Niterra Ventures

Welcome to Impact TV, a corporate venture video series in collaboration with, the Kaufman Fellows. My name is Jack Crawford, a founding general partner at Impact Venture Capital alongside my colleagues, Pat Bumpus from Impact Venture Capital and and Alessandro Santro from the Coffin Fellows. We're thrilled to welcome to the program Thomas Kluz, managing partner at Netera Ventures. Thomas, how are doing?

I'm doing doing really well. Thanks for having me on the show. Awesome. Hey.

We did a little bit of research, and it turns out you spent a little bit of time earlier in your career in Illinois. So just out of curiosity, Cubs fan or White Sox, or, where do you stand? Great question. Great question.

Yeah. There's no questions asked. I'm a Cubs fan. It's, in Chicago.

It's it's very simple. If you're a Northsider, if you're from the North Side, you're a Cubs fan. If you're a Southsider, you're a Sox fan. I grew up on the North Side Of Chicago, so go Cubbies.

Okay. That's great news. We can continue the interview because my my father-in-law my is 87 years old. He grew up in Chicago.

And and so we've been watching the the Cubs ever since. He's he's he's basically bought hats, jerseys, you name it. You're probably well aware once once you're anywhere close to the Chicago area, you're Cubs fan for life. So anyway, we can continue the interview.

That's great. I thought we might have to cut it off early. Before we dive into kind of your personal journey, can you just tell for people who are less familiar with Natera Global, can you just talk a little bit about sort of the the company at a high level just to kind of introduce it for people who are less familiar with the company? Sure.

Sure. Yeah. So Natera Global is an eighty eight year old company. We manufacture components and material science.

We have deep roots in automotive components and ceramics. We manufacture components like spark plugs, oxygen sensors, and all the other components that go into the, the internal combustion engine to keep it running efficiently and in a sustainable manner. What's remarkable is how the company has evolved though in in recent years. Today, Natera operates across automotive, health care, sustainability, and advanced materials.

Some of our moves into healthcare were because of our our sensor business. Our oxygen sensor that goes into the car also plays a role in constant oxygen concentrators and ventilators, and so we've been making a major push there. I think the thread that connects all of what Natera does is precision engineering and the ability to scale mission critical technologies globally. Super helpful.

Okay. And and now if we could shift to kind of your your personal journey that kind of led you to the Terra Ventures, you know, you spent a little bit of time at Adam Street Partners, learning a little bit about sort of venture in the venture ecosystem. You worked on digital health initiatives and did a joint venture with with some of the team at Qualcomm. So you've got some visibility to sort of the corporate world and the venture world, you know, tell us a little bit about your journey to the Terra Ventures.

Yeah. Yeah. Absolutely. So, yeah, Adam Street is how I cut my teeth into venture capital growth equity world.

Grew up in Chicago, and it made sense for me to join a fund locally. So I worked in the Chicago office. It was a foundational part of my life. It's where I learned through institutional venture capital, disciplined diligence, market structure, portfolio construction.

I after after doing that, I did join a startup. So I I ran a startup for a couple years, got the operator experience, got an exit under my belt, but decided to go back into venture capital in a corporate venture capacity. I I like building things and I like being an operator, but I also love to invest. And so I joined Qualcomm Ventures, after my my my time at Adam Street and my startup.

I did fall into the digital health space, just because that that was a core competency of mine. I'm a biomedical engineer by training, so I I just I've always loved health care. And so, so I started a a joint venture between Qualcomm Ventures and Novartis called DRX Capital. I was a Qualcomm Ventures employee.

And so we invested at the intersection of sensors, AI, and clinical, clinical sciences. I think that, kinda jumping towards to where I'm at today, my current role is really a mixture of operating and investing experience. It's kind of a combination of everything I've done. It's a place where I can blend venture discipline and then scale, technical depth using, the expertise of a global conglomerate, industrial conglomerate.

