Highlights
- The name “Out the Back Ventures” is inspired by surfing, symbolizing looking beyond the first wave to find better opportunities, akin to investing in future-focused startups.
- The firm specializes in converting university research, particularly deep tech, into commercial ventures by co-founding startups and adding business expertise.
- University tech transfer offices play a crucial filtering role, allowing Out the Back Ventures to mitigate early-stage investment risks by selecting promising IP.
- The firm is bullish on transformative technologies like nuclear energy (small modular reactors, fourth-gen reactors) and neuromorphic computing.
- Family offices and university funds form a significant part of the investment syndicate due to their entrepreneurial background and appetite for early, high-risk investments.
- Commercial readiness level (CRL) is a key focus, involving aligning startups with industry partners to validate market fit and prepare for scaling.
- Keong emphasizes humility, collaboration, and strategic acquisitions as vital lessons from his investing career.
Summary
In this episode of The Innovators and Investors Podcast, host Kristian Marquez interviews Keong Chan, Managing Director of Out the Back Ventures, a venture capital firm specializing in early-stage deep tech startups spun out of university research. Keong elaborates on the unique investment thesis of Out the Back Ventures, focusing primarily on university research translation into commercially viable companies, particularly in deep technology sectors such as nuclear energy and neuromorphic computing. The firm takes an active role in the startups by co-founding and providing management resources, often writing the first investment checks alongside universities and other angel groups.
Keong explains the critical role of university tech transfer offices in filtering and vetting innovations with commercial potential, which greatly aids in risk mitigation for the firm. He also highlights the growing involvement of university funds and family offices as key investors and syndicate partners. Keong shares insights from his 20 years of experience in early-stage investing, emphasizing the importance of strong teams and the balance between scientific integrity and commercial viability.
The conversation explores emerging technology trends, the value of identifying ‘noise’ in research as an early indicator of opportunity, and the importance of strategic partnerships with researchers and institutions around the globe. Keong reflects candidly on lessons learned throughout his career, stressing the significance of collaboration, humility, and strategic decision-making. The episode closes with Keong expressing admiration for Mike Moritz of Sequoia Capital and his nontraditional journey into investing, highlighting the value of diverse experiences in shaping investment perspectives.
Key Insights
- Surfing Analogy Reflects Strategic Patience in Investing: Keong Chan uses the surfing metaphor of waiting for the second or third wave to describe Out the Back Ventures’ approach. Instead of chasing initial hype, they look deeper into the horizon—investing in technologies and startups that may take years to mature but hold significant potential. This highlights the importance of patience and foresight in venture investing, especially in deep tech, where gestation periods are long.
- University Tech Transfer Offices as Gatekeepers and Partners: Universities have built-in systems to evaluate and patent early-stage technology. Out the Back Ventures leverages this rigorous university-side vetting process to reduce risk. The tech transfer offices act as long-term investment curators, investing university funds into protecting IP with commercial potential before presenting opportunities to external investors. This symbiosis creates a reliable funnel of high-quality early-stage innovations.
- Focus on Deep Tech with Long-Term Impact: The firm prioritizes sectors such as nuclear energy, which is undergoing a renaissance with innovations like small modular reactors and fourth-generation reactors, and neuromorphic computing, which promises dramatic improvements in energy-efficient processing. By focusing on foundational, “fit-for-purpose” research that surpasses incremental improvements on legacy technology, Out the Back Ventures aligns with breakthrough scientific advances that could redefine industries.
- Active Involvement and Syndication Mitigate Early Stage Risks: Out the Back Ventures typically co-founds startups with researchers, writing the first checks alongside university funds and family offices. This hands-on approach includes helping to assemble management teams and cultivating industry relationships, especially for commercial validation. Syndicating capital from aligned investors such as family offices provides financial stability and long-term support, which is crucial given the high-risk nature of early-stage deep tech.
