Dave Friedberg on TPB’s thesis-first investment strategy

I'm Dave Friedberg. I'm the founder and CEO of the Production Board.

We started the Production Board around 2017. It was set up originally as a permanent capital investment vehicle in partnership between myself and Alphabet. Subsequently, we raised additional institutional capital, family office capital, which we then deployed through traditional seed Series A investing, as well as a significant amount of work in foundry investing. We did a few later-stage investments. We're currently in the process of raising TPB II, which is primarily seed, and Series A investment fund, which is a more traditional managed fund. And then, with about 40% of our capital doing seed and A investing, some of which will come through our foundry work, but a lot of which will also come through other companies. And then we try and concentrate our capital on the winners. So that's a big difference for us. So we expect to invest about 40% of our capital in our seed and A pool. We expect about 15 Series A companies out of that pool. And then we really want to try and concentrate 60% of the capital in what we think will be called the seven winners, the seven that are really accruing significant value for us. And I think that's the best kind of investment model. Now, that's our that's our investment strategy. 

The Production Board, historically, we've had a pretty heavy legacy, heavy investment focus on, generally, I would say, digital meets biology. So the applications of how digital technology can transform biology span from food, agriculture, human health, biomanufacturing, and other broader applications and industrial sectors. We're increasingly doing more work in human health and continuing to do our investing work in food, agriculture, and Biomanufacturing, but are starting to expand our interest into energy and consumer and enterprise software. 

On our platform team, we've really tried to build competency around our foundry work that we've done historically. So we've started a number of businesses in-house, and when we've started businesses, we've taken a very significant and active role in building the founding team, helping to set the business plan, helping the team execute, ultimately realize early commercial traction, and later raise capital.

Through our foundry work, we've built out a pretty substantial platform team to support that effort, doing everything from H.R. recruiting, we can do comp and benefits analysis, help build recruiting networks to build the early team, as well as basic blocking and tackling finance, G&A, back office support facilities, etc. And then, we have a rotating scientist in residence program. So because of our pretty significant spend on science-heavy companies, we have scientists in residence that will spend anywhere from 6 to 18 months on staff with us. They'll help us with sourcing, with diligence, and ultimately roll into one of our companies, or we'll start a company with them. 

Our approach is to really try and make sure that we deeply understand the markets that we work in and then deeply understand emerging technologies and emerging science that's coming that may transform those markets. And then we try and form very detailed and deeply understood theses around how we think those markets will transform over what time scale and what set of technologies are going to have to come together to see that happen. Then we try and identify companies that match that profile, and then some of those companies, you know, we end up investing in. And sometimes we end up running a foundry project where we say; this opportunity is so significant, no one's executing against it as we see they may be able to. And then we'll actually start to talk to some people in our network and think about starting a business around that concept. 

Our thesis first approach, we think, gives us a real advantage. Within that, we have deep relationships, commercial relationships at the executive level, at a number of public companies that we spend considerable time with, as well as deep relationships with labs and leading scientists in the disciplines that we try and understand and track well. And so those relationships often translate into early access to deal flow or insights into papers or research that have not yet been published, that's coming public, that gives us the ability to see something before maybe the market does. 

A number of our investors have become co-investors with us in several of our companies. So we do try and form more than just client service relationship with our investors. We really view them as partners. And so we try and share information, share insights, share theses, and provide that feedback in a way that gives them better information to be investors elsewhere, but also provides access to us of things that they might be seeing, and a really great dialog. We're not trying to have lots and lots of people invest in our funds. We're trying to have partners that we can work with over the long run. 

We hold a symposium event every year, we call it, which is a little different than an LP summit because we actually bring in a lot of scientists, entrepreneurs, investors from the industry that other people might view as their competitors. But we really have such deep relationships in the industry that we try and bring these folks in so we can all learn from them and share thoughts and share ideas and opportunities and paint a optimistic picture about the future.