Planting seed investments on tech’s frontiers nets KdT Ventures $50 million for its latest fund

Like other venture investors over the past year, Cain McClary, co-founder of the investment firm KdT Ventures, recently made the jump to Austin. But unlike the rest of them, he was coming from Black Mountain, NC.

McClary had spent the better part of the last three years with his co-founder Mack Healy building out a portfolio that would be the envy of almost any investor looking at financing startups whose businesses depend on innovations at the borders of current technological achievement.

Since 2017, when the firm closed on the first $3.5 million of what ended up being a $15 million fund (they had targeted $30 million), McClary and Healy managed to find their way onto the cap table of businesses like the green chemicals manufacturer, Solugen; health diagnostics technology developer, PathAI; the Nigerian genetic dataset developer, 54Gene; the novel biomaterials developer, Checkerspot; and the genetics-focused therapy company, Dyno Therapeutics. 

That portfolio — and the subsequent top decile performance that Cambridge Associates has said comes with it — has allowed McClary and Healy to close on an oversubscribed $50 million new fund to invest in promising startup companies.

KdT co-founders Cain McClary and Mack Healy. Image Credit: KdT Ventures

Hailing from a small Tennessee town outside of Leipers Fork (itself a small Tennessee town) McClary studied medicine at Tulane and business at Stanford where he linked up with Healy through a mutual friend.

Healy, who had done stints throughout big Bay Area startups like Airbnb, Databricks, and Facebook brought the software expertise (and some capital to stake the firm) while McClary provided the life sciences know-how.

Together the two men set out to hang their investment shingle at the intersection of software and life sciences that was proving to be fertile ground for new business creation. Each company in the firm’s portfolio depends on both the advances in understanding how to code computers and living cells.

McClary had left California for personal reasons when he launched the fund in 2017 and in 2020 relocated to Austin for professional ones. Healy had already set up shop in the city and it was easier, McClary said to fly out to San Francisco to look for companies from the Austin airport than it was from Ashville.

Also, both men were placing big bets on the Dell Medical School at the University of Texas to become the breeding ground for the type of entrepreneurs that the firm is looking to back.

Mack was there… the Dell Medical School and we think it’s going to be produce the types of entrpereneurs that we want to support. Houston has a med system. I firmly believe that texas has a place at the table in the future 

“The way that we define it is that we like to invest in the physical layer of the world,” said McClary. “That includes not only medicine, but chemicals and agriculture. All of that is driven by some of the things that we have this sourcecode for the physical world.”

Mapping the unmapped corners of the frontier tech startup world means that the firm not only has a presence in Austin, but has hired principals to scour Houston and Research Triangle Park in North Carolina for hot deals.

That doesn’t mean the firm is forsaking California though. One of the most recent deals in the KdT portfolio is Andes Ag, an Emeryville, Calif.-based startup that’s applying yield-boosting microbes directly to seeds in an effort to improve crop performance for farmers.

“The KdT team speaks the language of science, making them an outlier in this area of venture investing,” said JD Montgomery of Canterbury Consulting, a limited partner in KdT’s first and second fund. “They are passionate about building the science companies of the future that will tackle some of the significant challenges our world faces in the next decade and beyond.”

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$1.3M in grants go towards making the web’s open source infrastructure more equitable

Open source software is at the core of… well, practically everything online. But while much of it is diligently maintained in some ways, in others it doesn’t receive the kind of scrutiny that something so foundational ought to. $1.3 million worth of grants were announced today, split among 13 projects looking to ensure open source software and development is being done equitably, sustainably, and responsibly.

The research projects will look into a number of questions about the way open source digital infrastructure is being used, maintained, and otherwise affected. For instance, many municipalities rely on and create this sort of infrastructure constantly as the need for government software solutions grows, but what are the processes by which this is done? Which approaches or frameworks succeed, and why?

And what about the private companies that contribute to major open-source projects, often without consulting one another — how do they communicate and share priorities and dependencies? How could that be improved, and with what costs and benefits?

