Ray Lane, founder of GreatPoint Ventures and partner emeritus at Kleiner Perkins, does not believe in venture investment at scale.
He aims to work as closely as possible with the founders of his portfolio companies, offering strategic and operational help along the way, Lane told VCJ.
“All my CEOs would say, ‘of all my board members, I spend the most time with Ray,’” he said.
One such CEO is Ethan Brown of Beyond Meat, the most successful IPO of the year.
“When you’re building a company, you need partners you can trust. Ray has been that person for us from the start. I can’t think of anybody I’d rather have on my side of the table,” Brown is quoted as saying on GreatPoint’s website.
Lane took an early bet on the plant-based alternative maker of meat products while he was at Kleiner, and later had GreatPoint Ventures invest in Beyond Meat at Kleiner’s cost basis, he told VCJ.
His close involvement with Beyond Meat is emblematic of GreatPoint’s approach to venture capital investing, Lane explained.
GreatPoint Ventures makes less than 10 investments a year because Lane and his two partners, Andrew Perlman and Ashok Krishnamurthi, want to stay true to the hands-on investment philosophy.
The firm raised a $200 million debut fund in 2015 and recently and quietly raised a second $300 million fund, Lane said.
Lane, who is best known for turning around Oracle when he was the database developer’s president and COO in the 1990s, has been a venture capitalist since 2000.
After spending 14 years as a senior partner at Kleiner Perkins, he started GreatPoint Ventures in San Francisco to broadly focus on enterprise technology and health and wellness.
Before GreatPoint, Lane met up with Brown in 2011 at the University of Missouri to see the lab and meet with the scientists who were engineering what later became the basis of the company’s chicken strips.
“What fascinated me is that it had the texture of chicken.” Lane said. “I was a believer from the beginning.”
Beyond Meat, which is based in El Segundo, California, was initially focused on making a plant-based chicken product, but sometime in 2013, Lane and Brown talked about developing an alternative beef product. Raising cows takes up a lot of land, Lane explained, and they consume a lot of water and emit methane gas. In addition, beef is often associated with heart disease and other health issues.
“I thought we would build a small company with chicken,” Lane said, “but if we would substitute beef for plant-based protein, then there is a huge market.”
Lane said that getting a plant-based protein to taste like beef took a lot of work, and although he did not know how to develop plant-based meat, he worked closely with the company helping with recruitment, fundraising and many aspects of the go-to-market strategy.
GreatPoint Ventures tries to apply this model to every investment, even if this means that Lane has to step off of the boards of late-stage companies and join the boards of early-stage companies, he explained.
“There is no question there is a bubble in VC,” Lane said about high valuations and thousands of companies that find funding.
That is why GreatPoint Ventures makes sure to not chase the latest tech trends, but instead backs companies that are solving real problems and have large addressable markets.
The firm invested in 20 companies from its first fund, and it has already made eight investments from its second, Lane said.
In addition to Beyond Meat, GreatPoint Venture’s exited its investment in Beyond Core, when SalesForce paid $110 million to acquire the enterprise analytics business in 2016.
Other investments include Skyhawk Therapuetics, a drug developer, RapidDeploy, an emergency dispatch technology maker, and Phil, a prescription management and delivery service provider.
In fact, about half of GreatPoint Ventures investments are healthcare companies, and although they are working on solving even more critical problems, like early cancer diagnostics and developing drugs for previously untreatable diseases, just like Beyond Meat they have a high-risk, high-reward profile.