Deal Flow :: As a quick introduction, I grew up in the midwest, studied mechanical and electrical engineering, and early in my career I became a patent attorney at a prestigious law firm. After clocking 10,000 hours, I walked away from the opportunity to become the youngest partner at that patent law firm, and instead I moved to San Francisco and founded my own law firm. Over the last 20 years, together with the brightest students from my “Patent Law and Strategy” course that I teach at Stanford, we built the top patent law firm for early stage startups. We have developed the patent strategy and wrote the patents for the following startups:
software :: Twilio, Duo, and Canva
fintech :: Coinbase and Plaid
digital health :: Benchling, Omada, Ginger, and Ciitizen
medical diagnostics :: Viz, Rad, NeuMoDx, Celsee, and Accuri
consumer :: June, Molekule, LIFX, and Boosted
enterprise :: EasyPost and Lob
processors :: Cerebras, Quadric, Mythic, and Luminous
autonomous vehicles :: Cruise, Gatik, and May Mobility
air and space :: Joby, Skyryse, Merlin, Accion, and Space Perspective
climate :: Zitara, ionobell, and Remora
communications :: Kumu, Swift, eero, and Estimote
artificial intelligence :: Vicarious, Ambient, and Zest
frontier :: Looking Glass and Reach Labs
Selection Process :: When our brand began to lead the market, we were inundated with 100s of potential clients on an annual basis. In the midst of this challenge, I had an important insight: the long-term success of the law firm was directly influenced by our ability to pick great startups amongst these potential clients. From the law firm's perspective, selecting clients that would raise venture capital and grow exponentially would dramatically increase ARR and — conversely — selecting clients that would fail to raise venture capital would dramatically increase churn. Because engaging the right clients was no different than investing in the right startup, I spent years methodically studying other angel investors and then applying their approaches and patterns to our engagement process. As the years progressed, we have approached 100% accuracy with these decisions. With very few exceptions, the startups that we engage raise venture capital.
Enormous Due Diligence :: In the normal course of developing the patent strategy for our clients, we are infused with all of the information an investor would ever need to make an early stage investment, which allows us to make confident early investments. We have made more than 100+ investments, and the vast majority of these investments have been in the seed stage. We were the first investor in Twilio, which now trades on the NYSE with a market cap over $60B. We were also the first investor in Ambient.ai, Luminous, and Zendrive, which have all subsequently raised at valuations over $100M.
Ability to Close Deals :: If you ask our founders, they would tell you that they accepted our investment because “it aligns us”, “we want Schox to continue to work hard for us”, and “the fact that our patent attorney invested has a great signal”. In short, our clients see us as a strategic investor. There were, however, a few times that we initially failed to close a deal, including Duo, Cruise, and Vicarious, because these clients wanted a larger check than the law firm was willing to write. And, although we later invested in Duo (through another fund) and in Cruise and Vicarious (in their later rounds), we want to be able to jump on the opportunity to be the first investor in similar companies in the future.
Fund Strategy :: Thus, with the aim to leverage our deal flow, our selection process, our advantage with due diligence, our ability to close deals as a strategic investor, and our desire to never lose another deal because our check is too small, we raised a fund. Schox Patent Group, which is an anchor LP of the fund, engages roughly 20-30 clients on an annual basis, and Schox Venture Capital intends to invest approximately $100-500K in a majority of these companies. Most of these investments will be $100-250K in seed rounds, and a few of these investments will be $250-500K in later rounds.
Commitments :: I am committing $25K on a quarterly basis and my law firm, Schox Patent Group, is committing $200K on a quarterly basis. When these two are combined, I am committing more than 15% of the fund (which is currently approximately $1.25M on a quarterly basis).
Reporting :: After the close of the quarter, I provide a list of our investments for the quarter. Because I am -- by the definition of this fund -- the lawyer for these companies, I cannot and will not answer any questions about an individual investment.
Learn More :: Schox.vc