Europe and the Americas with players who are seeking to solve the challenges facing the developing world. Concentrating on environmentally sustainable energy production, healthcare delivery, and food production — and more broadly, the emerging tech that can unleash progress in those areas — 1955 Capital is pursuing the commercialization of practical, cutting-edge solutions that can change the world.
Before establishing his own firm, Chung was a general partner at Khosla Ventures and investor at Lightspeed Venture Partners. Those roles brought Chung into close contact with a number of global companies — particularly those in Asia — across a broad range of economic sectors. Helping companies access markets like China and Southeast Asia are part of 1955 Capital’s core capability. Chung’s track record and extensive contacts allowed him to raise $200 million in committed capital before his firm launched publicly in February of 2016.
“1955 Capital’s mission is to invest in technologies from the developed world to solve the developing world’s greatest challenges. The genesis of this mission is pretty simple. It’s a natural extension of everything that I set out to do in venture capital over the past 15 years as an investor in sectors like energy, environment, food, agriculture, health, and education,” says Chung. “Even in the early days in my career, I focused heavily on issues associated with sustainability, the problems that humanity is facing, and how technology might be able to solve or influence those problems. My team and I have trained all our lives to tackle this big mission.”
The firm’s name is in honor of a pivotal year of revolutionary transition. In 1955, some of the biggest names in tech were born: Bill Gates, Steve Jobs, Vinod Khosla (co-founder of Sun Microsystems), and Eric Schmidt (former long-time Google CEO). Rosa Parks launched the civil rights movement, and McDonald’s and Disneyland opened their doors. And it saw the death of legends like baseball Hall of Famer Cy Young, jazz great Charlie Parker, Alexander Fleming (who developed penicillin), Mary McLeod Bethune (civil rights leader), and none other than Albert Einstein.
Today, 1955 Capital is a player in the still-developing field of sustainability investment, trying to harness advanced technologies and passionate entrepreneurs with areas of vital need around the globe. Chung was already recognized as a long-time veteran in this area and decided to launch his firm to fulfill this critical global mission. Indeed, in the new world order created by COVID-19 and coronavirus, 1955’s focus areas are more important than ever.
“Several groups approached me about starting my own fund. They thought I had an interesting playbook and background thesis. It helped that I spoke Mandarin and Cantonese Chinese. It helped that I had invested in and managed multiple deals in these less conventional sectors. It was suggested to me that this was a rare combination and that I had a shot to build a differentiated investment platform,” Chung explains when relating about the beginnings of 1955 Capital.
“That’s really what developed into the 1955 thesis that, again, is investing in technology from the U.S. and the developed world that has the potential to solve a pressing need that the world faces. We balance the impact of these investment themes and the ‘Save the World’ notion of it with an ability to generate significant returns as well.”
The Core Team
To carry out venture capital investments dedicated to driving innovation in these meaningful areas, Chung has assembled a passionate core team that can comfortably function in multiple settings on different continents. Like him, they tend to be renaissance men and women, comfortable and knowledgeable over a number of sectors and cultures and sharing a broadly humanistic motivation.
“At a foundational level, everyone on the 1955 team cares deeply about our mission — to invest in technologies that can make a difference, particularly in the developing world,” explains Chung. “The nature of the sectors that we look at — health, food, agriculture, energy, environment, education — require team members to be broad and deep across disciplines and be unafraid to explore new ideas. They also need to be thoughtful about how companies can access global opportunity.”
Kathy Chen on 1955’s investment team shares many of Chung’s professional characteristics. She too has an MBA from Wharton and her previous position — at Unitas Capital, which was part of the growth equity team that spanned Asia, North America, and Europe — also involved developing sound cross-border strategies, especially with regards to expanding market share in China. She started her professional career in investment banking — including stints at Bank of America, Merrill Lynch, and J. P. Morgan — with a focus on China. Her background also includes serving as a Packard Environmental Fellow at California Environmental Associates, which included delving deeply into the agriculture and aquaculture and other aspects of balancing economic development with environmental protection.
“Kathy was born in China but moved to the U.S. when she was young and is very bicultural. She’s helped me do a deep dive into areas ranging from alternative proteins to surgical robotics and applying pattern matching across all the types of companies we look at to guide 1955’s investment thesis and assess the global market opportunities,” notes Chung.
