Anorak Ventures: Partner Meeting 2024

On October 10th, we hosted our annual partner meeting at Shack 15 in San Francisco’s iconic ferry building. The afternoon was attended by an amazing group of investors and founders who presented on topics including Robotics, AI, AR/VR, Material science, extraterrestrial communications, and early-stage investing. We were also treated to an airshow provided by the Blue Angels!

GP Greg Castle in conversation with Brad Bogolea (Simbe Robotics)

Key takeaways from our State of Venture presentation include:

• The S&P500 is having a strong year (+23%), driven mainly by large-cap equities, while small-cap equities are lagging behind (+7%). Lower public multiples and political and economic uncertainty have kept the IPO market stunted for technology companies.

  

  Anorak's State of Venture Keynote

• With IPO and M&A activity low, liquidity for LPs has suffered, resulting in less capital available to be reinvested into the venture asset class.

• LPs are increasingly favoring experienced fund managers and fewer funds are increasing in fund size YoY.

• VCs with capital to deploy have more investment options and greater leverage when negotiating terms. It’s an investor friendly market for those with capital to deploy.

We heard from a selection of incredible founders and friends of the fund:

We learnt about the latest developments in Ai from Jake, how robots are changing the face of retail from Brad, efficient military planning from Grant, building gaming communities from Jack, material advancements from Derek, transmission of video from space with Nicolaas, as well as the incredible story of building and selling OpenGov for $1.8B from Zach. Finally, Alice Bentinck, the CEO of Entrepreneur First sat down with Charlie to discuss Non-American Dynamism and why she has recently moved the launch phase of her accelerator to San Francisco.

Non-American Dynamism with Alice Bentinck, CEO and Co-Founder of EF

We covered Anorak’s fund performance, provided an update on our thesis, and gave a first look at our plans for Fund III:

• Flock Safety, Anduril, Rec Room remain the core return drivers of Fund I. Onebrief and Simbe recently closed massive funding rounds and show great promise of pushing TVPI well beyond 5x.

• Fund II is still early, but Framework, Gridware, Trass Games, Sesame, and Polimorphic are showing early signs of breakout success. We’re targeting the same 5x TVPI.

• We consistently see authentic, mission-driven founders have better results in raising, hiring, and growing their businesses. The patriotic movement to ensure the US and our allies remain strong and resilient is a timely mission we will continue supporting through Fund III.

• Our top-performing founders come through trusted referrals. As our network of investors and successful founders continues to grow, we will develop systems to accelerate and encourage these valuable referrals.

• Over 160 people attended our evening event, including investors from almost every major firm and inspiring founders in our network.

SF Tech Week - Anorak Ventures DeepTech Mixer

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A massive thank you to our sponsors, UBS, Steifel, Perlson, VentureBest, and Orrick. To all the founders and friends who presented, we thank you for your time. We feel lucky every day to be supported by such a strong community and are incredibly excited to continue our work with Fund III.

Welcoming Charlie Leggate to the team

I'm very excited to share that I have joined Anorak Ventures, an early-stage emerging technologies fund. Our aim is to be the partner for seed-stage deep tech founders whose companies have a clear vision of how to push humanity forward.

“Vision” is an intentional word here. In building a business, it’s everything. I’ve been lucky to learn something about that over the last near-decade across strategy, product management, and most recently founding Avie AI. 

At the DeepTech accelerator Entrepreneur First in London, where I started Avie, founding teams learned a mantra: “Strong Beliefs, Weakly Held.” That’s Alice Bentinck’s and Matt Clifford’s abstraction of how to never lose sight of your vision, while remaining adaptable enough on how to get there. We were regularly pushed to present our visions for the company we were building. It was clear, very early on, which companies were going to raise the money they needed, hire the team members they wanted, and sell to their target customers. Those companies had the most ambitious and clearest visions.

Perhaps surprisingly, the hardest businesses to build are often those with the greatest visions. Technical founders building frontier technologies in robotics, AI, VR/AR, and deep learning usually find it easier to envision how the world might be in a decade compared to an MBA building a B2B SaaS solution (no offense to those building brilliant, high-margin software businesses). From my experience at Avie AI, we never struggled with the question “How big could this be?” when we started. My co-founder and I had a deep belief that biometric data from multiple wearables was the future of preventative health and that chat interfaces would be the future of interrogating data sets (contrarian at the time), making it incredibly easy to present the size of the opportunity.

Since then, Avie partnered with and was eventually sold to the UK’s largest health and wellness retailer, a company that bought into our global vision. I, however, have become a “vision junkie” (trademark pending), hell-bent on finding those with the most grandiose visions for how the world can be in the future and supporting them in any way I can to make those visions a reality.

I met Greg Castle three years ago. He not only shared the perspective outlined above but had spent the previous five years supporting and investing in some of the most exciting entrepreneurs and their visions, including Oculus, Flexport, Mux, Anduril, Flock Safety, and Rec Room. So today, after moving to the Bay Area from London, I am incredibly excited to join forces with Greg and continue to find, fund, and support the most ambitious people and their visions for the future.

