Dayna Grayson asking about industries, a seasoned venture capitalist who co-founded her own company, Construct Capital, five years ago, has been concentrating on somewhat dull software that has the potential to revolutionize industrial sectors, while the venture community is all aflutter about generative AI.
While AI isn’t excluded from her objective, it also isn’t dependent on it.
For instance, Construct recently led a seed round for TimberEye, a startup creating vertical workflow software and a data layer that, according to the company, can measure and count logs more precisely and, if all goes according to plan, assist the startup in realizing its objective of becoming the marketplace for purchasing timber.
You may think, how large could that market be. One estimate places the value of the global forest products market at $647 billion in 2021.
One more Construct transaction that sounds less seductive than, say, big language models is Earth, a startup that composts human bodies over the course of 45 days to create “nutrient-rich” soil. Indeed, disgusting. Additionally, it’s a wise market to pursue. In ten more years, cremation may make up as much as 80% of the market, compared to its current 60% share.
In the meantime, cremation has been compared to a 500-mile automobile ride; Earth believes it may draw in an increasing number of these clients as people become more and more interested in “greener” solutions in general.
Although Grayson and her co-founder at Construct, Rachel Holt, have avoided some of the AI hype, they are nevertheless vulnerable to many of the same issues that their counterparts face.
informed me recently on a Zoom call from Contruct’s Washington, D.C. headquarters. One of their difficulties is timing. In one of the frothiest markets in the venture industry, the two created their first three funds. Similar to all other venture firms worldwide, a few of their portfolio companies are currently experiencing dyspepsia as a result of excessive capital raising.
Nevertheless, they seem to be effectively bringing a few stuffy industrial companies with them as they charge into the future. Here are a few, length-reduced quotes from our recent conversation.
During the pandemic, you made investments as companies quickly raised rounds of capital. What effects did such quick rounds have on the companies in your portfolio?
The good news is that they didn’t significantly affect the majority of our portfolio companies.
because we actually invested the first investment in seed companies, which were new businesses that were established in 2021. The majority were emerging from the gate. However, it was tiresome [usually] and I don’t think those rounds were a smart idea.
Veho, a package transportation company that you have in your portfolio, raised a massive Series A round and, in only two months in early 2022, an even larger Series B. It fired 20% of its employees this year, and there have been rumors of employee turnover.
In my opinion, Veho is a wonderful example of a business that has successfully navigated the economic upheaval of the past year or so. Indeed, one could argue that they experienced some financial whipsaws.
markets by getting so much attention and expanding so quickly, but in the last year or two, their revenue has more than doubled, and I have nothing but praise for the management group and the stability of the business. They are and always will be among our portfolio’s leading brands.
Dayna Grayson asking about industries
Naturally, these things never progress straight forward. How much of an influence should a venture capital firm have on the businesses it invests in, in your opinion? It appears to be a contentious issue these days.
We are not control investors or private equity investors when it comes to venture capital. We aren’t always on the board. However, we work for our employers, adding value, and becoming
fantastic partners. This entails offering our networks and our industry knowledge. However, I classify ourselves as advisors because neither we currently nor in the future do we intend to be control investors. We therefore have a responsibility to give our founders the value they require.
I believe there was a period, particularly during the epidemic, when venture capitalists advertised that they would “let you run your business” and “not be overly involved in your company.” In fact, we have witnessed founders reject that idea and declare, “We want support.” They want someone to stand by them, supporting them and correctly balancing those incentives.
During the pandemic, venture capitalists were offering the moon; the market was that frothy. Currently, it appears that the power has turned away from founders and back toward VCs. What do you observe on a daily basis?
A relic from the panicked investing days of the pandemic is SAFE notes, or “simple agreement for future equity” contracts. I assumed that once we resumed a more controlled investment pace, investors would prefer to revert to investing solely in equity rounds, or capitalized rounds as opposed to notes.
We, the investors and founders, are amenable to SAFE notes. I have seen that those notes have become “fancier,” often include side letters that confer rights, benefits, and obligations beyond the provisions of the ordinary investment contract. As such, it is imperative that you inquire about all the specifics to make sure the cap table isn’t going very intricate prior to [the startup] [beginning].
Because SAFEs may be closed so rapidly, there is a strong temptation to keep adding. Take boards, for instance. You might write a side letter to a venture investor saying, “We want to be on the board even though this isn’t a capitalized round,” We advise creators to “just go ahead and capitalize the round if you’re going to go into all of that company formation stuff,” as that isn’t really the purpose of SAFE notes.
