A fund that holds observer status can have just as much impact as one with a full board seat, leveraging critical resources and being just as involved in a portfolio company’s development. 
Cultivating Innovation: Unveiling Applied Ventures’ Strategic Vision
May 9, 2024
Interviewed by Nicolas Sauvage on September 3rd, 2020
Self-described science fiction nerd Jaclyn Kossmann says venture capital is like rewatching Star Trek: Next Generation. When the series first aired, LCARS, transwarp, and the other technologies Captain Picard and crew had at their disposal seemed so futuristic. But, she told the Corporate Venturing Insider that screening the series today from her perspective as a senior investment manager at Applied Ventures, the innovations appear totally plausible.
“I grew up thinking about what the future was going to be like and how our lives would be changed by technology,” she explained. “That’s what I love about venture capital.
Whether you’re pushing the envelope on a business model or a technology, or you’ve come up with something completely out of left field. Can you commercialize it? Will the market adopt it?”
Path to the Bridge
Jaclyn said she is excited to perch on the cutting edge of technology as a leader in the venture arm of Applied Materials, although she followed a circuitous path to bona fide venture capital. She advised aspiring business executives to follow her example, be flexible, and explore all their options.
“You have a plan, but sometimes you pivot and come back,” she said. “Or, you find a new director or opportunity.”
After earning her bachelor’s degree in civil and biomedical engineering from Tufts University and a master’s in sustainable energy systems from Edinburgh University, Jaclyn worked for several years for renewable energy startups. She became interested in cleantech and became familiar with venture capital and private equity funding. While at Dartmouth in pursuit of her MBA, as she was “poking around and exploring what else I might be interested in,” Jaclyn’s mentor noticed her entrepreneurial leanings and encouraged her to investigate corporate venture capital. The pair founded a student-run venture fund. She helped build the team and the investment model, and she was hooked.
“I didn’t completely plan (my career) perfectly,” Jaclyn said. “But I’ve been a VC for five years now, and I can’t imagine doing anything else. love that you get paid to be curious to learn. You get to meet the most amazing, passionate, energetic, outgoing entrepreneurs. I’m definitely a founder fan.”
Taking the Helm at Applied Ventures
Applied Materials is one of the largest semiconductor equipment companies in the world.
“We make the tools that make the chips,” Jaclyn said, summarizing complex processes into a few words.
Applied Ventures is deeply invested in fostering technology-driven transformation. This initiative extends beyond a decade and supports startups focused on semiconductor equipment, self-driving vehicles, Web3, and more. Their focus is to leverage technological advancements to propel societal and industrial change.
“We are always looking at these new inflections, whether in AI, autonomous vehicles, or augmented reality,” Jaclyn explained.
She said she prefers Series A investments, especially for startups that would benefit from Applied Ventures’ hands-on support to accelerate their growth. However, she also acknowledges the great value that comes with investing at a later stage with established teams and investor syndicates.
“We want to back our winners because their success is our success, and not just in terms of finances,” Jaclyn said. “We are highly strategic, but it is mandatory that I believe we are going to be making money off of the company.”
Single-Partner CVC Advantages
Jaclyn said the setup at Applied Ventures provides several benefits she can leverage. She appreciates her fund’s evergreen structure backed by a single limited partner. That means she doesn’t have to invest time attracting outside capital. It also means industry experts are just a phone call away.
“I work with the sharpest people that help me diligence deals, find the best technology, and help our portfolio companies,” she explained. “We’re very strategic and that’s rewarding, whether we’re helping them with market positioning or customer access, or just developing the technology.”
She highlighted the value of pattern recognition in assisting founders, identifying their blind spots, and offering strategic guidance. This feedback elevates the entire startup ecosystem, even when Applied Ventures decides against investing. She emphasized that although a startup may not be the right fit for her fund, it may be perfect for another investor.
“I believe in a big community, in a big tent, and being inclusive, and helping make those connections as appropriate,” Jaclyn stressed.
She said providing founders with a clear reason for the decision not to invest is critical. Entrepreneurs deserve support and honesty as a reward for their courage to take the risk.
While the Applied Ventures team assumes both board member and observer seats on the portfolio companies it supports, Jaclyn said the right to vote on company decisions has not been a serious factor so far. Applied Ventures can be just as active and involved in the startup’s journey from the observer seat. She believes the involvement offers the opportunity to contribute insights and collaborate effectively all while reserving the right to vote for important decisions. An observer seat acts as a middle ground, fostering active engagement with the entrepreneurial team and providing strategic support while maintaining flexibility and less rigorous fiduciary responsibilities. Applied Ventures’ observer members often sit in on portfolio company investor and customer calls.
To Boldly Go…
Jaclyn noted that the Applied Materials mothership has aggressively pursued venture capital. It began with a $50 million fund and has since established a second ($100 million) and a third ($150 million). The company has remained bullish even as other investors pulled back.
“We had feedback very early during the pandemic that we should continue to invest,” she said. “This is a boon for the technology areas we’re interested in — communication, electronics, connectivity. I’m glad that we have that support and that vision from leadership that thinks we’ve done a great job and wants us to continue.”
She said she expects Applied Materials to be just as willing to allocate future funding, especially since the fund has “found a sweet spot in the appropriate amount of capital and the number of deals that make sense for us. Maybe we will start writing even bigger checks or early bigger rounds. We’re at a cool time with so many mind-boggling technologies.”
Captain Picard would be impressed.
