Demo Day Round Up - Hot Trends Emerging from Top Incubators and Accelerators

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  Speaker 1:
  Hi, I’m Mike Collins, the founder and CEO of Alumni Ventures. Today we’re going to talk a little bit about what companies are coming out of the top incubators and accelerators. People vote with their time, their money, their talent, and I think it’s a really interesting analysis that we do internally to look at the categories where we’re seeing entrepreneurs saying, I want to spend the next 10 years of my life, where the incubators and accelerators are accepting them into their classes, and these companies are getting funded. So we do this roundup internally, but we thought we would share it out in the world. That’s part of what we do. So let’s go. Before we get going, we’re speaking today about Alumni Ventures and our views of the world. This presentation is for informational purposes only. It is not an offer to buy or sell securities, and those are only made pursuant to formal legal documents.

  I’ve been in the business a while, so grew up in the Midwest — probably hear it in my voice — went East to go to school. First job was at a venture firm called TA Associates in 1986, and I’ve been in the space of innovation, entrepreneurship, technology. Started Alumni Ventures a decade ago, basically to bring smart, simple venture to retail investors. I think it’s a very important asset class and it should be part of more people’s portfolios. At Alumni Ventures, we are retail focused. We’ve raised 1.4 billion — actually more — from almost 11,000 customers. We have a very large portfolio. We co-invest exclusively. So typically, we invest in 300 companies per year, plus or minus. We have 100 employees, back office in Manchester, New Hampshire, with our 10 investing teams in the venture hubs. We are well respected as a co-investor. We try to be very helpful to our portfolio companies using the power of our large community and large Rolodex and connections. We don’t sit on boards, we don’t price rounds. Again, our niche is to be a co-investor of choice. We try to be transparent, we try to bring more people into the asset class, and we focus every day and get up to try and get into the very best deals we can.

  At the end of the day, venture capital is about flow and access. So one thing we do is shine a spotlight on some of the companies that we think are really out changing the world and doing great work. You can read the full list of companies — Apex 50. We think it’s a very impressive list of amazing companies doing amazing things. A few you may have heard of, many probably haven’t yet, but again, it’s all about the deals. Next, as a co-investor, we believe strongly in co-investing alongside great lead investors. We invest with these folks a lot and others. There’s probably — most great companies, most great ventures — end up with one of a hundred or so people, funds, and companies. Again, there are definitely some exceptional niche players. There are firms that are just exceptional at a certain geography or pre-seed or do gaming better than even some of these players, but you want really strong lead investors because that’s where good companies go.

  So the point today is these are companies that came out of incubators. So you definitely see some amazing stories coming out of places like Y Combinator and others. I think it’s as important for the categories and trends that they’re identifying. Again, I think talent migrates to opportunities. That’s just one of the rules. And there is no greater investment than where one wants to start a business or join. And so by attending these, listening to the pitches, you develop pattern recognition. You see where the puck is heading. These things develop in, they build on other technologies. So I think it’s important to review, attend, talk about — but with the humility that most of these companies, like most ventures, don’t make it, or they make it in a very modest way. So do not forget this is a power law business. But these things all look great in hindsight. At the time — little less predictable, to say the least.

  Okay, so what are we seeing right now? This is Q1, 2025. These are things that are coming out now. Government stuff. So a lot of work in addressing big, fat, bureaucratic, inefficient systems. That’s the story of venture capital. You’re looking for it. I think there are a few categories, and I think this is actually a powerful insight. I think there have been those categories where entrepreneurs and VCs have shied away from because it is just viewed as kind of an indestructible piece of granite. And we’re talking now about education. We’re talking about healthcare, defense industry, the government. And there has been so much success in the entrepreneurial ecosystem — just look at something like space, where the private sector has really kicked the ass of what the government has achieved. So I think the gloves are off, and we’re seeing people go after things.

  Traditionally the purview of government — so selling to government, addressing an alternative to government — is no longer off limits. Who’s the next Palantir? So government software revolution, government technology revolution. Really related to this is kind of public safety. Safety is a theme. Information. One of our portfolio companies here, we give some examples like RapidSOS kind of reinventing the 911 system, which was developed 50 years ago and is really dealing with kind of backwards technology when everybody has a smartphone and there are satellites and this, that, and AI systems. So there’s just tremendous opportunities related in these public-adjacent public safety arenas.

  Next: onshoring. Strategic technologies — chips, cybersecurity, AI, energy. These things are talking about low-human factories, robotics. We’re bringing things in. We’re building things in this country — whether it’s data centers or nuclear innovation related to retail, where I can operate a system without humans or one person instead of six. So the idea of making and building stuff in the United States is back. That can be anywhere in the stack — and including a lot of picks and shovels are great opportunities.

