Our Investment Thesis
By Ash Patel & Michael Marquez
Data, used intelligently, presents an enormous opportunity
From warehouses in California to cornfields in Nebraska, data-crunching super-computers and robots that learn on the job are creating a new frontier of computing. Like the Industrial Revolution before it, this data-fueled revolution will upend industries and reward those who deploy new tools to solve big problems.
We invest in, and partner with, early-stage technology companies at the forefront of this revolution.
We have arrived at an inflection point with technology that presents opportunities for disruption in most major industries.
Consider: There are more than 10 billion connected devices in the world today, and that number is expected to rise to 64 billion by 2025. These devices connect to ever-more networks and take in ever-more data through advanced imaging and other sensors.
By 2025, IDC predicts worldwide data will grow 61 percent, to 175 zettabytes, with as much of the data residing in the cloud as in data centers.
Quite literally, devices will be everywhere, sensing everything imaginable. Companies will confront virtual tsunamis of data. The ones that thrive will master intelligent data systems and take full advantage of the abundance of actionable data. The rest will find themselves inundated and, eventually, drown.
As data infrastructure and platforms gain widespread use and deployment, data’s role in business will only continue to grow, both in terms of the amount being collected and its importance to a company’s ability to compete and succeed.
New learning systems—technologies designed to continuously learn and adapt— power intelligent machines. In a context in which software can build itself, computer systems no longer will be constrained by algorithms but, rather, by the data they can access and act on.
This is a ripe environment to exploit a once-in-a-generation opportunity to invest in the next wave of key technology businesses.
Intelligent systems are the next forefront of Big Data—systems that can learn, think, read, write and sense their environments. These systems collect data, analyze it, and then predict and act on it.
For intelligent systems to work, businesses need data infrastructure that is responsive to human-scale interactivity and that can measure, process, interpret and react to data in real-time. Intelligent data infrastructure of the future will manage its own “plumbing” hidden underneath daily activities of billions of interconnected people and devices.
The combined power of AI, deep learning, robotics and connected devices making sense of their environments will continue to disrupt industries, including ones that have felt only minimal impacts so far.
Where We Invest
We invest in early-stage technology companies that are poised to take advantage of the data-fueled revolution.
Sectors we invest in include:
- Artificial intelligence (AI)
- Big Data/Data infrastructure
- Deep learning
- Cloud computing
- Connected devices/Internet of Things (IoT)
- Drones and robotics
When considering an investment, we seek out two types of companies. The first is a systems builder, a company collecting and using data or leveraging data algorithms to solve a big problem. The second is a systems enabler, a company develops the underlying technology allowing others to build their own intelligent systems.
Systems builders are companies that create intelligent systems through the use of new technology, data processing and data algorithms. These companies build “data moats” around their businesses, effectively walling themselves off from competition by using data in a way that is hard or impossible to replicate. Even if a copycat emerges, a system builder can keep its competitive advantage and remain one step ahead.
We invested in Docyt because we saw the potential for a data moat around financial records of medium-scale businesses. Docyt uses AI to automate back-office functions such as invoicing, collecting millions of billing and account records along the way. The result is a more efficient back-end office system that continues to learn on its own with every record it processes.
We invested in Zipline because we saw the promise of a fully autonomous fixed-wing drone that learns from its environment. Although autonomous drones are not yet approved in the U.S., Zipline has amassed thousands of flying hours delivering medical supplies in Rwanda through a government agreement. Zipline’s data moat widens with every flight.
The second type of companies we invest in develops the underlying technology for intelligent data systems. We call these “systems enablers.”
We invested in Rigetti Computing to make super-computers available to the masses. Company founder Chad Regetti has a new approach to quantum computing that, if successful, will allow companies to access a super-computer with the same ease as their Dropbox account.
TigerGraph and Sapho are system enablers helping companies leverage the power of data they collect. TigerGraph’s AI finds relationships and connections between disparate datasets, making sense of data so that companies can act on it. Sapho acts as a data superhighway, allowing once-isolated applications to communicate with each other and share information.
So, what’s our role in this data-fueled revolution?
We are passionate about helping early-stage data-fueled companies succeed in solving big problems in industries ripe for disruption. We leverage decades of combined experience leading and investing in technology companies to find founders who fit our investment philosophy, and then we help them create and execute winning strategies.
We remain firm believers in our initial thesis. The data-fueled revolution is underway. We are excited to go to work every day to find and support the innovators who will see it through.
About the Authors
Ash Patel and Mike Marquez are co-founders of Morado Venture Partners, a seed venture capital firm dedicated to capturing investment opportunities in emerging technologies and data-fueled businesses.