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Prime Movers Lab raises $245M fund aimed at investing in early stage science startups

Dakin Sloss, Prime Movers Lab general partner, joined Yahoo Finance to discuss the company's new $245 million fund to invest in early stage science startups.

Video Transcript

[MUSIC PLAYING]

ADAM SHAPIRO: Roughly 30 minutes to the closing bell and the indices are in the green. We talk P/E sometimes, let's talk VC right now. And we invite into the stream two important people. First, Dakin Sloss, the Prime Movers Lab general partner and founder, and Julia La Roche, who is a correspondent here at Yahoo Finance.

Dakin, I just want to ask you real quick. You just raised $245 million for a fund that's going to look for scientific startups. For someone like me, who might be interested in getting in on this kind of thing, what kind of startups are you looking at when you say scientific?

DAKIN SLOSS: First off, thank you so much for having me on. I really appreciate the opportunity. So what we mean by a scientific startup is a company where the core value proposition is in the intellectual property, some sort of scientific breakthrough. Maybe this is energy, transportation, manufacturing, biotech. These kinds of companies, where what they've invented is a fundamental change in the market that they're going after.

JULIA LA ROCHE: Dakin, I just want to congratulate you. This is your second fund. Adam was just mentioning, 245 million raised here and some big name backers. I know Bill Ackman backed the first fund. You have Dmitry Balyasny, Joe Lonsdale, and just a handful of very well-known investors.

So you're pretty young, I want to kind of hear from you, how do you get these investors on board with what you're doing, especially at a young age?

DAKIN SLOSS: Well, yeah, thank you. I think, first off, it has to do with the amazing entrepreneurs that we have. So in our first fund, we've backed a lot of really phenomenal companies, like Momentus, which has already announced that it's going public in a SPAC merger. Upward Farms, Covaxx, Heliogen, these are companies that are literally transforming billions of lives.

And so I think it really appeals to investors for two reasons. One is we're producing fantastic returns. Our first fund is on track to be one of the best performing funds of 2018. But also, the companies we're investing in are feeding the planet, making it possible for space infrastructure to happen for the first time, providing billions of doses of coronaviruses vaccines to help end this pandemic.

And I think people like to put their money in someplace that's actually going to have a meaningful difference for the quality of human life.

JULIA LA ROCHE: You just mentioned a handful of the portfolio companies solving some of the biggest problems we face right now. And I am going to ask you just about the proliferation of SPACs, just want to hear your views. And are folks coming to you and looking at your own portfolio companies to take public?

DAKIN SLOSS: Yeah. Well, first off, I think big picture. If you look at the original wave of tech companies, like Amazon or Google, these companies went public much earlier in their life than companies over the last 15 years have. And then there was a lot of regulation put in place that made it much more onerous to go public.

And in particular, it's very difficult to go public as an earlier stage tech company, where a lot of the value is in the future and you're relying on telling a future story about future financials. And what SPACs have really done, and I think it's not talked about enough, is made it possible for earlier stage tech companies to access the public markets, which is both good for those companies in order to get capital and good for public market investors to be able to participate in the upside and participate in the growth story. And we have one company, obviously, already announced going public via SPAC, and there'll be some more exciting news that I can't talk about quite yet for other companies in the portfolio in the coming weeks.

SEANA SMITH: Hey, Dakin, it's Seana. I want to ask you more broadly speaking, because we've been talking about over the last several weeks, especially the role of technology in today's society. And I know you have a lot to do with that, a lot of your work. I'm curious, just because it can be used, one, for a lot of good, but it can also be very destructive.

How are you thinking about this as you identify and select which breakthrough scientific inventions you want to back and you think are a positive influence here for society?

DAKIN SLOSS: Yeah, I think it's a really good point. And I think, in general, the technology sector has been overenthusiastic about how technology can contribute to human good. But we've seen lots of examples over the last 10 years on how social media has made a lot of people's lives much worse. So technology is just a tool. It's how you use it that determines what the outcome is for people.

And I think the big thing that we look for is, what are the motivations of the founders that we're backing? So every CEO that we're backing is not doing this for the money. They're doing it because they want to contribute to a better world, for their children, for their community, and for humanity at large.

And I think if you have founders that are motivated about the right things, then they take the time and are thoughtful about making sure that the downsides associated with their technology are mitigated. And that's really important to us. That's why we're in this business.

ADAM SHAPIRO: Last question for you as we wrap this up, when you're in the position you're in and targeting these different companies for investment, once you've made that initial outlay, do you take part in the running of the company or is it more traditional VC? We stand back and watch the growth.

DAKIN SLOSS: Yeah, I think it's a great point. So today, there's this really crazy thing going on that founder friendly is known as stepping back and not participating. And that's because the people who get involved in companies from VC too often mess it up and they're really arrogant, they bring kind of all sorts of perspectives that are not necessarily right for the company. And we've taken a different approach.

Really, the commitment that we make to our founders is that, by far, the least useful thing we provide is capital. And so we have partners who are focused on helping them hire, helping them with government relations, with PR, with marketing. We have executive coaches that are supporting them in their personal growth and development so they can become the best leaders possible.

And we really roll up our sleeves and do whatever it takes to make sure that our founders not just are successful, but enjoy the process of building their companies. And that takes a different mindset than, I think, your typical VC.

ADAM SHAPIRO: And I got to let you know, Dakin, we want you to come back because you dropped some hints about some big announcements coming on. But if you don't, Julia La Roche will get very angry. And you don't want to cross Julia La Roche.

JULIA LA ROCHE: Oh, we'll definitely have him back.

ADAM SHAPIRO: Watch out.

DAKIN SLOSS: I'll be back, don't worry.

ADAM SHAPIRO: Dakin Sloss, Prime Movers Lab general partner and founder, and Julia La Roche, please forgive me, I know I'm going to get a text message soon.