Why Braintree founder Bryan Johnson invests in tech’s most neglected markets

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• Bryan Johnson, who sold his company Braintree to PayPal
  for $800 million in 2013, has created a fund called OS Fund to
  invest in “deep tech” companies centered on the areas of
  science and technology.
• Of the 28 companies OS Fund has invested in since
  2013, 26 saw an increase in their valuation, two were
  acquired, and four are now valued at $1 billion or
  more.
• Now, Johnson has raised a second fund, OS Fund II, to
  further more science-backed pursuits.

“
If you go to someone with money, and say,
‘Hey, why don’t you invest in science stuff?,’ they’ll probably
say no,” says Bryan Johnson. “They’ll say that it takes longer,
that it’s harder to assess risks, and that it isn’t worth
it.”

Johnson is the co-founder of
OS Fund, a venture fund that
specializes in what Johnson calls “deep tech”: technologies
centered at the crossroad of science and tech.

Often, these “deep tech”
companies — or any early stage company dealing
with science, medicine, or biotech — pose as
risky bets to prospective investors.  

Biotech companies typically take
longer to yield returns than their consumer-facing counterparts,
and regulatory approvals and research studies can prolong the
time before products are ready to go to market, making many
investors less eager to fund science-backed startups.

But Johnson says these deep-tech companies are not only
worthwhile investments, they’re also highly profitable.
So far, Johnson’s early foray into investing has yielded
overwhelmingly high returns: Of the 28 companies that
Johnson and his co-founder Jeff Klunzinger initially funded since
2013, 26 saw an increase in their valuation, two were acquired,
and four are now valued at $1 billion or more.

Now, Johnson and Klunzinger have raised a second fund,
called OS Fund II, to invest in entrepreneurs that plan to solve
global problems like world hunger, nuclear waste, and
environmental hazards caused by food production.

While these issues might seem like daunting investments,
Johnson insists that solving these problems shouldn’t be left to
non-profits or NGOs.

“We’re not simply do-gooders,” Johnson said of himself and
Klunzinger. “We’re competing with all the best funds in the
world. We’re interested in seeing returns on our investments and
doing this successfully.”

Johnson credits much of his fund’s early success to his
outsider sensibility: Johnson is the former CEO and founder of
payment company Braintree. After he sold Braintree to PayPal in
2013 for $800 million, Johnson used some of his money to fund
science-based companies. 

“I have no formal scientific training,” said Johnson.
“Early on, I was personally vetting $100 million on this project.
I come from a very naïve perspective, and I’ve spent a lot of
time doing research and working with the founders.”

Johnson says his early experience as an entrepreneur has
provided him with the benefit of guiding early companies in the
right direction: While many science-based companies are clouded
by an academic perspective, approaching these same companies with
a purely entrepreneurial insight can reap huge dividends, Johnson
says.

“A lot of scientists have built up the wrong intuitions,”
he said. “The academic game incentivizes you to pursue fields
that are sexy, rather than the best markets. Sometimes you have
to look for markets that aren’t sexy, or have been
neglected.”

Johnson compares investments in biotech today to the early
enterprise landscape of the late ’70s.

“In 1978, there were a few new companies like Microsoft and
Intel and Oracle that were building up a new eco-system of
opportunity. Now, we’re in the age of biology and genomics and
protein design and automatic manufacturing. It’s an emergent
field that’s bigger than computing. It’s a new era for
investing.”