Investor Letter ~ 2020
Updated: Dec 23, 2020
By now, I imagine you have received as many holiday greetings as you have 2020 commiserations. In the spirit of looking forward to a new year, I’ll spare you the latter and simply say that I’m glad we all made it through together. I am proud to report that in the face of external challenges, it has been a very good year for Meyer Keith.
Where We’ve Been
If you recall, this investment was originally made into a Lexington-based company called MakeTime, which was admittedly running a strong second to Xometry as an on-demand advanced manufacturing platform. Truth be told, it was a blessing that Xometry made the smart move of consolidating its position in the market early by buying us out in exchange for their equity--we got a load of shares in Xometry and while they rolled out international initiatives with BMW, Bosch and others, our Kentucky boys at MakeTime focussed on expanding their reach in the heartland, which is serving the company well as ‘re-shoring’ of the US manufacturing supply chain takes hold. Since we became shareholders in Xometry, they have raised two significant rounds of capital from Dell Technologies, Greenspring Associates and the pre-IPO experts at T Rowe Price.
Someone much wiser than myself said that luck is what happens when preparation meets opportunity. Carbon Health is proof of that. We made our original investment into Carbon when they had one or two urgent cares under management in the Bay Area. We knew that the model was working, we knew that their hospital partners were happy and we knew patient retention was growing. Bernie Sanders was still the Democrat to beat and we spent a lot of time planning out what would happen to the Carbon model under universal healthcare (it still looked good to us!). A few months after cutting our check, Covid hit and growth went into hyper-speed. We bridged them another round of financing to keep up with demand and as of this summer, made a significant investment into their Series C round with an expanded group of our network, led by Dragoneer. I’ll resist being foolish enough to predict the future here, but we’re on a rocket ship right now. Let’s enjoy the ride.
Fun fact: Charles and I actually began our partnership with an insurance product that we built with a roadside assistance company (to expand their benefits business) and pitched to carriers up and down the I-95 corridor for a few months over a pretty bleak winter. Our product never reached the market, but Charles and I had enough time to talk about all sorts of other ideas and our partnership continued. As we did more deals together, we kept hoping to find an insurance opportunity that felt right. We wanted a digital-first tool that could integrate seamlessly with the kinds of decentralized marketplaces that we had learned to love via Drizly, Xometry and a few personal deals that we had made together. We wanted this firm to have underwriting power, but also function as a claims processing tool for marketplaces whose users might have existing policies. We also needed to be able to invest into it at an early stage. Pheww! It probably comes as no surprise that it took us a few years to find what we were looking for. That said, we did eventually find our match and backed Digisure. After a few successful beta tests with some small rental marketplaces in North America, Digisure has now entered into a partnership with Eagle Rider to provide insurance to their entire motorcycle marketplace as it rolls out internationally. Digisure is still young but starting to rev its engine. Pun intended, apologies.
Meyer Keith I
While the above may sound like a lot of work, the truth is that the majority of our time is spent talking (or texting ‘tbh’). Charles and I usually come up with what we want to invest in long before we even find the company doing it and, as two outsiders to the ‘VC industry,’ we almost always have to find that company ourselves! The thing about talking is that sometimes our jaws get more of a workout than our brains, so we both think it’s important to keep ourselves ‘fit’ through day-to-day investment activities. To that end, I have been managing a public markets fund on behalf of ourselves and a few early investors, simply to grow the proceeds from a return that we were lucky enough to have early on. Because I send out monthly reports on these accounts, I’ll spare everyone redundant details beyond the year end returns below. Trust that if anyone wants to talk stock, you know where to reach me! There is no mandate to the fund beyond being opportunistic, but I did capitalize on the Covid sell off in preferred shares to buy us a load of fixed income for the years ahead. If anyone’s looking for some extra yield, we got it.
Where We’re Going
As I look out at 2021, I’m filled with excitement. Beyond the final release from this pandemic and the possible cultural shifts that may come from that, there seems to be a tremendous enthusiasm for technological themes beyond the major ones of the aughts. Cloud, social, productivity, big data, open architecture--these themes are old news, not because they are irrelevant but because they have seeded a new crop of markets and businesses that are now rapidly emerging. As a result, the field of opportunities has grown larger. Our job is to figure out how to find a plot with potential that isn’t overly crowded. As a preview of our work, we’re currently examining:
~an api-based soil data platform for farmers to more accurately track their resource needs so that they can increase their yields, improve their bottom lines and meet environmental regulatory requirements
~an employer sponsored health insurance product and other consumer insurtech opportunities in India
~direct purchases of regional carbon credits in North America in anticipation of increased market liquidity from a national/multi-regional regulatory harmonization
Final Thoughts for Now
One of the lessons that this ‘eternal’ year has taught me is the value of being present. Time flows on and we can either look to the future, the past or the present. Like life, I think that good investing relies on the coalescing of all three perspectives but decisions, like deals, are only ever made right now. Let’s respect the lessons of where we’ve been, consider where we’re going and greet today with open eyes.