Rally
- Bryan Johnson, who sold his company Braintree to PayPal for $800 million in 2013, has created a fund called OS Fund to invest in "deep tech" companies centered on the areas of
science and technology. - Of the 28 companies OS Fund has invested in since 2013, 26 saw an increase in their valuation, two were acquired, and four are now valued at $1 billion or more.
- Now, Johnson has raised a second fund, OS Fund II, to further more science-backed pursuits.
"If you go to someone with money, and say, 'Hey, why don't you invest in science stuff?,' they'll probably say no," says Bryan Johnson. "They'll say that it takes longer, that it's harder to assess risks, and that it isn't worth it."
Johnson is the co-founder of OS Fund, a venture fund that specializes in what Johnson calls "deep tech": technologies centered at the crossroad of science and tech.
Often, these "deep tech" companies - or any early stage company dealing with science, medicine, or biotech - pose as risky bets to prospective investors.
Biotech companies typically take longer to yield returns than their consumer-facing counterparts, and regulatory approvals and research studies can prolong the time before products are ready to go to market, making many investors less eager to fund science-backed startups.
But Johnson says these deep-tech companies are not only worthwhile investments, they're also highly profitable. So far, Johnson's early foray into investing has yielded overwhelmingly high returns: Of the 28 companies that Johnson and his co-founder Jeff Klunzinger initially funded since 2013, 26 saw an increase in their valuation, two were acquired, and four are now valued at $1 billion or more.
Now, Johnson and Klunzinger have raised a second fund, called OS Fund II, to invest in entrepreneurs that plan to solve global problems like world hunger, nuclear waste, and environmental hazards caused by food production.
While these issues might seem like daunting investments, Johnson insists that solving these problems shouldn't be left to non-profits or NGOs.
"We're not simply do-gooders," Johnson said of himself and Klunzinger. "We're competing with all the best funds in the world. We're interested in seeing returns on our investments and doing this successfully."
Johnson credits much of his fund's early success to his outsider sensibility: Johnson is the former CEO and founder of payment company Braintree. After he sold Braintree to PayPal in 2013 for $800 million, Johnson used some of his money to fund science-based companies.
"I have no formal scientific training," said Johnson. "Early on, I was personally vetting $100 million on this project. I come from a very naïve perspective, and I've spent a lot of time doing research and working with the founders."
Johnson says his early experience as an entrepreneur has provided him with the benefit of guiding early companies in the right direction: While many science-based companies are clouded by an academic perspective, approaching these same companies with a purely entrepreneurial insight can reap huge dividends, Johnson says.
"A lot of scientists have built up the wrong intuitions," he said. "The academic game incentivizes you to pursue fields that are sexy, rather than the best markets. Sometimes you have to look for markets that aren't sexy, or have been neglected."
Johnson compares investments in biotech today to the early
"In 1978, there were a few new companies like Microsoft and Intel and Oracle that were building up a new eco-system of opportunity. Now, we're in the age of biology and genomics and protein design and automatic manufacturing. It's an emergent field that's bigger than computing. It's a new era for investing."