Member Spotlight: Anzu Partners
For this deep dive, we spoke to Whitney Haring-Smith, Managing Partner of Anzu Partners.
Tell us about your firm. What makes it different?
Anzu Partners focuses on industrial technologies and life sciences, and we are driven to bring capital and capability to technologies that pull the future forward. Every member of our investment team is a technical subject matter expert and 50+ people (two-thirds of our total team) focus on portfolio support. Because of our depth of expertise, we have the courage of our convictions – and lead over 90% the rounds in which we invest.
Anzu is uniquely qualified to make deep tech investments that other firms wouldn’t always choose. It starts with our attention to detail and our in-depth diligence, which has been described by several of our co-investors as the most thorough process they’ve ever seen. Our team is willing to work through difficult deals, and we’ve helped companies clean up complicated histories with prior investors and move forward with a trusted partner.
Our portfolio support model is also where we stand out as a firm. While we usually spend hundreds of hours on diligence, we often can spend thousands of hours on support for any given portfolio company. The vast majority of our efforts are spent supporting our companies to grow smart and mitigate risk.
We have dedicated teams across manufacturing and supply chain, talent and recruiting, accounting and finance, marketing and communications, and capital solutions. Our team members, most former operators themselves, understand our companies’ unique challenges better and faster than external vendors. Our manufacturing and operations group helps to set up supply chain operations from scratch, even in international markets, our talent function maintains a large pipeline of technical experts and scientists who can join our portfolio companies, and our capital solutions teams opens up a network of new relationships for our companies across markets, all of which helps us de-risk these investments and enables companies to succeed.
What defines your portfolio?
Since the firm was founded in 2015, Anzu has invested in 40 industrial and life sciences startups across three venture funds. For most of our portfolio, you do not need to be a technical or scientific expert to understand the value – but you might to understand the science behind it. Notable investments to date have been in spaces like optical coherence tomography (aka lasers that scan your eye at the doctor), plasma microwave technology (aka manufacturing metal powders), and single-cell genomics (aka cancer detection).
The typical company in our portfolio has received millions of dollars of prior non-dilutive funding, whether through government grants or research programs, or is a spinout from a top university, and we typically enter early in the commercialization curve.
We are not the only firm that ends up having convictions in these companies. Global Fortune 500 companies have co-invested or followed us in funding, once they see the transformative impact these companies could have on the industrial or life sciences industry. For example, both LG Technology Ventures and Samsung Venture Investment Corporation have co-invested in OTI Lumionics, a Canadian company developing production-ready advanced materials for consumer electronics, and the Volvo Cars Tech Fund co-invested in Niron Magnetics, a company developing rare-earth free, clean magnet technology.
Tell us about the current VC landscape in your geography/region
Anzu invests primarily in North America and selectively in developed international geographies. Our typical target ecosystem has strong engineering schools, major industrial/biotech corporate headquarters, and a reasonable cost of living. While we do invest in the Bay Area, our largest markets are San Diego and Boston, with investments from coast-to-coast including Minneapolis, Chicago, and multiple companies in New Mexico.
One key advantage of Anzu’s multi-office strategy where we have no formal headquarters, is that we are willing to go where the fundamental building blocks for successful companies exist.
What are the benefits of being an NVCA member?
The regulatory environment around venture capital has become markedly more complex since Anzu was founded in 2015. Whether recent changes in CFIUS regulations, tax treatments, or SEC regulations, NVCA has been a useful interpreter and interlocutor on issues that have impacted our growth. In 2020, Anzu opted to become a registered investment advisor (RIA), which has expanded the range of transactions in which we can engage, but the additional regulatory burden has enhanced the value of NVCA for us.
We are greatly appreciative of NVCA’s leadership in the quest to increase diversity within our industry. We are very pleased with NVCA’s Venture Forward program, and we are proud to be a signatory on the Human Capital Pledge and the VC Human Capital Survey, which helps smaller firms understand how to collect and manage the DEI data tracking and management process.
Additionally, NVCA’s educational content, such as the monthly webinars have been extremely valuable in training our team members who are new to venture capital. On the job training in this industry can be difficult, but these webinars have helped our newer team members to quickly understand complicated industry matters and helped our team solve for issues that arise in their day-to-day operations. NVCA’s networking opportunities have also been beneficial for our growing firm and have given us opportunities to generate visibility with larger firms to build our broader network or to learn new best practices.
What’s ahead for your firm in 2023?
The year ahead is marked by ever-higher concerns about “uncertainty” in the capital markets. For Anzu, our investments rest on a deep conviction on the technology and commercial value proposition – not the latest financial trend – and our daily drive comes from funding fundamental technologies, not quarterly marks. So, while 2022 was a harsh year for many venture funds, we finished raising our third venture fund at just over $200 million in January 2023, and our portfolio companies received about $80 million of non-dilutive government grants. Because our firm is structured to deeply support our portfolio companies, we are built for tough markets like those we might experience in 2023, and our attention is focused on supporting our companies’ commercialization and strategic efforts. We look forward to executing on this in the year ahead!