  Okay, stuff going on in crypto. Bitcoin has been one of the best investments over the last decade. The wave we’re seeing now is — and there’s meme coins and nonsense in what is still frontier technology for sure — but that lacks nuance. And so I think what we’re seeing now in this next wave is more and more companies really addressing markets and jobs and problems that are better using a distributed ledger technology. So obviously examples that we’ve seen are betting markets, prediction markets, which can be done in different ways — but distributed technology. We’re seeing one of our portfolio companies, BlueSky, taking on X and others with a totally different distributed technology stack. Actually, BlueSky was sourced by a couple of team members out of our blockchain group. So we think this is a real technology. It’s a kind of a misdirect to look at nonsense meme coins, but there’s — underneath the nonsense — there are real businesses that solve real problems. Payments and remittance, especially cross-borders, for example. Still very inefficient, very expensive. The Visa-MasterCard complex is super expensive and just points to a lot of opportunities on things that should be cheaper, should be more frictionless, should be more safe, should be more distributed. We think there’s huge opportunities here.

  Chips — again, I already mentioned the building of data centers that are just going up fast, going up at an enormous scale. There are names you hear about, and then there are names that you don’t hear about. But building these sites, cabling these sites, managing heat management in these sites — again, you hear about typically one part of the stack, but people can make money at various parts of the stack. These are layers of things to do — from chip design to fabs to data centers. Tremendous entrepreneurs, tremendous startups happening in this space. Everybody’s like, oh, it’s too late, Nvidia. I’ve just heard that for 30 years. So again, this is where we see really interesting things coming out of accelerators, incubators, pre-seed deals getting done.

  This is a little related to the FinTech, but it’s kind of a different angle. We are seeing what I’m going to call FinTech 2.0 — right — where we’re seeing taking on what again, historically, banks — a lot of financial infrastructure — is getting disrupted or at least people trying to disrupt it. I mean, you can make an argument — I think my argument is — that Block, Bitcoin — Bitcoin is in the process of disrupting gold and precious metals as a repository of value. And if you run the numbers, which is another analysis we’ve done and I’ve shared, that disruption’s not complete yet. But I think there are other big, bureaucratic, inefficient parts of our financial system where there’s huge disruption opportunities, made possible by AI, made possible by blockchain, made possible by an environment where there are no sacred cows anymore. And so FinTech kind of sounds old-fashioned, but there are new opportunities that are anything but — and we’re seeing a lot of ’em coming out of these places.

  Space. Again, I think what we’ve seen in the last five years is the privatization and the venture entrepreneur ecosystem. We’re still super, super early. Again, I’ve shared that this is the area where I encourage young people who have no clue — like, pick a sector — this is a really interesting one. There are enormous opportunities. People, again, very superficially dismiss it as kind of billionaires playing tourism. There are practical, money-making ventures that are being proposed and happening right now. And it’s early — again, still a lot of work being done on getting costs per ton in space, kilogram in space lower. But you look at the charts — it’s dropping very quickly. It’s very exciting. And we’re seeing really exciting startups in the space. And we were — I think on the last — I don’t know, I saw a picture of the payload of one of the recent SpaceX flights, and just gratifying to see we had something like six of our companies had something going up into space. So space economy — we’re seeing really good stuff come out of the accelerators and incubators.

  AI coding tools, engineering tools — some of these are really old. Again, everybody talks about the leverage being created by Cursor and Lovable and some of the things working to be a supplement or a replacement for programming. But I think we’re going to see more and more of this in the physical space as well. So seeing new tools, new platforms, new software, new approaches for the physical world I think is something that smart money is on. I think the revolution in making stuff gets a lot less airtime. We have seen less of it, but again, I think we’re going to see a lot more of that in the next five years. So where’s the next Autodesk? And that may not even be the right mental framework to be thinking about it. And this is one of the things about going and hearing the pitches from these entrepreneurs — is their framework, their frames of reference, the kind of end problem solutions. Again, that’s how you become a great venture capitalist — the prepared mind. So really exciting stuff in this space as well.

  HR stuff. So a lot of high tech of high touch. So I think we’re seeing a lot of tools. We’re seeing a lot of startups exactly that are trying to be a job. So I’m going to create a business that is going to replace this particular job title that’s in a lot of companies. Or we are trying to be something where one person can run these three assistants and I need to hire one person, not four. So again, I think we are just at the beginning of AI transforming the workplace. We’re seeing it again — where is the AI employee? Where is the AI department? Where is the AI company?

