#StartupsEverywhere Profile: Neil Thanedar, Founder & GP, Utopic Ventures
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Investing in Scientists Solving The World’s Biggest Problems
With an academic and entrepreneurial background in the sciences, Utopic Ventures Founder and General Partner Neil Thanedar seeks to provide pre-seed capital to an underserved segment of the innovation ecosystem: scientist-run startups. We spoke with Neil about his passion for scientific and deep-tech companies, the impact of the accredited investor definition on the investing world, and his desire to make Michigan the next tech hub.
Tell us about your background. What led you to Utopic?
In 2010, I graduated from the University of Michigan with molecular biology and business degrees and a dream of starting a biotech company. My dad, who has a PhD in chemistry and now represents Michigan’s 13th congressional district, had started a one-person testing lab in St. Louis in 1990, and by 2008 it had grown to over 500 people. But in the height of the recession, the bank took over the business, foreclosed our house, and sold it all for about the value of their loan. To recover, my dad and I started a small testing lab in Ann Arbor, which turned out to be a great business. After that company became profitable, I started my own business called Labdoor, which tests anything the FDA doesn’t and provides modern consumer reports. It’s been profitable for a few years and runs independently now.
After running Labdoor for over ten years, I was excited to start something new. Back when I went through Y Combinator with Labdoor, I realized that I really love working with scientists who are starting their own businesses. In venture capital, there’s a stereotype that scientists don’t make good CEOs, or that they can’t run businesses, so when VCs do offer to fund scientist-led startups, they take a large portion of their businesses and install their own CEOs with a traditional structure. By now, we've realized that technical people like software engineers can run very successful and impactful businesses as CEOs. This should include scientists as well.
What kind of startups does Utopic Ventures support?
We invest in new biotech startups with a scientist CEO and a proof of concept for a breakthrough scientific idea. They can still be in university or a repeat founder. We want to be their first investor with a $50K-$250K check. It used to be the case that biotech startups would need millions of dollars in their first round so that they could build labs, cover equipment costs, etc. But startup costs are now dropping dramatically as more biotech proofs of concept are created with software and AI, and universities and contract research organizations are more friendly to startups.
Policymakers have recently put forth legislation to expand the definition of an accredited investor. How would this impact your world as an investor?
I would love to see everyone be able to invest in startups! I’m a big fan of crowdfunding, which we did in our seed and Series A rounds for Labdoor, and we ended up having hundreds of smaller investors. So that’s something I’d love to see made easier and more accessible to everyone. A big reason why there are $100K check minimums for venture capital investing is because a lot of that money goes to fees, paperwork, and legal costs that eventually lessen the money that is actually going toward startups’ products. So if there’s any way to make it so that more people can invest in startups and VC funds with smaller checks, I’m on board.
As you know, the collapse of Silicon Valley Bank had major impacts in the funding space for startups. How has your work been impacted, and what should policymakers consider as the ecosystem recovers?
On a personal level, I had founder friends directly impacted by these events, so I was relieved to see quick action taken to resolve everything. The focus on depositors was definitely needed and I think it helped the situation immensely. But the venture capital market was already cooling off before this happened, and now it’s getting even worse. So the question that startups and investors are asking is: is this a prolonged downturn, or is it temporary? I don’t think people have figured that out yet and startups will struggle because of the uncertainty. Biotech has especially been impacted because many startups in this space relied on venture debt from banks like SVB to fund research and development costs. We need more sources of early-stage capital for startups in every sector.
Given your experience working with universities, how can policymakers improve tech transfer policies around startups’ intellectual property?
Back in college, one of my key internships was doing research at the University of Michigan’s Tech Transfer office. From my experience there, I know that UofM generally doesn’t claim ownership on IP created by students but does require revenue sharing on IP created by employees. I would love to have a database of every university and their tech transfer policies. That'd put pressure on schools to make tech transfer easier because I do think that this is a huge roadblock to innovation. I've heard of some universities charging 50 percent or more in equity and/or revenue that gets taken from startups right off the top. That hinders scientist-led startups to the point where they drop certain kinds of research entirely. It would be much better if we had consistent, transparent, and fair tech transfer policies.
Tell us more about your experience working to build the state of Michigan up as a tech hub. How could policymakers help support your local innovation ecosystem?
I would love to see emerging hubs out of schools like the University of Michigan that have great research centers built around them. Startups that are founded out of those universities would easily be able to spin out and develop. Right now, programs like this are so concentrated in cities like Boston, San Francisco, and other traditional tech hubs, but when I get great pitches, they’re coming out of Georgia Tech, or University of Michigan, or Carnegie Mellon, for example. Scientists with great ideas already live in these areas, but they usually don’t have access to many funding sources. They deserve to live and build out of their own communities—and sometimes, that means places where it’s much cheaper to operate. That shouldn’t mean a lack of access to capital. My personal passion is getting more research and funding opportunities for emerging tech hubs, especially in places like Detroit, which has a massive capacity to grow and get back to its peak size. We have a great opportunity to bring more talent to the Midwests’ urban centers if we invest in ourselves.
What are your goals for Utopic moving forward?
My immediate goal is to make my first ten investments for Utopic this year. Next, I would love to continue to build and promote Michigan as a research and manufacturing hub. For the long term, I’d like to get more connected with other startup champions and policymakers in DC. If I can start building coalitions around startup policy and create new strategies the way I did for my dad’s campaigns, I could help a lot of other activists and politicians make a similar impact.
All of the information in this profile was accurate at the date and time of publication.
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