These and other questions aren’t the type that any single organization or local government is likely to take on spontaneously, and of course the costs of such studies aren’t trivial. But they were deemed interesting enough (and possibly likely to generate new approaches and products) by a team of experts who sorted through about 250 applications over the last year.

The grantmaking operation is funded and organized by the Ford Foundation, Alfred P. Sloan Foundation, Open Society Foundations, Omidyar Network, and the Mozilla Open Source Support Program in collaboration with the Open Collective Foundation.

“There’s a dearth of funding for looking at the needs and potential applications of free and open source infrastructure. The public interest issues behind open source have been the missing piece,” said Michael Brennan, who’s leading the grant program at the Ford Foundation.

“The president of the foundation [Darren Walker] once said, ‘a just society relies on a just Internet,’ ” he quoted. “So our question is how do we create that just Internet? How do we create and sustain an equitable Internet that serves everyone equally? We actually have a lot more questions than answers, and few people are funding research into those questions.”

Even finding the right questions is part of the question, of course, but in basic research that’s expected. Early work in a field can seem frustratingly general or inconclusive because it’s as much about establishing the scope and general direction of the work as it is about suggesting actual courses of action.

“The final portfolio wasn’t just about the ‘objectively best’ ones, but how do we find a diversity of approaches and ideas, and tackle different aspects of this work, and also be representative of the diverse and global nature of the project?” Brennan said. “This year we also accepted proposals for both research and implementation. We want to see that the research is informing the building of that equitable and sustainable infrastructure.”

You can read the full research abstracts here, but these are the short versions, with the proposer’s name:

  • How are COVID data infrastructures created and transformed by builders and maintainers from the open source community? – Megan Finn (University of Washington, University of Texas, Northeastern University)
  • How is digital infrastructure a critical response to fight climate change? – Narrira Lemos de Souza
  • How do perceptions of unfairness when contributing to an open source project affect the sustainability of critical open source digital infrastructure projects? – Atul Pokharel (NYU)
  • Supporting projects to implement research-informed best practices at the time of need on governance, sustainability, and inclusion. – Danielle Robinson (Code for Science & Society)
  • Assessing Partnerships for Municipal Digital Infrastructure – Anthony Townsend (Cornell Tech)
  • Implement recommendations for funders of open source infrastructure with guides, programming, and models – Eileen Wagner, Molly Wilson, Julia Kloiber, Elisa Lindinger, and Georgia Bullen (Simply Secure & Superrr)
  • How we can build a “Creative Commons” for API terms of Service, as a contract to automatically read, control and enforce APIs Terms of service between infrastructure and applications? – Mehdi Medjaoui (APIdays, LesMainteneurs, Inno3)
  • Indian case study of governance, implementation, and private sector role of open source infrastructure projects – ​Digital Asia Hub
  • Will cross-company visibility into shared free and open source dependencies lead to cross-company collaboration and efforts to sustain shared dependencies? – ​Duane O’Brien
  • How do open source tools contribute towards creating a multilingual internet? – Anushah Hossain (UC Berkeley)
  • How digital infrastructure projects could embrace cooperatives as a sustainable model for working – ​Jorge Benet (Cooperativa Tierra Común)
  • How do technical decision-makers assess the security ramifications of open source software components before adopting them in their projects and where can systemic interventions to the FOSS ecosystem be targeted to collectively improve its security? – Divyank Katira (Centre for Internet & Society in Bangalore)
  • How can African participation in the development, maintenance, and application of the global open source digital infrastructure be enhanced? – Alex Comninos (Research ICT Africa (RIA) and the University of Cape Town)

The projects will receive their grants soon, and later in the year (or whenever they’re ready) the organizers will coordinate some kind of event at which they can present their results. Brennan made it clear that the funders take no stake in the projects and aren’t retaining or publishing the research themselves; they’re just coordinating and offering support where it makes sense.

$1.3 million is an interesting number. For some, it’s peanuts. A startup might burn through that cash in a month or two. But in an academic context, a hundred grand can be the difference between work getting done or being abandoned. The hope is that small injections at the base layer produce a better environment for the type of support the Ford Foundation and others provide as part of their other philanthropic and grantmaking efforts.

