Jennifer Fonstad and Theresia Gouw launched Aspect Ventures with their own money in February 2014—and have hardly looked back. “We closed our first investment that first week,” Fonstad says. The pair went on to make a number of investments that first year before deciding to raise funds more formally from outsiders, like a conventional venture firm, and early in 2015 announced a $150 million fund. They announced their second fund, at $181 million, this January, with limited partners who include Melinda Gates and Cisco CEO Chuck Robbins.
Aspect was a rare (if not the only) venture fund in Silicon Valley founded by two women, but neither partner was a newcomer to venture capital. Fonstad had spent 17 years at powerhouse firm Draper Fisher Jurvetson, where she was a managing director. Gouw, meanwhile, was a partner at another top firm, Accel Partners, where she had been for 15 years. The two had known each other before that, going back to their early career days at Bain.
Their current fund focuses mainly on Series A rounds, but also seed investments, in a number of fields, chief among them cybersecurity, digital health, and the future of work. In part, the new funding will be used to expand the team, which now numbers nine on the investment side. I recently visited Fonstad at Aspect’s headquarters, which is housed in modest second-floor digs in downtown Palo Alto. We talked about those tech areas, some newer arenas Aspect is eyeing such as artificial intelligence, voice, and blockchain—as well as issues such as international competition, diversity, potential effects of trade sanctions on startups, and the changing nature of entrepreneurs themselves. (Read on to see what Fonstad says about the diversity of entrepreneurs in her firm’s portfolio and a kind of next-gen LinkedIn, among other things.)
Following is an edited transcript of our conversation:
Xconomy: Let’s start with some background on Aspect and your focus, what you started with originally and what’s new.
Jennifer Fonstad: We have deep experience and expertise in what I’ll call enterprise software categories: SaaS [software as a service], analytics, software security, digital health—and we have a fairly robust consumer presence as well. My co-founder, Theresia, had done quite a lot in software security, both as an entrepreneur and then as an investor. And I did quite a bit myself in digital health and next-generation analytics particularly. So those were some of the core areas we started in.
We’ve developed a number of different themes since then around the future of work and how employees, employers, and individuals, will be interfacing. A good example of this: Uber drivers, who technically are not employed by Uber, are coming together to develop their own association that would then be used to buy healthcare. So, how do employers think about innovating when there is a different type of workforce and a different type of community? What types of products and services will they require—in terms of education to get their first job but also in the job? How do you find those employees? How do you recruit them? How do you compensate them?
A little over a third of the fund right now is in security software–we had our first IPO in the fall of 2017, a company called ForeScout. About 20-25 percent is in the future of work, another 20 percent in digital health. And then we have new areas that we invest both at seed and then Series A, as the categories emerge.
X: Let’s talk about some of those new areas.
JF: We’re doing quite a lot in AI now, which permeates and touches so much of each of these categories and more. But a lot of our AI work is really focused on solving a particular business problem—using data in new and novel ways to solve a business problem that you couldn’t have solved before when you didn’t have access to that data and information. We have a number of investments in that category, and also in automated vehicle software. Because there’s a number of platforms, services and software, used in managing the car from an operations perspective—everything from digital mapping to communications.
Then we have done some investing around blockchain, but not blockchain as