  I think there’s innovation happening all along that. Again, people stuff. Education, I think, in the next decade is going to be totally transformed. I think every student is going to have a personal AI teacher, mentor, or this is going to look a lot more like a tutor that’s with you your entire life. And just a lot of really exciting stuff. I’ve made the point too — all this stuff on high tech, robotics, AI — humans are not going away. And so kind of human-centric stuff is a really investable space. Some really exciting startups here. Here’s a couple of our portfolio companies as well.

  So hopefully you got a few tips and tricks and shares out of that. Talent and money flow to the best opportunities. This is where we’re seeing some of the most exciting startups, teams, capital — at the very earliest stages — flowing now. And the key to this is: invest broadly, invest in good teams, invest alongside really strong syndicates, and have the humility to know that you’re looking for the one out of 20, one out of 100 that is an amazing breakthrough situation. So just to wrap up: at Alumni Ventures, we’re designed to see a lot of stuff. We do so many deals. We’ve built our infrastructure to be a retail partner for people. We like to be your venture person. So check us out. I think if you’re tuning into this, you may be interested in some of our higher alpha opportunities — our Seed Fund, our Deep Tech Fund, our Strategic Tech Fund. You might be interested in participating in our syndications. So if you’re interested, check us out. Do your homework. Book a call. We love talking to people. We learn something every day. We do have a few questions that came in.

  I’ll read them now. What indications do you guys get to assess whether a technology is getting to adoption point? How do you know if it’s not too early or too late? So that’s a tricky judgment call. And I think kind of the things that we’re seeing is: you tend to see these clusters. And a lot of times, technology builds on a scaffolding of prior technology. So this is the same thing in science and technology — these things kind of happen at the same time in different places with different teams because the scaffolding is there in order to take one step, not four, right? So one, you’re going to see a few people in the space. I think you get very afraid when you see 50 startups doing the same thing. I think you get very scared where there’s nobody else. I think at the end of the day, you’re focused on the problem and the market, and a lot of good entrepreneurs — some are really able to sell and articulate, “What exists sucks, and here’s what is 10x better,” with some data that will tell you that — if they’re able to get early traction.

  And that’s really what you’re looking at at kind of the pre-seed round — is can they get a customer that really says, “The time is now.” Right? So again, a lot of things in venture capital — it’s a lot of pattern recognition, it’s a lot of history, and one develops a sense of asking the right question, looking for the right team, and timing it. And if you’re going to lean, you want to lean early. It’s a lot better to be early and stick it out than be late. It happens, but it’s very hard — and you better have a unicorn founder and a totally different approach.

  So what about the macroeconomic trends? Listen, I think we are in a really good space. I think there was a bit of a bubble in the COVID era that’s been repriced. I think dumb money has been flushed out. I think teams are focused on being efficient, being profitable. Raising money is harder. So I think it’s more of a buyer’s market. I think capitalism has won. And as I mentioned, even in one of the slides, taking on some of these — “Oh, you can’t take on the medical establishment and win” — I think there is increasing confidence that entrepreneurs and capital are the way to go to solve problems. And we’re not naive to think that there aren’t unintended consequences or bad characters in the mix, but we are in a world of technology and innovation, and that drives quality of life, health outcomes, longevity. National security is really going to fall to the countries with the best technology. You see warfare now is about AI and drones — not exclusively about aircraft carriers.

  Here’s one about blockchain investing: Do you guys receive tokens as part of your investments? A lot of times in that space, we do. Again, every deal is different. A lot of times, you’re receiving equity in a company, and because you’re an investor in the company, you’ll also be given, as part of the deal, coins. So we’re investors in a company called Miston Labs. They’ve got a Sui token — SUI, I think. So yeah, we own equity in Labs; we got a bunch of Sui tokens. Those are tradable. And so yeah, it provides a couple of vectors for liquidity for our investors.

  How does it work to invest in venture capital funds? So again, we encourage people to hop on a phone call. It’s pretty straightforward. You pick a fund, you sign some paperwork, you prove accreditation, you write a check, and then we invest it on people’s behalf. And it depends on the fund — say 20 to 30 companies. And when there’s an exit, we send money back. We send it in the form of yellow envelopes. So we’re well known as kind of the yellow envelope company. So yeah, that’s how it works. So thanks for everybody’s time today. Again, there are more questions out there — book a call, check us out. Hopefully you found this valuable, and see you again soon. Thanks.