#cornell, #ford-foundation, #intellectual-property-law, #northeastern-university, #nyu, #omidyar-network, #open-source, #open-source-software, #philanthropy, #tc, #uc-berkeley, #university-of-texas, #university-of-washington

Kanarys raises $3 million for its data-driven platform to assess diversity and inclusion efforts

Mandy Price was already a highly successful lawyer in private practice before she took the jump into entrepreneurship alongside two co-founders to launch Kanarys a little over one year ago.

The Harvard Law School graduated didn’t have to start her company, which helps businesses measure the efficacy of their diversity and inclusion efforts using hard data, but she needed to start the company.

Now, a year after its launch, the company counts companies like Yum Brands, the Dallas Mavericks, and Neiman Marcus among the dozen or so companies using its service and has $3 million in seed funding to help it expand.

For Price, the drive to launch Kanarys came from her own experiences working in law. It wasn’t the microagressions, or the lower pay, or casually dismissive attitude of colleagues toward her well-earned success that led Price to start Kanarys, but the knowledge that her experience wasn’t unique and that thousands of other women and minorities faced the same experiences daily.

I have had many things happen to me in the workplace that is similar to what many other women and women of color have dealt with and didn’t want to have my children have to go through similar issues,” Price said. 

So alongside her husband, Bennie King (himself a serial entrepreneur in the Dallas area), and her University of Texas at Austin and Harvard classmate, Star Carter, Price launched Kanarys in late 2019.

The company uses Equal Employment Opportunity reports and assessments of various policies involving promotion, recruitment, and benefits to track how a company is performing in relation to its industry peers.

“A lot of the inequities we see are from a structural and systemic standpoint. That is where Kanarys can see how they’re perpetuating inequity,” Price said. 

Kanarys starts with an independent assessment of a company’s policies and practices and then conducts quarterly surveys with employees of its customers to see how well they are meeting their stated goals and objectives. They also integrate with existing human resources systems to track things like pay equity and promotions.

The service has attracted the attention of the Rise of the Rest fund, Morgan Stanley, Jigsaw Ventures, Segal Ventures and Zeal Capital Partners, which led the company’s $3 million seed round.

“Organizations have typically tried to address this with individual interventions,” said Price. “What we’re saying is we have to address it on both fronts. So much of the inequities that we see are based off of institutional and systemic policies and practices.”

Not only does Kanarys track information on diversity and inclusion efforts for customers, but for job seekers there’s a database of about 1,000 companies which operates like Glassdoor . The focus is not just on worker satisfaction, but on how employees view the diversity efforts their employers are undertaking.

Notably, Kanarys founders join the (far-too-few) ranks of Black entrepreneurs launching businesses and raising venture capital. In 2017, studies showed that 98 percent of venture capital raised in the U.S. went to men, according to data provided by the company. Black entrepreneurs in general receive less than one percent of venture capital, and Black women founders make up only 0.6 percent of venture capital funding raised. 

“We know that a focus on DEI in business is not just the right thing to do for employees, it also makes good business sense,” said Price, CEO and co-founder of Kanarys, in a statement. “Kanarys’ DEI data arms companies, for the first time, to make precise, immediate, and informed decisions using real, intersectional metrics around their diversity goals and inclusion programs that ultimately drive bottom-line business objectives.”

 

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Trump’s sudden reversal on student visas will be felt in Silicon Valley

Growing up in the Philippines, Andreia Carrillo always liked the stars. It’s what brought her to the United States to study astronomy, and why she wants others to follow in her footsteps and study the stars.

“Though, we’ll see if that happens now,” Carrillo said.

Carrillo is one of the hundreds of thousands of students affected by a recent rule change, issued by U.S. Immigration and Customs Enforcement (ICE) to no longer allow international students from staying in the U.S. if their university moves classes fully online.

The rule change, published Monday, lands as the threat of the coronavirus pandemic grows across the country, forcing some universities to shift to digital-only operations for the fall.

