EP 5: When Being an Outsider Is Good for VC

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You don’t have to be an expert in a field to know how to make good investment decisions around it. Bruce Cahan shares how successfully funding any pioneer economy often requires knowledge from other fields. (Listen)

Bruce Cahan of Chestnut Street Ventures

Episode Summary: Though Bruce Cahan has been involved in a wide range of activities throughout his career, he says that one of the most unlikely pivots he’s made is to look at how we’re going to bank and finance space exploration. Given that space is a 70-year-old industry, you might be wondering why this has to be considered at all. Aren’t we already funding space?

Bruce explains that the government invested in space for defense and other activities during the Cold War, but budgets dedicated to space agencies flatlined after that. Recently, however, smartphone technology (the ability to carry a supercomputer in your pocket) has inspired innovators to take a different look at how we build space assets like satellites, robotics, imagery, and so forth. Though the engineering has advanced, thinking about how to pay for the next level has not.

Without a consistent way of financing the space economy (whether government or private market), missions that should be in design, development, and testing will be put on hold due to the uncertainty of funding. Bruce is applying his knowledge of how markets work and how to successfully fund them to effect change in the space economy while using that same expertise to review potential deals for Chestnut Street Ventures (CSV) as an Investment Committee member.

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Introducing Bruce Cahan, Investment Committee Member for CSV

Bruce Cahan has advised Fortune 1000 corporations and federal technology investors, negotiated billions in transactions, innovated investment strategies for sharing smarter open data, and is now redesigning banking. He co-founded Urban Logic, a nonprofit that harnesses finance and technology to improve sustainability decisions in real time, and is a frequent mentor for startups in Silicon Valley.

Bruce graduated from Wharton and Temple Law School. He’s also on the Investment Committee for Chestnut Street Ventures, a Penn alumni venture fund that invests in Penn alum-led companies. The fund is one of many alumni venture capital funds under the Alumni Ventures Group (AVG) umbrella. Bruce works with Managing Partner Gail Gilbert Ball, who is also a graduate of Wharton.

In Bruce’s words, “I’m a recovering Wall Street lawyer, Hong Kong merchant banker, geospatial technology finance pioneer for the government, 9-11 responder, Ashoka Fellow, and now at Stanford in the engineering school trying to innovate banking and finance and insurance.”

Three Takeaways from This Podcast

As you listen to this interview with Bruce Cahan, remember that he confesses he did not understand the space economy all that well when he first got involved. But he applied his knowledge of how to fund innovation and businesses and markets to the needs of this industry in order to effect change. That’s the skillset he also brings to Chestnut Street Ventures as part of the Investment Committee.

Below are a few of the insights you’ll gain by listening to this interview and what Bruce wants potential investors to know about this unique opportunity to invest with classmates:

1. We are ambassadors

Chestnut Street Ventures is a community of Penn alums with a connection to UPenn or its graduate schools. Although the CSV fund is not affiliated with the university, Bruce says the connection cannot be ignored. So in listening to proposals, he feels a responsibility to ensure that investments are made in companies that Penn would be proud to be associated with.

2. We are responsible

Along those same lines, Bruce feels responsibility to the entrepreneurs that the fund works with both in terms of how the Investment Committee treats the founders and how they foster the relationships–whether or not investments are made. He believes that this is especially important because the common school connection is in part being used to attract the founders and the funds. The folks at Chestnut Street are working hard to treat all parties fairly.

3. We are diverse

Bruce believes that emerging or rapidly developing markets often need other fields’ knowledge in order to advance. His training in transactional law and finance, for example, gives him the perspective to advise on how to fund innovations in space services and assets in ways that space engineers are not trained to see. This same diversity is also what helps the CSV Investment Committee thrive.

Learn More

If you are a UPenn alum and want to learn more about what your former classmates are doing, sign up for the Chestnut Street Ventures fund newsletter or the Alumni Ventures Group newsletter for a peek at all of the universities represented.

You can follow Bruce at Urban Logic or on his LinkedIn profile Bruce Cahan. You can also watch the NewSpace 2017 Panel discussion on space commodities futures trading exchange.

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Founders and Funders is a podcast where we discuss how entrepreneurs and investors work together to build great new companies. Our guests, many of whom are connected with AVG as entrepreneurs, investors, managing partners, fellows and more, are invited here to talk about the journey of building companies from incubation to early stage investing and beyond.

If you want to follow more fascinating stories and insights from the entrepreneurs and investors who are part of the Alumni Ventures Group community, then subscribe to Founders and Funders on iTunes, Founders and Funders on Android, Stitcher, and other popular podcast channels.

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Related Episodes

  1. Episode 1: The Genesis (and Ripple Effect) of Alumni Ventures Group
  2. Episode 2: Companies Focused on the Triple Bottom Line Get Rewarded
  3. Episode 3: A Founder on a Crusade to Change Big Pharma

23 episodes available. A new episode about every 6 days averaging 27 mins duration .