So it's it's a lot of fun. I feel like I'm really building these businesses as well as investing in the business. When you were at Adams Street, I'm curious, were you, primarily focused on the direct investment, aspects out of those vehicles? Are you making actually primary, commitments into VC funds as part of their fund to fund activities?

Great question. I I did not do the fund to fund side. I was I I believe I can go on record for this. I was the first associate hired by the growth equity direct investment team.

So it used to be called the direct investment team. It's now called the growth capital team. So I was making direct investments into companies, not into funds. Okay.

And, tell us about, maybe a little bit more detail on the Natera Ventures and Natera Lab. What what what is this, an incubator, an accelerator? Tell tell us how that how that works to support some of your return objectives and your strategic objectives. Yeah.

Yeah. So Natera Ventures Company, which I'm, I'm the managing partner of, we are an investment vehicle that, serves as the corporate venture arm of Natera Global. The term Venture Lab, which is, which is what what people can find about us online, It's actually an umbrella term that Natera approved for our global venturing activity. It's not a separate lab.

We don't build things anymore. We used to build things, call it four years ago, three years ago. Over the last year and a half, two years, we are squarely focused on, investment activity. And so we look at VentureLab as an ecosystem where we're building to connect our venture venture efforts across regions and the business units at Natera Global.

Okay. That's that's helpful. And and what we're seeing with corporate venture groups, work with we work with literally hundreds of different corporate venture groups, exchanging deal flow, trying to gather market insight, candidly trying to elevate our own investing IQ. We've seen a lot of different structures.

You've got corporates that are evolving and now starting to bring in outside LPs. Some of them from a fund management perspective are starting to adopt sort of carried interest models, a lot of different sort of evolution. And now corporate venture, I think, is 40% of all venture backed deals are corporates. Maybe it's higher now.

Can you just talk a little bit from a structure standpoint? Is this solo LP? Are bringing in outside LPs? And then what's any anything else that you'd mentioned with regard to organizational structure of Natera Ventures?

Yeah. Great question. Yeah. So we are we are a sole or single LP fund, backed entirely by Natera Global companies.

Natera Global is a an aggregation of of multiple companies. So there's a lot of different businesses there. There's a health care business, there are materials businesses, and then there's the sensor business. But, the aggregation of all that is our single LP structure.

We don't have outside LPs, no hybrid structures. We operate with the financial discipline of a top tier VC, but our mandate is fundamentally about building the next generation of new core assets for Natera. So that means we're constantly looking beyond the company's existing businesses to identify and develop opportunities that could shape Natera's long term future. It's a model that gives us both speed and strategic depth and allows us to create long term enterprise value, not just generate short term results.

That's awesome. So let's let's go one level deeper with regard to your investment strategy. You may know Impact Venture Capital is investing at the seed level, primarily in AI companies focused on security, finance, digital health, some of these other areas. And from a style standpoint, we're we're oftentimes leading the early rounds of investment and then bringing in corporate co investors.

We have 47 portfolio companies now that we've seeded, and they've attracted more than $500,000,000 of follow on capital from corporate investors. So that's from a syndication standpoint, how we're we're operating across the portfolio. Can you talk a little bit about sort of your focus by stage, by industry sector, and let's call it by style? You know, how how are you how are you engaging?

Yeah. Yeah. Yeah. So so I think by stage, we're we're classic stage agnostic.

We invest early. We invest late. We we lead when there's a strong strategic fit with, with some of our core competencies. And when and we co invest when there's a a a broader ecosystem, of syndicates, you know, that bring certain levels of expertise to the syndicate.

So again, we can lead, we can co invest. Again, we we like to reserve for follow on financing when we feel that there's a strong strategic link back to the mothership. Every investment needs to stand on its own financially, but our primary goal is to to to invest and and generate strategic returns for the mothership. So, so we we at the end of the day, we invest where strategic and financial value reinforce each other as opposed to thinking about it one way or the other.

And from a syndication standpoint, how do you think about collaboration with VCs or corporate VCs? It was interesting. About ten years ago, I moderated a panel at Plug and Play. And there was, I think, four CVCs on the panel and 50 in the room.