Rounding out the core 1955 Capital team are Venture Partners Ryan Gilliam and Benjamin Tseng, and Chief Financial Officer Jim Hinson. Gilliam, who holds a Ph.D. in Materials Science and Engineering, is also CEO of the Fortera Corporation, which develops technology to enable the beneficial reuse of CO2 to produce a range of building material products that both directly capture and offset emissions. Gilliam’s role at 1955 centers on related areas like the energy sector, waste upcycling, and materials innovations, but he also lends his considerable operational experience in advising portfolio companies on developing global partnerships and scaling technologies. Tseng was formerly an investor at DCM Ventures, another notable cross-border venture fund, where he invested in advanced technologies across energy, healthcare, and agriculture and helped launch their Android Fund. Hinson, who is also a member of the executive committee of Greenough Consulting Group (GCG) and leads their Venture Capital practice area, has been deeply involved in financial planning and reporting at several major corporations over his 35-year career, including Tenaya Capital, Lehman Brothers, and APV Technology Partners.
“Not all firms are like ours. Other firms will hire someone who is a — pick your industry, ‘social media expert.’ And that’s all they invest in all day long,” explains Chung about his team’s dynamics. “We’re a bit different. We feel it’s critical not to be too grounded in conventional thinking about an industry and [that] the ‘experts’ can miss big opportunities for disruption.”
In addition, there is a network of individuals that the 1955 team has worked with that also have input into the decision-making process of the firm. Chung’s former portfolio company CEOs from his time at Khosla — including industry veterans Dr. Jennifer Holmgren, CEO of bioenergy company Lanzatech, and Marcus Meadows-Smith, CEO of agricultural company BioConsortia — have served the boards of 1955 portfolio companies.
“We then have in our extended 1955 family individuals who are at the top of their fields, including one of the foremost surgical robotic surgeons in the world, who help do the technical and go-to-market analysis,” continues Chung. “Our team combines a more industry-agnostic, objective view on new technologies with a rigorous industry-specific perspective to decide whether to invest in a startup. That’s the best way to identify relatively untapped opportunities to build a massive business that can transform and redefine the future of an industry. You need partners who are not afraid to do that.”
Pursuing the Vision
The team ultimately works to connect the advanced technological solutions that are reaching the market to the challenges facing the developing world under the broad umbrella of sustainability. According to its web site, the strategy of 1955 Capital is heavily premised on the expectation — due in large part to the explosive growth that has been unleashed this century — that “the developing world will face an onslaught of challenges in energy and environment, food safety and supply, and access to healthcare and education.”
That means having a foot in both worlds — the high-tech and the developing — and thereby seeing opportunities that can migrate over national borders. That is a dynamic that Chung does not think is fully realized.
“I think one of the things that many American and European entrepreneurs don’t see day-to-day is the massive opportunity there is in places like China, Indonesia, Sub-Saharan Africa, and the Middle East. China is about to become the leader in deploying many of these technologies because close to 2 million people are dying a year of air pollution-related disorders. There are 300 million people who don’t have potable drinking water. It’s the fastest-growing middle-class of all time, yet they question the safety of their food and whether the doctors in their country can heal them,” Chung elucidated at a 2017 Solve at MIT roundtable discussion. “Everyone now has the ability to afford better food and healthcare, and through social media they can see how everyone else in the world lives. And so, the opportunity for a technology entrepreneur in the United States and Europe to influence the course of how China, Southeast Asia, Sub-Saharan Africa will develop is quite staggering.”
Seizing on that opportunity, while adding real-world value by acting as the transition point for intellectual capital being commercialized into tech solutions, is 1955 Capital’s ultimate ambition. The company acts as a cultural bridge that assists the management of emerging tech companies to evaluate their entry into emerging markets. And while Chung sees the entirety of the developing world as being on one side of this equation, his company’s focus — for both broadly economic and deeply personal reasons — will start with Asia.
Though not born in China like 1955 Capital’s Chen, the firm’s founder was born in the United States to recent Chinese immigrants and grew up working in his parents’ Chinese restaurant. It was on this bicultural foundation that Chung built his earlier career at Khosla and Lightspeed and is one of the core themes of 1955 Capital.
“Lots of entrepreneurs might find it hard getting through regulatory approvals without the right partner. Lots of people complain about Chinese regulations, but often it means they don’t have the right partner and advice,” is how Chung described it to AgFunderNews in 2016. “There’s so much money locked up in solving these big challenges, and politics backing it, that there are definitely some advantages to being involved in these sectors.”
The key is not just to see opportunities, but to have the know-how and experience to navigate the regulatory, financial, and cultural differences that have to be overcome. It comes down to cross-border execution while riding the bucking horse of venture capital. It’s a skill Chung has put in his time to master.
