How DeepWork Capital is
Building the Future through Funding
(November 2019) – Mitchel Laskey likes disruption. To him and his two partners at DeepWork Capital, Benjamin Patz and Kathy Chiu, it’s the key to survival.
“Our leaders aren’t afraid to challenge the status quo — things that ‘industry veterans’ take as gospel,” Laskey said. “Like ‘Computers are a commodity and there’s nothing left to innovate’ —not for Steve Jobs. ‘People won’t buy what they can’t touch and feel’ — that didn’t stop Jeff Bezos. ‘You can’t sell coffee for five dollars a cup when people can make it at home for 25 cents’ — tell that to Howard Schulz.”
Every time you use your Apple iPhone to scroll through Amazon while waiting in line for that venti vanilla latte at Starbucks, you are living proof of DeepWork’s hypothesis: Given the right resources, disruptors with big ideas build
Entrepreneur to Entrepreneur
Before founding DeepWork and turning their attention to early stage investing, each of the three team members was busy gaining personal entrepreneurial experience.
Laskey was co-founder and CEO of Dynamic Healthcare Technologies, a company that developed advanced clinical information systems and electronic health records and was acquired by Cerner Corporation in 2000. He went on to serve in other leadership roles, including CEO of four public and private companies, all with experience developing entrepreneurial technology companies across industries.
Patz founded Coleman Technologies, a developer of custom data acquisition, data analysis and other technology systems. He served as CEO until 2009, when it was acquired and he became chief operating officer of Presidio, which provides cloud-based IT solutions. A technologist at heart, he funded and led a team from the University of Central Florida (UCF), his alma mater where he earned his master’s degree in electrical and electronics engineering, to the finals in the famed autonomous vehicle competition, the Urban Challenge.
Chiu was an electrical engineer with degrees from Massachusetts Institute of Technology who later became a quantitative analytics specialist for Cornerstone Research, an economic consulting firm that provides financial analysis and expert testimony. After completing her MBA at Stanford University, she went into business development for various technology companies and later became a venture capitalist with a Denver-based firm focused on wireless technology.
When they met as angel investors in Orlando, all three were ready to take a different approach to portfolio building.
“We noticed how much early stage deal flow there is compared to available capital, and we knew that active involvement from investors made a difference in outcome,” Laskey said.
They set out to create a managed venture fund with principals who had deep experience in entrepreneurial activities themselves so they could see their portfolio companies through the various stages of development.
Their combined experience is key in helping them course-correct while guiding their portfolio companies. “It keeps them from falling into the ditches we’ve climbed out of,” Laskey said. “While everyone makes mistakes on the entrepreneurial journey, let them at least be original ones. We usually sit on the board or have an observer’s role, so we know our portfolio companies well.”
Being so close to the process allows the partners to offer the guidance of those who have been through certain business scenarios before and an understanding of what resources might be required. He explained it this way: “Additional allocations can be made when companies are executing according to plan and require planned follow-up on capital or have opportunities that require additional capital to execute on.”
The Lay of the Land
Laskey described the partners’ own uphill battles when putting together their first fund: “It was like juggling three eggs and trying to stand on a balance beam at the same time.” Lining up both their investors and their pipeline companies meant mastering acts of faith, and of balance.
Their know-how and intuition proved reliable from the start, however. Their first client, Fattmerchant, is one of the most recognized names in financial services in Central Florida, multiplying its revenue by 10 times within the first three years.
DeepWork’s first fund eventually encompassed a variety of technology start-ups, including Nanophotonica and Intecrowd. Now, with the beginning of its second fund, the company has taken an interest in another promising pipeline of Florida’s talent: life sciences.
It has already invested in HCW Biologics, an immunology company with an experienced founder who exited another company at the billion-dollar level, Laskey said. Another new addition to their portfolio is AireHealth, a med-tech company that provides portable nebulizers for children with asthma. AireHealth was awarded the top prize of $100,000 earlier this year in a pitch contest with America Online founder Steve Case’s Rise of the Rest tour.
“We noticed that about half of the deal flow is in the life science and med tech space,” Laskey said. “That’s just the expertise the Florida geography happens to have in spades.”
Central Florida also offers plenty of other benefits. With most other markets in the state within a reasonable driving distance, Orlando allows them to serve companies throughout the region.
The pipeline has been promising. According to DeepWork’s team, Florida’s 12 public universities perform more than $2 billion worth of research each year, leading to communities of start-ups and an ecosystem of innovation.
“The incubators, accelerator and innovation centers — such as StarterStudio, Tampa Bay Wave, Guidewell Innovation, and UF Innovate — keep the entrepreneurial ecosystem robust and well primed,” Laskey said. Add that to the development groups such as Orlando Economic Partnership, Enterprise Florida, Space Florida and the chambers of commerce all helping put resources to good use and work them back into the community, and you have what Laskey calls “a vibrant backdrop of a startup scene.”
No matter the industry, DeepWork’s partners have a few general expectations from their portfolio CEOs — people they are assisting in their roles as disruptors: “Fearlessness, willingness to rethink the obvious, passion, resilience,” Laskey said. “Then, of course, commitment, focus, clarity of vision, expertise and grit. It’s about a balance of ego and humility.”