And there's a lot of discussion that day about going investing earlier by stage instead of being passive investors at the Series C or Series D going earlier by stage. And the other element was, hey, why don't we start syndicating deals together? Why don't we start building rounds of financing together between corporates? And I think historically, the view is that there was just so much with regard to the competitive landscape.

How could you really co invest with other corporates? But it seems like more and more syndicates are being built with multiple corporates and and but but maybe talk a little bit about as you think about rounds of financing coming together and your collaboration with traditional VCs and CVCs, what's your sort of point of view on on sort of what's best? Yeah. I mean, we we love to collaborate.

Right? So collaboration is a constant thing for us. We love to co invest with traditional VCs, deep tech funds, and other corporates. We we try to be mindful of the complementary nature of a corporate versus the competitor, but we love to co invest with other partners.

It gives us, you know, capital exposure, but also thought leadership. That's probably the most important thing for us. Our unique value is pairing the capital and the networks with our engineering depth and manufacturing scale. So we like to connect the dots.

We're we're the connective tissue for all of that. And then in terms of do we invest in in sort of other funds? We actually that that's something we really like to do, actually. So we do run a selected fund of funds process.

So we have a model where we like to get early visibility into emerging technologies and stay close to firms shaping the next decade for themselves and the companies, right, that we look at. So, it for us, it's not purely a financial play, so we're not looking for really good financial exposure, although that helps. It's really about insight and early signal detection in the markets that we care the most most about. As you look at, potential LP commitments in VC managers, are you looking by geography?

Are you looking by industry sector? Are you looking just for people where you have a chemistry quotient and have the ability to collaborate? Are you looking by stage? You know, how are you sort of filtering, you know, opportunities as you assess making the the next wave of LP commitments?

Yeah. So it's it's really about investing in smart, smart investors in a particular segment. So we'll usually be very thematic about our selection process in fund to fund. So we'll look at who's the best investor in, in AI based materials or who's the best investor in industrial IoT.

Right? We believe that some of the best funds and and, you know, they'll generally have returns to show for how good they are. We'll be able to reference that, and then obviously, litmus test their expertise in that particular area and invest to get some of that exposure as I mentioned earlier. It's it's it's not just a purely financial decision.

It'll be how do we get the deepest insights into a particular market segment. Yep. Makes sense. We've we've had a fair amount of success with AI applied to security.

I have a personal interest and we have a firm level interest in AI applied to digital health. You seem to know a lot about that space and had some success. It'd be great to share your insights that you know, where should we be? Folk within the umbrella of digital health?

There something that sort of captured your attention or something that you think is particularly interesting that you would, you know, encourage or advise me and our our team at at Impact to focus on a little bit within digital health? Yeah. Yeah. Look, I think that there's been a lot of froth in digital over the years, and there's just been a flood of capital into different, into different segments.

And I think we're we're in this kind of like, you know, the the trough of disillusionment is over, and we're kind of in this path productivity, I believe. Right? And so the froth is is subsiding. And so for me, the areas that we're most energized about that we're investing capital in are diagnostics, and there's certainly a digital component to that, sensors, wound care, AI driven clinical tools, and what I'd call hardware enabled health.

Places where kind of biology, the physical sciences, the material sciences, and machine learning converge. That's where we're trying to move the needle. We're seeing, we're seeing the wearable space really take off with, with with, you know, advanced sensing capabilities. We invested in a company called BioLink, which we're very excited about.

It's a glucose monitor. It's a continuous glucose monitor using, noninvasive microneedles, and it has the ability to sense multiple analytes on the patient. You know, we think that sensors like that, really unlock novel use cases both for reimbursement in health care, but also for value creation for the consumer and and unlocking novel cases of virtual care. You know, giving doctors the ability to to to asynchronously see a patient.