- Family Offices’ Unique Role in Deep Tech Funding: Family offices are entrepreneurial, risk-tolerant, and competitive investors who value early access to groundbreaking technologies. Their direct cap table involvement, as opposed to indirect investment through VC funds, offers transparency and closer relationships with startups. This dynamic suits deep tech’s extended timelines and high uncertainty better than traditional venture capital models, which typically prefer later-stage validation.
- Commercial Readiness Level (CRL) as a Strategic Milestone: Beyond developing technology to a viable prototype (Technology Readiness Level 3–4), startups must demonstrate commercial fit by validating customer interest and pilot projects. Out the Back Ventures prioritizes this transition, using their networks to connect startups with industry players, government agencies, and prime contractors to gain real-world validation, which is essential for scaling and follow-on funding.
- Lessons on Collaboration and Strategic Growth: Reflecting on his 20-year career, Keong highlights a critical lesson: knowing when to bring in external expertise, share equity, and pursue strategic mergers or acquisitions rather than growing solely organically. This acknowledges that different growth stages demand different leadership and capabilities. The humility to recognize one’s own limits and the courage to collaborate widely are vital for building scalable and sustainable companies.
- Noise in Research as Investment Signal: Keong describes how the volume and polarity of discourse (loud proponents and skeptics) within the research community around emerging technologies signal key innovation inflection points. This “noise” helps identify areas where disruptive breakthroughs are imminent, but where the broader market and mainstream investors may still be unaware—enabling informed, early-stage bets.
- Diverse Perspectives Enrich Investment Decisions: The discussion about Mike Moritz, a journalist turned legendary investor, reinforces that nontraditional career trajectories can sharpen one’s investment acumen by emphasizing people, conviction, and narrative rather than purely technical expertise. This suggests investors need not be domain experts in all technology but must understand market dynamics, team capabilities, and signals of potential success.
- Bridging Science and Business Requires a Deliberate Model: Advanced university research often suffers from “technical proudness” and a lack of business experience among researchers. Out the Back Ventures addresses this by co-founding startups and bringing in business and operational expertise early, solving a common innovation gap where brilliant technology fails to translate into scalable startups. This model paves the way for stronger technology commercialization and increases chances of sustainable success.
- Global Reach Enhances Access to High-Quality Research: Operating across Australia, the Netherlands, the UK, and the US, Out the Back Ventures taps into diverse ecosystems and world-class institutions such as Oak Ridge National Laboratory and Oxford University. This broad exposure allows the firm to identify convergent technology trends (e.g., quantum sensing, AI, nuclear energy innovations) and build a diversified portfolio across geographies and disciplines.
- Timing and Capital Efficiency are Crucial in Deep Tech: The firm typically invests in startups with a runway of about two years to reach key scientific and commercial milestones. Such focus on capital efficiency and milestone-driven funding rounds supports startups to advance technology readiness while building market traction, essential for attracting later venture rounds or strategic partnerships.
- Balancing Scientific Integrity and Commercial Pressures: Keong acknowledges the tension between the desire to push technology forward and the need to remain scientifically rigorous. University cultures understand this dynamic and emphasize patience, recognizing the long development cycles inherent to breakthrough innovation. This balanced perspective balances optimism with realism in startup development.
- Future Outlook: Investing in Foundational Enabling Technologies: The conversation underscores the strategic value of foundational research areas such as AI hardware (neuromorphic chips), energy generation (advanced nuclear reactors), and quantum technologies, which have the potential to unlock massive economic value in coming decades. Early investment exposure to these fields supports long-term alpha generation and positions capital at the forefront of global scientific advancement.
Conclusion
Keong Chan’s experience and Out the Back Ventures’ unique model highlight how deliberate, patient, and well-informed early-stage investing in university-originated deep tech can yield outsized returns while driving meaningful innovation. By leveraging strong relationships with tech transfer offices, syndicating capital with family offices, and supporting commercialization and management capabilities, this approach transforms complex research breakthroughs into market-ready startups. The conversation provides invaluable insights for investors and founders interested in navigating the challenging but rewarding world of deep technology commercialization.
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