Shelley Zhuang (right) has grown 11.2 Capital to include Principals Pramod Gosavi (left), David … [+]
11.2 Capital
A chance encounter with one of venture capital’s top figures helped propel 11.2 Capital founder Shelley Zhuang into a career a startup investing career.
A computer science PhD from the University of California, Berkeley, Zhuang grew up with a father who was a professor in the same field; academia was a logical career route. But attending classes at the Haas School of Business, she was moved by a talk given by Midas List billionaire Doug Leone of Sequoia. “I just went up to him afterwards and said, how do I get into this VC thing?” remembers Zhuang. “And he basically said, ‘apply to as many positions as possible.’ So yeah, I did that.”
Two decades later, Zhuang leads one of the more interesting VC firms you’ve likely never heard about: 11.2 Capital. Named after the escape velocity needed to leave Earth’s gravity (11.2 kilometers per second), 11.2 Capital focuses on investments in “deep tech,” meaning biotech, healthcare, space and other research-intensive areas. Founded in 2013, 11.2 Capital closed a previously-unannounced $101,010,101 second fund earlier this year.
“I wanted to start a fund really focused on the technology, on really technical founders,” Zhuang says. “At the time, there were very few seed funds focused on deep tech.” News of 11.2 Capital’s new fund was first reported over the weekend in the Forbes Midas Touch newsletter.
Today, 11.2 Capital manages about $150 million in capital, with standouts from a portfolio of 40-plus companies including standouts such as self-driving car service Cruise Automation, which was acquired for more than $1 billion; biotech business Ginkgo Bioworks, which went public and carries a market cap north of $25 billion; and digital clinic Hinge Health, which reached a $6 billion valuation last week, giving the firm at least five unicorns.
But growing the firm hasn’t proven easy for Zhuang, who landed an analyst role at DFJ (now Threshold Ventures) in 2005 following Leone’s advice, then helped set up its Shanghai office before spending about two years as a business development leader for a DFJ portfolio company in renewable plastics, Ecoplast. It took Zhuang five different closes to raise 11.2’s first $50 million fund, meaning that its early checks into winners like Cruise and Ginkgo were relatively small. And when Zhuang set out to raise a second fund, she found out that institutional LPs like family offices and fund-of-funds had different expectations. One: they expected emerging fund managers to play the relationship game over time. “I wish talking to them is something I did earlier, but I was very focused on doing investments,” Zhuang says.
Fundraising paused in 2020 during the pandemic. But after lidar company Aeva and fraud detection service Forter raised unicorn rounds, 11.2 Capital picked up more steam earlier this year, ending up with offers for more capital than Zhuang needed. Her firm has made 11 investments from Fund II so far, including hybrid vertical take-off and landing vehicle maker Craft Aero, battery maker Sepion and cyber asset manager JupiterOne.
While a number of investors now bill themselves as deep tech experts, 11.2 Capital hopes it can continue to identify opportunities, and provide technical support, in ways others can’t. Its three principals – Jacob Smith, Pramod Gosavi and David Dorsey – all have technical backgrounds. And the firm conducts its own thorough diligence, Zhuang says, even when it isn’t leading a round, despite an investing climate that puts pressure on such processes as in-demand entrepreneurs can expect quick checks.
Zhuang tells the story of a company at Y Combinator’s Demo Day several years ago that was raising a round. Zhuang wasn’t sure about it, and asked some of the other committed investors how its team had answers questions about certain concerns. “They were all like, if you want more detail, talk to this other investor who did more diligence,” says Zhuang. “That’s not something I’m comfortable doing. It’s our job, I believe, to get to the bottom of these things independently.”
One area where 11.2 Capital needs to conform more to the times: marketing. Having an office is no longer important – Zhuang moved to Las Vegas during the pandemic out of personal choice – but entrepreneurs need to see you online, even in deep tech. “It’s probably an area we need to hire someone,” the firm’s founder admits. “I’m a geek. All of us on the team, we just aren’t marketers by nature.”
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