I think that's a that's a that's a trend that we're closely following and are excited about. Is there something else we should be looking at in the wearable space? I realized just in if I just sort of, look at my my my family, we everybody's got either an Oura Ring or a Whoop, glucose monitor. My my my fault, my 87 year old father-in-law, who I mentioned earlier, was wearing sort of a fall detection device for a little while.

Mean, we as humans, I guess, regardless of age, regardless of gender, regardless of location, seem to be more and more comfortable wearing, things getting sort of access to data. Anything else we should sort of keep an eye out for? There's certainly things happening in the glassware space. I think there's some interesting things in the hearing aid space.

But, but anything else that that you're looking at from a wearable standpoint that you'd mentioned? Yeah. I mean, I I I hear you, talking about fall detection, and, you know, I think, I think wearables are are are sort of taking off. I think the the sector to really pay attention to is aging tech.

We really have a a we have a problem in The United States. Our fertility rates are down and our patient population is aging exponentially. And I think we need a sustainable way of both treating and and and taking care of those patients. Right?

It's becoming, economically not viable for a senior to retire this day and know, trying to move into assisted living or skilled nursing is very, very challenging. And so I look I love looking at technologies that sort of enable, that trend. I think fall detection is is one of them, but I also think more broadly remote patient monitoring and smart living. I mentioned before we kicked off this, this this, this podcast that I'm at a, kind of a smart living mobility conference, where, a company that I'm supporting is building, prefab homes.

Right? And one of our target markets is the aging population. And each one of these prefab homes come with a whole host of AI based IoT solutions. So sensors that can detect falls, that can check-in with the patient to see how they're doing.

Again, we we are seeing this exponential growth in aging population, but we're not seeing the provider provider count increase exponentially coinciding with that. And so we're running into a very big problem in in in in America, and we're seeing that in Japan as well. And so, so I I very closely monitoring, not so much the technology, but the problems that are occurring in the health care space and then trying to find the technology that helps solve those issues. I think this remote monitoring, space is is extremely interesting, yeah, to your point.

I can remember with my mother-in-law, we set up a a video camera in her living room just so we could peek in on her every once in while, make sure everything was okay. And and, and now, you know, obviously, there's other technologies that we're adopting with, with my with my father-in-law. But yeah, that's a really interesting space. Maybe let's switch and, and start talking about sort of from, from a performance standpoint, as you look at, you know, kind of managing the corporate venture activities there, are there KPIs that you're paying attention to?

Is it just about returns? Are you measuring strategic value? Is it about the number of investments that you make each year? How many follow ons syndicated routes financing?

Is there something that is a pretty consistent KPI for you that tells you, yeah, we had a good year? Is it just about, you know, am I Mo I see, you know, just sort of like how the how the investments are performing? Are there other things that provide you with the signals that tell you you're headed in the right direction? Yeah.

Great question. So first, it is strategic value. I think we're we're in the business of identifying or building, companies or new business areas that align with Natera's long term vision and could become explosive growth opportunities for Natera. Right?

We call this new core assets, and that's our number one KPI. So we are always identifying what is the top of the funnel for Nucor assets. Right? And those generally will, you know, those would generally be inspired by companies we invest in or they could be the whole company themselves.

Right? So there's a chance we invest in a company, pre seed and seed or series a, and then we could potentially acquire the whole business if it makes sense. But that's that's our number one purpose for, the the existence of Natera Ventures. I think second is financial performance.

Again, I I I like to think of these two things as reinforcing each other, right, as I mentioned earlier. So I I balance them equally, but, but we do measure MOEIC. We measure IRR. These are all kind of classic venture capital, disciplinary metrics.

This this can this shows the mothership that we can create new core assets for Natera while generating a cash on cash return. And then we can use that cash on cash return to invest in more new core assets, and we we create this sort of flywheel of strategic value for Natera that is fueled by financial performance. Yep. Makes sense.

From an industry sector standpoint, let's just do a little bit of a deeper dive on some of the industry sectors that you're focused on as it relates to AI applied to them. So you do obviously, you're thinking a lot about mobility, you're thinking about health, there's some sustainability objectives. I mean, how are you thinking about sort of AI applied to those things? We're finding that, you know, there's there's AI infrastructure required for certain applications.