Construct’s mission is to “transform foundational industries, logistics, manufacturing, mobility, and critical infrastructure, that power half the country’s GDP.” It almost seems as though Andreessen Horowitz has since taken this identical idea and renamed it as
“Dynamism in America.” Do you concur, or are these themes distinct?
It is somewhat distinct. We do, in fact, share some similarities with their investment thesis. These core sectors of the economy, which some refer to as industrial spaces and others as energy spaces because they may integrate supply chains, mobility, transportation, and decentralized manufacturing, are, in our opinion, in need of transforming into tech sectors.
If we are successful, we believe that a number of our firms will be valued similarly to how tech companies are currently valued—that is, with revenue multiples and EBITDA margins that remain constant over time—whether they are manufacturing software companies or are manufacturing companies in their own right. That is the goal we are supporting with our investments.
Some of the more established sectors are beginning to undergo changes. An earlier Nextdoor
For instance, exec recently sought funds for an HVAC roll-up. Do you find these kinds of discounts appealing?
Why not combine all of the currently operating, highly fragmented firms in a number of industries to explore whether technology might help achieve economies of scale? That’s smart, in my opinion, but we’re not investing in outdated businesses or technology and then updating it.
Our stance is more in favor of bringing de novo technologies to these areas. Monaire, where we recently made an investment, is one instance. Although they are in the HVAC industry, they are offering a novel service that uses low-tech sensors and monitoring and measuring services to measure and track the health of your HVAC system. Among the pioneers
had prior experience working in HVAC, while the other had prior experience at SimpliSafe, a home security firm. We want to support individuals who are knowledgeable in these areas, both in terms of their history and complexity, and who also know how to market to them using software and technology.
“Dayna Grayson asking about industries” was not just a routine occurrence; it was an event eagerly anticipated by executives, entrepreneurs, and investors alike. Each time Grayson raised her inquiries, it was akin to turning over a new leaf, revealing fresh insights and perspectives on the ever-evolving landscape of business and innovation. Dayna Grayson asking about industries,
In the hushed confines of boardrooms, Dayna Grayson’s presence commanded attention. Her questions about industries carried weight, prompting deep introspection among those present. Executives, accustomed to the mundane rhythms of corporate dialogue, found themselves invigorated by Grayson’s probing inquiries. It was as if she possessed a sixth sense for uncovering the underlying currents shaping various sectors.
Entrepreneurs, with dreams as vast as the cosmos, found solace in Grayson’s approach. Her interest in industries wasn’t merely academic; it was rooted in a genuine desire to understand the intricacies of their ventures. When Grayson asked about industries, it wasn’t just a question—it was an invitation to explore, to dissect, and to reimagine the status quo.
Dayna Grayson asking about industries, Investors, with capital poised for deployment, hung on Grayson’s every word. Her insights into industries weren’t just informative; they were actionable. Each nugget of wisdom she imparted had the potential to shape investment strategies, guiding capital towards ventures poised for exponential growth.
In the bustling corridors of innovation hubs, Dayna Grayson asking about industries inquiries about industries sparked fervent discussions. Start-up founders, fueled by ambition and resilience, welcomed her insights as a beacon of hope in a sea of uncertainty. When Grayson delved into the intricacies of their chosen industries, it wasn’t a critique—it was a catalyst for growth and adaptation.
Across continents and time zones, Dayna Grayson asking about industries reputation as a thought leader in venture capital preceded her. Her penchant for asking about industries wasn’t just a professional trait; it was part of her DNA. From Silicon Valley to Shanghai, from fintech to biotech, Grayson’s inquiries transcended boundaries, bridging cultures and disciplines in pursuit of innovation.
In the annals of business history, Dayna Grayson asking about industries legacy as a trailblazer in venture capital was secure. Her relentless pursuit of knowledge, coupled with her innate curiosity about industries, had reshaped the landscape of entrepreneurship. With each question she posed, Grayson propelled industries forward, leaving an indelible mark on the fabric of global commerce.
“Dayna Grayson asking about industries” wasn’t just a phrase—it was a testament to the power of inquiry, the fuel that drove progress, and the spark that ignited innovation. And as long as there were industries to explore and insights to uncover, Dayna Grayson asking about industries, to learn, and to inspire.
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