“I was in China 13 times last year. In some cases, flying in for six hours to negotiate deals with companies, or driving down dirt roads to villages to negotiate partnerships,” Chung related to Forbes in a 2016 interview when announcing the creation of 1955 Capital. “I’ve really doubled down on this type of strategy.”
Focusing the Approach
That strategy has led to 1955 Capital being deeply embedded in some of the most innovative economic activity currently underway in the world. That manifests itself both macro-economically by being players in broad areas like ClimateTech and FoodTech while concentrating on lending crucial support to specific companies in its portfolio.
For example, as the repercussions of global climate change are becoming ever more apparent — both from the crucial observations of the scientific community and everyday experiences of farmers and residents of coastal areas — the ClimateTech sector has heated up. It is dedicated to using tech solutions to lessen the impact of, well, the tech revolutions of previous centuries.
Recently, money has poured into the sector, including $1 billion going into Breakthrough Energy Ventures backed by Bill Gates, Jeff Bezos, and Jack Ma, and $10 billion going into the Earth Fund that Bezos founded. The profound worldwide impact of the COVID-19 crisis will only intensify this, in part because many of the repercussions of climate change — deforestation, habitat loss, and mass migrations — also heighten the risk of novel pandemics jumping from other species to humans.
“CleanTech lagged because consumers and enterprises didn’t take climate change seriously enough for it to impact their spending. Now that it is seen as an existential threat to the planet, there is more urgency about solving it by consumers, corporations, governments, and investors. It’s a perfect storm,” Chung explained to IPO-Edge.com in a February 2020 interview. “When a company [in China] is told it won’t be able to grow unless it reduces its carbon footprint, a solution becomes a matter of survival.”
Since its founding, 1955 Capital has heavily invested time in studying food supply and agricultural concerns. It is an area that Chung has studied for the last decade.
“There are a lot of areas in food and ag that are nice to have in the U.S. but could mean life or death in China or India. The populations of these Asian countries are growing along with the middle-classes who can afford to buy good food, and they want safe and plentiful and varied food to choose from. Unfortunately, they’re saddled with terrible soil conditions, not enough arable land, insufficient controls over local farming practices, and tech could be the answer to that,” Chung told AgFunderNews back in 2016. “We can help to bridge that gap, and that’s why the initial investor group came together, on both sides of the Pacific, to support bringing western innovators to greater challenges in the Far East. On the data side, there’s a revolution over here [the United States] with farmers becoming increasingly sophisticated in managing data on their land, but that’s only just beginning in China, and I think that type of tech will be very much needed.”
Among the companies in 1955’s current portfolio, Crop Enhancement is a company that specializes in increasing crop yields with agrochemical techniques that aim to minimize the use of pesticides while delivering specific nutrients to soils and fertilizers. 1955 Capital is one of several AgTech investment players backing the firm.
Likewise, Sustainable BioProducts — recently rebranded as Nature’s Fynd as part of an $80 million capital raise — takes microbes found in the geothermal springs of Yellowstone National Park and, via a novel and cost-efficient fermentation process, creates a range of food products that contain a nutritious and complete protein profile. Its method began as part of NASA research into food for use in long-term space travel and, like so many programs first aimed at space exploration, Earth-based spinoffs were realized (you can still pick up a can of Tang at the supermarket). Nature’s Fynd develops protein-rich microorganisms — which the company has officially dubbed Fusarium strain yellowstonensis — which can replace far more energy- and land-intensive protein sources in a wide range of foods.
These kinds of innovative companies — far ahead of the mainstream tech curve — not only need financial support and business mentoring but also allies in expanding across national borders. This is the special need Chung sought to fill when he established his firm.
“At 1955, we did not invest in a flood of companies and spread ourselves too thin after we raised our initial funds … I want to be on the speed dial of my CEO’s. I want to be knowledgeable enough and close enough to the company, so that I can make useful suggestions around how to build the company,” Chung explains. “Yes, we’re focused on generating profits and returns in areas that typically have been hard to make money in. In this new wave in sustainability investing, we need to ask ourselves what lessons we can learn from the past. It’s similar to all the other tech investment industries. Whether it’s biotech or IT or Bitcoin, there are boom and bust cycles when a lot of investors new to the sector get excited. A lot of money flows in. At times, big money is made. But a lot of money is lost when the boom cycle is over if investors are not prudent. I hope to apply the experience over the past 15 years of being involved in many successful companies in these challenging sectors to make an even bigger difference this time around.”
With that experience, Chung and 1955 Capital hope to aid many pioneering companies that could be vital to our collective future ride out these boom-and-bust cycles and bring their badly needed innovations to the world.
Originally published at https://patch.com on May 1, 2020.