And so we've made some investments into some chip companies and some networking companies. Then, know, sort of the next wave of this feels like AI applied by industry vertical or by technology type. How do you think about sort of artificial intelligence as it applies to the sectors that you're focused on? Yeah.

Yeah. Yeah. Yeah. So look, I think AI is becoming the operating system for every industry that we touch.

It's it's no longer vertical AI. It's a it's horizontal infrastructure. So maybe I'll go by by market. So we look at three different areas at Netsera Ventures.

We're focused on mobility, sustainability, and human health. In the mobility space, AI is transforming vehicles from hardware first assets to software defined ecosystems. Right? The real innovation will come from companies that treat cars like data platforms, not just machines.

Right? I think that's a really, really exciting thing about the mobility space. In sustainability, AI lets us model complex systems like energy loading balance, material circularity, and next gen manufacturing at a level that wasn't possible five years ago. In health care, you know, we're entering an era where biology becomes computational.

Domain specific medical models allow clinicians to see patterns the human eye could never detect, and that candidly is unlocking a myriad of other use cases in in the health care space. That's that's wildly, wildly exciting. We were sort of talking about that a little bit earlier with the fall detection. This whole notion of I've fallen and I can't get up.

Right? Those commercials from, I think, the eighties and nineties, there's a whole host of new AI based solutions that are entering the market that will actually make some of those applications really come to fruition. So so look, I think AI will compress the time between a scientific idea, a product, and a scalable business, and that's transformative for venture. And what's even more transformative is a global materials company like Natera can leverage some of that for entering novel use cases and new business areas.

So we're, we're really you know, we're a ceramics business. We have a ceramic pretty large ceramic business. And, you know, ceramics are kind of ubiquitous now, especially with the semi industry. And and when you think about ceramics, it's actually a very sustainable material.

So I like the idea of AI kind of unlocking and almost being prospective in what application ceramics will unlock for us going forward. And so I I I sort of I invest along the AI spectrum, but always reflect on what what can our ceramic unlock in the AI space. So, you know, ceramics are very heat dissipating. They're insulative in a semiconductor, know, in the semiconductor industry, and so they do allow for very high compute novel use cases.

So I'm I'm I'm I'm timing the two, in parallel, And I think, I think there's a there's a there's a very interesting future business for Natera, in the AI space. But we'll have to, we'll have to we'll have to wait and see on this one and continue investing. That's a a valuable perspective as you look at AI externally externally and where you're focused. Maybe one, almost a self serving question from a professional development standpoint.

As we look internally inside our firm, we're also looking at how to apply AI and managing the next best, you know, sort of a venture firm, trying to become an iconic VC in this industry. As you look at AI internally, is there anything you're doing? I mean, we're looking at sort of how to sort of manage the deal. We try and see 3,000 investment opportunities each year.

Is there something we can use AI to sort of filter those in a unique way? We're looking at how AI can be applied to our portfolio management activities, to reporting, to research. I mean, there's just so many different opportunities inside our investment firm. How are you thinking about sort of, you know, potentially the use of AI inside Yeah.

The the corporate venture activities that that you're you're managing? Very cool question. Very cool question. We're actually, aggressively evaluating something like this internally.

You know, I think we are at our core. One thing I didn't mention earlier in this podcast is Natera Global is headquartered in Japan. We are culturally very Japanese. I'm based in Silicon Valley.

I run a team in Silicon Valley, so we we operate at Silicon Valley speed. But we are beholden to the Japanese culture, which is very, very dependent on, decision making in a social construct. So, it's not one individual making a decision for everybody else. It's the collective making a decision.

And so we are actually looking at ways that AI can expedite that. Right? And and do so in a really transparent manner. But nobody likes the decision being made and everybody not understanding exactly why that decision was made.

