Wearable Tech World Feature Article
June 10, 2014

Lux Capital Making Investments in Transformative Tech

Lux Capital is a company focused on helping emerging companies with transformative technologies that have a goal to change the world. The team of entrepreneurs and investors help companies get better connected, have deeper insight and command industry leadership faster than the competition.

I recently caught up with Adam Goulburn, senior associate with Lux Capital. Based in the firm’s New York headquarters, Adam concentrates on investments within the healthcare and life science sectors focusing on broad investment opportunities in healthcare IT, services, mobile health, and therapeutics. Originally from Australia, Adam has dual degrees in Commerce and Science, completing his Ph.D at the Australian Stem Cell Centre and was chosen as a highly selective Premier Scholar.

Our full interview appears below.

What key elements do you typically look for in a business plan?

AG: So business plans take, for us and for me in particular, many forms. What I look for are a couple of key elements. One is an exceptional team and exceptional entrepreneurs. Entrepreneurs that have big, bold ideas—Ideas that are contrarian views in markets that have large incumbents, that don’t innovate as quickly as what they should. So these quick, nimble entrepreneurs can challenge those markets.

When should entrepreneurs turn to the investment community for financing?

AG: It depends on the company and the stage the company is currently in. For us at Lux, we invest early and there’s no stage that’s too early for us. We actually create companies from scratch, so whether it’s an idea on the back of a napkin, or whether it is a business plan, we’re interested in talking to great entrepreneurs. There are so many options for funding these days for an entrepreneur. There are friends, family, angel networks, crowd sourcing platforms, incubators, accelerators, and then venture and private equity. So it all depends on the stage, and more importantly what the entrepreneur wants to achieve with those goals and how quickly.

Is there something more that you would want to say in terms of what that entrepreneur would like to do with those dollars, could you elaborate on that just a bit?

AG: Whenever we sit down with a team or a single entrepreneur, we ask how much funding they’re looking for and what they hope to achieve with those dollars, what milestones they want to hit. Often we’ve convinced or partnered up with an entrepreneur and put more dollars in because we ultimately support the vision. We want to go quicker and want to create that large business that the entrepreneur does as well. So, I think that entrepreneurs should have an idea as to the amount of money they want to raise, but it shouldn’t be a cemented number that they’re not flexible on.

Where should entrepreneurs then go to raise capital?

AG: As I said in terms of the “who,” I mentioned before friends, families, angel networks are really prominent, crowd sourcing platforms – the Indiegogos and the Kickstarters of the world, the angel lists, incubators and accelerators, the Y Combinator, and specifically my area in health, Blueprint Health, Rock Health, these types of institutions. And then there’s venture and private equity and even the larger hedge funds. So they’re the types of institutions.

In terms of geography, Silicon Valley/Bay Area obviously dominate—there’s just an enormous appetite for innovation and tolerance to risk over there, and they also have the most know-how on how to build companies with entrepreneurs. We at Lux have an office in Palo Alto, obviously in the heart of the Valley, and we also have an office in New York. New York is making a big push in terms of early stage startup and innovation. Boston is very prominent in life sciences, therapeutic and medical devices. But where we look for entrepreneurs is across the country, and there are therefore investors across the country. Nashville has a big focus and is a big epicenter for healthcare, so I focus on those areas as well as Philadelphia and even areas like Madison, Wis.

Would you like to give us a bit of an outline of what a great entrepreneur and a great team might look like?

AG: Well that’s the intangible and that would be different for any investor that you ask, and even any entrepreneur that you ask. My two things, what I look for – and there will be an infinite number of characteristics and traits – I tend to look for two things. Entrepreneurs that I like to back are ones that charge through walls and do anything to get their business up and running and make it successful. So that’s the first thing. The second thing which is ultimately related to the first is – a great entrepreneur has the ability to sell, and by that I mean sell potential investments to us so they can fundraise, but more importantly sell potential employees and team members. Can they create a vision where people want to follow them into the trenches and be a leader? Can they sell potential customers and clients and business development folks? And they’re all different pitches and different selling arguments, and a great entrepreneur knows how to adapt to who they’re speaking to at the right time in order to create that vision. So there things like passion, knowing the space cold, can be the face and vision of the company. The main two things I look for – their ability to charge through walls and also their ability to sell.

So going back to how can entrepreneurs calculate the value of their enterprise?

