The Smarter Startup

A Deep Tech VC on Market Timing, Female Leadership & Diversity

Jeff Burkland chats with Lu Zhang about her experience as a founder, how her fund chooses companies, and her quest to bring more diversity to startups.

Not too long ago, companies in deep tech and healthcare were often overlooked for funding in favor of companies focused on consumer products and business innovation.

Lu Zhang, Founder & Managing Partner of Fusion Fund, has worked to change that. As a solo founder of a medical device company, she has a unique perspective on how to lead a deep tech/healthcare company to a successful exit.

Special guest host Jeff Burkland, Founder & CEO of Burkland, returns to chat with Lu about her experience as a startup founder, how her fund chooses companies to support, and her quest to bring more female and minority voices into businesses and startups.

We discuss:

  • Why Fusion Fund focuses on tech and timing in early stage investments
  • How Lu leverages a CXO network for funding decisions
  • The benefits of fostering cognitive diversity on your team
  • Initiatives to empower female leadership in the boardroom

Early Stage Investments

What does Fusion Fund look for when it comes to those early-stage investments? There are two factors: tech and timing.

For Lu and her group, the founder isn’t the only deciding factor. Technology plays a huge role in influencing their investment decisions as well. Their interest is piqued if the technology in question is better, faster or cheaper because it means that it’s ready for commercialization.

“Even if you have the best technology, the truth is the market needs better, faster, cheaper technology. Then, it’s ready for commercialization.”
— Lu Zhang

A lot of technical founders in Silicon Valley often repeat the same mantra: “We have the best technology. We should be winning.”

And while it may seem like those with the best tech ought to be winning, that isn’t always the case. The truth is that the market demands better, faster, and cheaper technology in order to break out from the pack.

It’s important to note that cheap doesn’t just refer to the cost of the technology. It’s about the cost of implementation and integration as well.

Another important factor is timing, specifically market timing.

People are always drawn to and distracted and fascinated by new technology.

As Lu says, “Technology buzzwords are everywhere.”

But just because the technology exists doesn’t make it ready to go to market. The reason it is ready for investment is because the market is ready for the technology.

CXO Network

So, how does Lu and her team determine when the market is ready for the technology?

Lu set up a network called the CXO network, made up of CTOs from Fortune 500 companies with strong technical backgrounds. This network looks at potential investments and determines the best timing to invest in the technology.

In some cases, the technology seems great and the founder seems great, but the timing is off. In those situations, the potential investment is monitored until the optimal time to bring it to market is reached.

“As a VC fund manager, we need to do the math, metrics, and modeling to really make sure we optimize the whole fund.”
— Lu Zhang

Embracing Cognitive Diversity

According to Lu, diversity is critical for creativity and for innovation. Not only that, having cognitive diversity within your company provides diverse perspectives which will eventually open you up to diverse opportunities.

It’s why she advocates for more founders from minority groups, in general, and why she’s on a mission to bring more women into business and into startups in particular.

Empowering Female Leaders in the Boardroom

It’s no secret that across the board, women are incredibly underrepresented in seats of influence and power in large companies. This means that an awful lot of companies are missing out on an awful lot of key insight and decision-making.

On the one hand, empowering female and diverse leadership is simply the right thing to do. It’s 2022 and there is far too much talent out there to be overlooking people for positions of leadership because of arbitrary traits.

“On the one side, empowering female and diverse leadership is the right thing to do. But on the other side, it’s the smart thing to do, because a diverse team background will generate a much better return.”
— Lu Zhang

But on the other hand, it’s not just the right thing to do. It’s the smart thing to do. Think about how much insight and critical thinking skills your company might be missing out on because of a lack of diversity in the boardroom.

When there are more interests represented at the board level your business is going to generate a much better return because you’re going to have a more diverse range of thoughts and opinions. And once diversity is established at the board level, it gets passed down to the management level, and then down to the whole team.

This discussion with Lu Zhang comes from Burkland’s Startup Success podcast. Browse all Burkland podcasts.