And this applies to making, deal making decisions. Right? Taking the, taking the company from stage zero to stage seven in our top of in our funnel. Right?

So we wanna be able to use AI tools, kind of workflow productivity tools coupled with AI to effectuate some of that. Right? We you know, we'll use Slack. We'll use Teams from time to time.

We use Google products. We use CRM such as Affinity. I think I think AI can kinda help us blend all of those tools together to make better decisions and make better investments. Right?

At the end of the day, I'm a big believer in the collective making a better decision than a than a than an individual. So We'll have to continue to share experiences on that. I just I think it's a fascinating area, I think certainly both corporate venture firms and traditional VC firms are going to evolve and and and likely identify sort of a series of best practices for for leveraging AI. So I look forward to continuing to share experiences on that.

I'm going to shift to the rapid fire portion of the program last two questions for you before we wrap up. One professional and then one personal question, if you don't mind. The professional question is just sort of, I'm always curious as to favorite podcast or industry publications, what are what are people reading, you know, sort of, is there anything that has really captured your attention and you're pretty consistent about reading or listening to as it relates to publications or podcasts?

Yeah. Look, you know, I I I I question whether I should share this or not. I'm a big fan of the Joe Rogan podcast. I listened to that for kind of the, I'm just fascinated.

I don't necessarily agree with him politically or anything like that, but I'm fascinated by the types of people he interviews. These are thought leaders. These are the people that are kinda leading the charge in the areas that impact my life, your life. And so I I just find him to be very informational.

I like all in. That's really interesting. A 16 z feature content is cool. I think, I think they've got this, you know, software is eating the world, is a common topic for us at Mattera.

We're a materials company. We don't have, we don't have any software expertise. So, tuning into a 16 z content is always helpful. And then I I also I I find long form thinkers on LinkedIn interesting as well.

So I, I generally I know LinkedIn's become a bit noisy lately, if I may say that, but, but I'm I am always interested in in people's posts about lessons learned in the venture capital world. I'm always looking for ways to be more founder friendly. I am an I was an entrepreneur. I continue to be an entrepreneur as I build this fund, but, I really wanna make sure founders like us, we're good to them, and we we can shape the future better if we can learn to think the way they do.

Right? So that's that's how we, maintain a tier one, CBC program. I think that's a valuable point of view. Yeah.

I appreciate you sharing that. On the personal front, I'll I'll share with you that when I went through the Kaufman Fellows program, who the Kaufman Fellows actually, as part of this recorded session, distribute it out to all the different Kaufman Fellows, of which I think there are 900 worldwide or something like that now. My thesis project, as I went through and graduated with the Coffin fellows is on strategic planning for life. And so was looking at, you know, how do you apply business tools to life?

And as part of that, I found that a morning launch routine was something that high performers really thought about. And so sort of morning routines was something, you know, how do you launch each day to sort of bring your A game effectively not just to business but to life? And so if you don't mind me asking, I'd love to just is there anything that you do in the morning that helps you to sort of seize the day and and bring your A game to to to the office and and to, to some of the discussions you participate in?

Yeah. Great question. I I I don't wanna sound cliche, but I think an early morning workout is quite frankly the best way to start the day. It gets the endorphins pumping, gets the dopamine going.

It just I never have a bad day if I get an early workout in. So I I like to rope. I used to row crew in college, so love getting on the in the morning. Even twenty to thirty minutes is a fantastic way to start the day, followed by a very strong coffee drink.

I'm a big cold brew fan, nitro cold brew all the way. It's packed with caffeine, and then, you know, I'm off to the races. Right? So if I can if I can get this in early enough, gives me some time to catch up on emails, the day is is clear for me.

Right? So I, this is this is what I try to do on most days. Not every day, but on most days. Thanks for sharing that.

I appreciate it. On behalf of the team at Impact Venture Capital and the Coffin Fellows organization, thanks to Thomas Clues for spending a little bit of time with us. Thanks, Thomas. Thank you.

Thanks for having me. Really appreciate the time. That's a wrap.