AG: This for me is an interesting question – it’s also dependent on the stage of the business. For me, it comes down to demand for investors to invest in the company and what the market will take. But the most important thing for me is we want to partner with great entrepreneurs that want to change the world, that want to create really disruptive, transformative businesses, and if you do that together, everyone’s happy regardless of valuation. So that’s how I tend to look at it.

I know that we’ve looked at companies that are quite high in valuation but we think that those can be really dominant businesses in their markets and are happy to pay for the valuation. We tend to invest earlier stage, so create companies from scratch, series A’s are our bread and butter. So the lower valuations tend to be in our ballpark because we’re taking that higher risk. It is always a negotiation but we always find that we come out to a fair valuation.

How can entrepreneurs then capture the attention of potential investors?

AG: Again, some of what I said before with your question on what makes a great entrepreneur. Entrepreneurs need to be bold, they need to be the face of the company and present their vision. Be integrated and entrenched in the market and their industry. One of the things I find with entrepreneurs I know are continual working relationships. There’s continual updates—we sit down for coffee every now and again. I continue to make introductions and be helpful regardless of whether there’s a dollar invested in the company. So it’s a two way communication and relationship that's continuous rather than just an On/Off.

In addition there’s creating a presence, whether at conferences, summits, networking events, but also an online presence through various outlets. So when I think about some of the great entrepreneurs…they know the space cold, they’re entrenched in their industry, they blog, they tweet, they’re not just an opinion but a real presence, and they become a go-to resource for other entrepreneurs in the industry but also outside of the industry. What’s this entrepreneur doing that’s enabling them to attract a great team, and make headway into the industry and the market as well as attract investors.

Thinking about the commitment that the entrepreneur really needs to make in the early stages to build a presence, to build their brand, to have others be interested in what they have to say and potentially what they are going to accomplish.

AG: Right, and you think about some of the entrepreneurs that are out there. The obvious types are the Steve Jobs of the world and Elon Musk, and what they’ve done to create that presence and how they go about doing that. Younger entrepreneurs should look up to those types, and they’re obviously not the only two but there’s something to learn there.

Are there any current events in the technology sector that you feel are particularly notable these days?

AG: As you mentioned at the beginning of this call, I focus mainly on healthcare, so within the healthcare world, there’s a conference coming up in Washington, D.C. at the beginning of June called the Health Datapalooza. I’ve been at that since the beginning, it’s now in its third year and is growing exponentially. I’m actually sitting on a panel that’s having young wearable start-up companies pitch to a panel of investors. It’s a great conference.

Health 2.0 puts on a great conference every year that I try and get to. Incubators like I mentioned before, Blueprint Health, Rock Health, even Startup Health is based here in New York organize great events, and they’re more regular events that I try and get to. Another event that comes to mind is CES, and they started implementing a real focus on wearables, digital health and health tech as well, and that’s obviously a large conference.

Looking ahead, how do you imagine wearable technologies enhancing our lives, particularly in healthcare?

AG: How long do you have? Look, technology is becoming more and more integrated in our daily lives. That’s not an out-there statement – it’s just a fact. Quantified Self is providing insight into ourselves as human beings that we’ve never had before. We’re now monitoring ourselves, we’re working out what we eat and how far we walk and how much activity we’re doing, and blood pressure and heart rates. There’s an enormous amount of data out there. The next step for me is to turn that into actionable data. What can we do with that data and how do we change our behavior because of that data, so that we’re living a more healthy extended life.

So that’s what I think the next steps are, how to actually provide a layer of software on top of the data that’s already out there that can provide actionable data, not just to us as consumers but also physicians and doctors that want to and need to utilize this data. So that’s more on the consumer side.

I guess you can also look at it from the enterprise side. And consumers are also a major role here and are linke—specifically focusing on employers and health plans that manage a large population, a large number of lives. I think there’s a way for wearable technology to help manage those lives.

And too much of healthcare is being focused on doctor visits when there is an acute problem. And wearable technology enables doctors to extend away from the doctor’s clinic. So the 99 percent of the person’s life that he’s outside the doctor visit, you can help monitor and manage those lives. And that is ultimately what we like to think of here at Lux is distributed healthcare. Moving healthcare out of the clinic, into the workplace, into the home, into the daily life and better manage those lives. I think the key is combining engagement with a great technology that we’re innovating with, and engagement is a tough thing to crack but I think we’re making some good headway on that. 

Want to learn more about the latest in wearable technology? Be sure to attend Wearable Tech Expo, July 23 & 24 at the Javits Convention Center in New York City.  Stay in touch with everything happening at the event -- follow us on Twitter.

Edited by Maurice Nagle

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