News of the rule change caught immigration lawyers by surprise. The Trump administration said nothing more about the policy beyond a tweet from the president: “SCHOOLS MUST OPEN IN THE FALL!!!,” a decision over which the federal government has little authority. It’s a sharp reversal from the administration’s position in March — at the height of the pandemic’s spread in the U.S. — allowing students to retain their lawful immigration status even as in-person classes were suspended across the country.

The sudden rule change puts universities in a difficult dynamic: administrators can let campuses stay open to keep international students in the country but run the risk of spreading the virus; or close up, maintain social distancing, and international students be damned.

But the knock-on effect will be felt across the U.S., not just by the students, the universities whose revenue largely depends on higher tuition fees from international students, or even the college towns whose economies rely on schools keeping their doors open. The rule change will also impact the fields that these students pursue, largely engineering, math, and computer science, and the rate of innovation that can be sustained in a country without the core, often invisible, talent behind it.

After all, one of the most popular destinations for international students is the state of California, the heart of Silicon Valley.

Eric Tarczynski, the founder of Contrary Capital, says that he’s seen “scores of entrepreneurial people come to universities from abroad explicitly because it’s their gateway to building a company in the United States.

“To some extent, it’s their Ellis Island, and we’ve funded several companies this way,” he said. He pointed to alternative programs, like Lambda School, will help the same talented students shift online.

New York University president Andrew Hamilton said in response to the government’s rule change that “requiring international students to maintain in person instruction or leave the country, irrespective of their own health issues or even a government mandated shutdown of New York City, is just plain wrong and needlessly rigid.”

“If there were a moment for flexibility in delivering education, this would be it,” he wrote..

NYU will join a chorus of other schools in reaching out to federal officials to ask them to revoke the rule change. Harvard and MIT have gone further by suing ICE to stop the rule change going into effect.

“The coronavirus has become a vehicle for the administration to continue in its advancement of anti-immigrant policies,” Tahmina Watson, an immigration lawyer, told TechCrunch. “With the election looming in a few months, the administration is looking for every possible angle to block immigration.”

“The invisible wall is real and gets higher every day,” said Watson.

One option for schools is going to the hybrid model route where some classes are taught live and others are taught online. Harvard, for example, said it will bring up to only 40% of undergraduates to campus this fall. Universities that go virtual may struggle to justify their traditionally exorbitant tuition fees.

The rule change touches on a nerve that has been agitated throughout the pandemic: how remote education shapes what we can learn, and more importantly, who can have the opportunity to learn. Some have noted that a remote shift might harshly impact international students who have spotty connections in other countries. Others say that higher education’s appeal in the U.S. is largely the network it provides.

In Carrillo’s case, there was no opportunity to study astronomy in the Philippines. She had to come to the U.S. if she wanted to pursue her dream career path.

The rule change is likely to face legal challenges. Watson noted that Monday’s policy has questionable legality. The administration referred to it as a “temporary final rule,” which she says essentially avoids the rule going through a more typical public comment period.

“I am sure schools, among others, would have a lot to say about this policy,” said Watson. “If the administration wants to change long standing policy, the Administrative Procedure Act should be followed at every step.”

The rule, thus, awaits more direction and clarity from the administration. Until then, it is up to colleges and students to figure out how to process the drastic step.

One international student who attends graduate school at University of Washington, who asked to remain anonymous fearing their visa status, said that the rule change puts their research and scholarship at risk if they are forced to go back to their home. If their school opts for a hybrid model, they worry about their health.

“I’ve never felt so disrespected in the United States,” the student said. “If only the international students are required to go back to class, and there is a chance of getting the virus, you’re risking the international students to get infected, they said.

When Carrillo heard the rule change, she said she panicked and emailed her department. To her relief, her current college — the University of Texas, Austin — will take a hybrid approach to classes in the fall. She can stay in the country, for now.

But the news isn’t a complete sigh of relief. International students, like Carrillo, are used to feeling a false sense of security under the Trump administration.

“I feel so shitty for wanting things to be hybrid,” she said. “Morally I want things to be safer and have things online, but then that would also mess up my stay here.”

 

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