wati Mylavarapu and Matt Rogers are the definitive Silicon Valley power couple. Rogers, a cheerful, be-fuzzed technologist, co-founded Nest Labs. Swati, a sharp visionary, was at Square for four years before joining legendary investment firm Kleiner Perkins Caufield & Byers as a partner.
Now they’re ready for act two.
The pair have just launched their new investment platform, Incite, and are looking to the future with a timeline generally unheard of within the Valley. The bottom line? Matt and Swati are looking to fund world-changing startups no matter how long it takes to see a return on investment.
Matt co-founded Nest with Tony Fadell in 2010, which sold it to Google in January 2014 for $3.2 billion. He doesn’t like to talk about how much he got from the sale, be he assures me he didn’t splurge on a crazy, post-exit purchase like an island.
“Matt sold Nest and we had an incredible opportunity to pay it forward and use the capital we’d acquired to make the world better,” Swati told me. “That seemed like the right thing to do. But first we wanted to spend some time learning how that’s done, and [Kleiner Perkins] offered a history-rich place to learn from some of the best VCs and creative capitalists in the business, like Randy Komisar and John Doerr.”
Swati worked as a partner at KPCB for two years until the end of 2017. She tells me she left the firm understanding great investors are really working in service to their entrepreneurs first but also to their fund investors. Fundamentally, great entrepreneurs are missionaries and change-makers, she says, adding they’re in it to change the world and are not just motivated by money or short-term gains.
“Having an early investor on the other side of the table who not only supports that but has done it, and can offer that motivation, guidance, resources – that’s game-changing,” Swati said.
The pair consistently looked at founders leading mission-based companies who couldn’t find investors. Along the way, they identified a category of startups who were attempting to solve big problems but were running into fundraising roadblocks. This is where Incite wants to make investments.
ncite is a different type of investment fund, say Swati and Matt. Although there is a venture fund involved, it’s more than that. There’s a foundation, too, which, as they explain, allows them to fund companies and ideas where they might not see a return for 20 years. And if a company is not right for Incite’s venture fund or foundation, the two can use personal funds to support a startup, too.
Incite has three investment vehicles, which allows the pair to wait longer for a return: Incite Ventures, an LLC investment fund looking at mission-driven enterprises; Incite Labs, a 501(c)(3) nonprofit organization that makes grants and program-related investments to charitable, educational and scientific purposes; and a political wing called Incite Politics, in which Swati and Matt get involved personally to organize and support political initiatives and candidates.
The firm aims to address the funding gap around hard science and difficult tech. This is an area Matt and Swati feel traditional venture capital largely ignores because of the time it takes to see a return on investment.
“We have patience,” they said over several interviews with TechCrunch, and this is evident through some of the early investments. They feel some investments have the potential to change the world, and therefore deserve a longer time to mature. Because of this, Swati and Matt set up Incite to offer the best terms to founders and the fund over the long haul.
It helps that Matt and Swati only have to answer to themselves.
“We’re passionate about discovering first-movers,” they said. “These are the brilliant, committed people taking critical-but-fragile first steps to address substantive change. If we can be the difference and get these people the initial momentum they need and then we fire up that spark.”
Yet through this all, Incite does not have any limited partners. Matt clearly views the lack of LPs as beneficial to entrepreneurs.
“Entrepreneurs look for investors who are there to help for the long term,” Matt said. “Because we have no accountability to LPs and are more interested in seeing the impact in the world, we provide a much more patient capital. Also, having been an entrepreneur myself, I can really empathize with the daily stresses of what folks deal with on a regular basis. I often get calls from our founders who are just looking to talk through some of their challenges and get some perspective from someone who has gone through it.”
Incite aims to do this through funding and fundraising while connecting people for advice and guidance. That pitch is not unique to Incite. It’s the same hook used by most venture capital firms. Those tentpoles hold up most investments, and most investors utilize their network to ensure their cash is properly supported and has the best chance for a return. It’s Incite’s different funds that set them apart in the venture world.
Without these three investment vehicles, Incite would be similar to any other venture fund, yet with them, there’s credence behind their professed patience. They’re funded differently from Matt and Swati’s personal funds, with Incite Ventures’ funding coming from the pair’s family office. Incite Labs is a private foundation that they gift money to on an annual basis, and their political work is funded directly and personally from their own coffers.
So far the two partners have funded 24 projects. Incite intends to use these different investment types at different rounds, too. The blended asset class gives Matt and Swati flexibility and thus changes the risk structure of their investments.
Investments like Wright Electric Airplanes was done through the private foundation, as the return on investment is expected to take much longer.
Still yet, there are projects like The Arena, which the two funded and Swati helps run, to help organize political activism through building of communities and running quarterly training summits.
att and Swati are the only two Incite investment partners, and Matt is keeping his day job at Nest. This is not his exit from Nest, he says. I asked him this question several times, and he started laughing, saying, no, he’s not leaving Nest and that for him, Incite is a nights and weekends project, stating Swati does most of the work.
I first met Swati at TechCrunch Disrupt SF 2017. She came along with Matt who was scheduled to sit down for a fireside chat on the Disrupt stage. Nest had just launched its long-rumored security solutions. But moments after meeting her, it was clear we at TechCrunch made a mistake. Swati should have been on the stage with Matt. She’s visionary, and the pair share the same passion, which Matt laid out onstage that day.
Swati says she grew up in a similar situation as Matt, born to hardworking immigrant parents who made her and her sister aware of their luck to have the opportunities available in the United States. She graduated from Harvard with the highest distinctions and attended Oxford as a Rhodes Scholar. She says she started college wanting to be a doctor and discovered economics and how great technology can be transformative and impactful in helping people live better lives.
“The form has evolved as our world has changed, but the goal for me has always been the same – help people to both live better, and to have more opportunities and seize them,” Swati said.
This mission is evident through one of their early investments. Nima is the maker of gadgets that detect allergens and components within food. Their first product detected if a food substance contained gluten. TechCrunch first meet Nima when it won Hardware Battlefield at CES in January 2016. Matt and Swati were already investors, previously putting money in Nima’s seed round, and in May 2016, participating again in the company’s Series A.
Nima co-founder Shireen Yates has great things to say about them, too.
“Swati first reached out a few years ago when she learned about Nima,” Yates said. “Food allergies run in their family so they immediately understood the pain point we were solving for. They invested in our seed round and have remained incredibly active since.”
Yates says they show up as partners and consider them an extension of the company’s team. She says they’re instrumental in helping Nima maximize their impact.
Nima’s thoughts line up with the stated goals of Matt, Swati and Incite, and there is no doubt the two intend to see this project through to the end. With the long timeline, various investment vehicles and lack of partners, it’s clear the two have put in a lot of work to position Incite as a premiere investment organization. But that’s just the start.
Matt and Swati have a big mission and even for Silicon Valley power players, they will not be able to do this alone. They’re going to need help though they never admitted that to me when we talked.
There are close to 900 venture firms located in the United States and many are after the same type of entrepreneur as Matt and Swati. Even with their founding and investment background, the two are still going to have to establish their investment and advisement chops in the competitive VC world. It will take time, and, well, if the two are to be believed, they have the time.