If you’re a founder with a clear and ambitious vision for your company and team, please get in touch at charlie@anorak.vc.

Ready Player Two

After years of anticipation, today Apple finally announced its entrance into the XR market with the launch of its Vision Pro headset.

This is a big moment for wearable technology, and our investment thesis at Anorak Ventures. We've been focused on XR since Greg's 2013 investment in Oculus. We’ve invested in XR gaming (Rec Room/Virtex), enterprise collaboration (Arthur/Resolve), K-12 education (Prisms of Reality), secondary education (Osso VR/Moth&Flame), healthcare (Innerworld/Karuna), infrastructure (Vntana), and other adjacent areas. We’re big believers that XR, as a medium, can improve the way that people work, learn, relax, and most importantly, connect with each other over distance.

Here’s why we are bullish on the Apple Vision Pro, and the broader XR market, after today’s announcement:

• Apple is aspirational - Nobody is better than Apple at making technology cool. It stems from a combination of human-centric design, product quality, iconic marketing, and perhaps a bit of lingering charisma from Steve Jobs. Google attempted AR with their Glass product but it backfired as users were labeled Glassholes. Meta has spent billions to widen VRs appeal, but their user base remains a narrow demographic. With $40B of wearable revenue last year (one-fifth of Microsoft’s total revenue!), Apple is one-of-a-kind at bringing products from niche to mainstream.

• Competition is good - Meta is currently the only viable option for XR at scale. Startups are, and have been, trying to bring new headsets to market, but the capital intensive nature of novel hardware makes it difficult to succeed. Customers benefit when companies are forced to compete. Innovation accelerates and prices are driven down. Regardless, if the Vision Pro succeeds, consumers will benefit from today's announcement.

• Flagship experience - Like Tesla, whose first product was a $140,000 two-seat convertible, Apple is entering the market with a high-end, no-compromise device that has impressed everyone lucky enough to try it. Meta chose to subsidize the cost of headsets to gain adoption. The $3,500 price point of Apple’s headset shows conviction in its ability to produce amazing products. The Vision Pro will initially be inaccessible to most, but like the iPhone, over time will come to be seen as indispensable while the price will continue to drop. Furthermore, the 525 Apple Stores around the world will be a valuable channel to demo this amazing new technology to millions of people, creating pent-up consumer desire even for people who can’t yet afford it.

• Marketing to the masses - There was a notable difference between how Apple marketed their headset today versus Meta. Absent from Apple’s presentation was an excess of technical jargon and a deep dive on the technology; instead Apple focused on more familiar and practical use cases that users could easily grasp. Mark Zuckerberg’s fascination with the technology has long been reflected in Meta’s marketing efforts, but likely hindered XRs appeal to the masses. One of Apple’s strongest attributes is their ability to market to the masses by portraying an intimately familiar experience, rather than by emphasizing cutting-edge science-fiction technology.

• One OS to rule them all - Complete control over both the software and hardware gives Apple a distinct advantage in XR – Apple is uniquely positioned to bridge the most immersive interactions (in XR) with the most frequent interactions (on iPhone). Apple's tight iOS/MacOS/iPadOS integrations and seamless blending of the physical and digital worlds make Vision Pro a very familiar and welcoming environment. Putting on a Meta Quest 2 today is disorienting – Apple is painting an entirely different vision for XR where it can seem fully immersive, or not at all immersive, with a literal control dial for the user to set their immersivity preference.

• Apple’s play for the enterprise - Most Apple products do not highlight enterprise use cases, but the Vision Pro video prominently showed use cases in remote work and prosumer applications, positioning the headset as a companion device for business travelers and an at-home device for immersive remote work. The design has a waist pack making it more comfortable for long sessions. To us, this signals a commitment to the power user - the user who will spend an extra minute getting the headset ready because they’re planning on using it for 3 hours, not 3 minutes. Improved ergonomics will be important for enterprise usage.

• Pioneering 2D/3D interaction model - Apple’s core experience is focused on a more familiar 2D interface and retains a direct connection to the user’s physical surroundings. Familiar applications like Photos, FaceTime, and Keynote, can be tiled and arranged in an immersive 3D space. Apple realizes that very few people have tried XR or feel that they have a need for it, and is shipping the Vision Pro with a iPad-esque experience that feels familiar to users and allows the huge installed base of iOS apps to run on Day 1. It’s also less intimidating for users, who aren’t thrown into a completely virtual world which can be disorienting.

Anorak Ventures is tremendously excited for Apple to bring XR to market, and then, over time, to the mass market. The visionary founders of our VR/AR portfolio companies have seen this world coming for years and even decades, and there’s no better company than Apple to now show the world what this technology can do.

Contact: amal@anorak.vc