The Inquisitive VC – David Pakman , Partner at  Venrock

David Pakman graduated from the University of Pennsylvania in 1991 and right out of college joined Apple as a Product Manager. After being at Apple for a few years, Pakman proposed to the company that it launch a group specifically focused on partnerships with and products for the music industry. This led to the launch of the Apple Music Group in 1995 with Pakman as a co-founder.

Pakman left Apple in 1997 and went on to work for an early-stage startup, which was the first online CD retailer and internet record label, before starting his own company. In 1997 Pakman co-founded Myplay Inc. The company created the first digital music locker and went on to have 8 million users, before being sold in 2001 to Bertelsmann eCommerce Group.

After this Pakman held various Director roles and in 2003 joined eMusic as its CEO. eMusic was the world’s leading digital retailer of independent music, second only to iTunes in the number of downloads sold. Pakman left eMusic and joined Venrock as a Partner in 2008. eMusic was acquired by TriPlay for US$26M in 2015.

Venrock was originally established as the venture capital arm of the Rockefeller family in 1969. The firm is well known for leading Apple’s first venture round in 1978. Other significant investments include Intel, which was Venrock’s first institutional investment in 1969, DoubleClick which was acquired by Google, and Dollar Shave Club which was acquired by Unilever.

At Venrock, Pakman focuses on early-stage venture investing in consumer and enterprise tech companies with a recent focus on robotics, crypto, consumer products and AI. He led both the Series A and Series B rounds in Dollar Shave Club and sat on the board until that company was acquired by Unilever for US$1B.

When asked about how Pakman got interested in crypto and blockchain he stated, “It’s really the story of following the developers. Crypto has been an active area, there have been a lot of smart developers that have been attracted to experimenting there.”

Pakman sees a lot of opportunities in the Web 3 possibilities, especially but not limited to in-game collectibles. The entrepreneur turned VC, led Venrock’s investment in the Series A round of Dapper Labs.

Dapper Labs is a startup that is building blockchain-based games on a proprietary blockchain they have built called Flow. Dapper Labs are also the creators of Crypto Kitties, a phenomenon that has had over US$28M in sales.

The company has raised just under US$40M from investors including Venrock, Andreessen Horowitz, Union Square Ventures, Accomplice, Samsung NEXT, Google Ventures and Digital Currency Group.

When asked why Pakman invested in Dapper Labs, he stated, “First and foremost it’s because of the team. The team there is really an extraordinary mix of talented entrepreneurs and company builders that are less religious and more practical than other teams we have met in the blockchain space. They really are trying to tackle an interesting problem, which is they want to build gaming experiences for mainstream consumers on top of blockchains.”

Specifically in regards to the business Pakman sees the value in crypto-collectibles, which are the basis for a lot of the games Dapper Labs are building. According to Pakman digital collectibles can not be done online without blockchain.

There are a lot of examples of companies having virtual items in gaming, but the reason this is a flawed method according to Pakman is that users don’t really own the item. They have been given permission to have it by the game publisher, who could revoke the rules at any time.

“That won’t happen in the crypto collectible world, where effectively the creator of the virtual item as said there is only going to be a thousand of these and there cannot ever be anymore, and you can check the code to validate that,” says Pakman.

Pakman has gone through two economic downturns in the past, first as an entrepreneur during 2001 when the dot com bubble burst, and the second as a VC during the Global Financial Crisis in 2008.

In regards to Venture Capital he states that first the “tourist money” leaves, this is all the non-serious, non-institutional money like Hollywood celebrities and athletes. What is then left are institutions and some angels, who are serious about investing, that are trying to actually build returns and they get much tighter with their capital.

“So when there is less capital, only the serious entrepreneurs survive, the tourist startups get weeded out pretty quickly too. You are left with a smaller number of startups, less capital and different terms, and also a new set of problems to solve.”

Pakman’s most recent publicly announced investment was in a company called Simbe Robotics. A robotics company based in San Francisco that develops a robot for retail. The company raised US$26M in a Series A round led by Pakman and Venrock.

The seasoned VC has also missed out on some successful investment opportunities, including the likes of Twitter and MongoDB, both of which IPO’ed. Reflecting on missing these opportunities Pakman said, “You can’t always see the vision and we make a lot of mistakes, but hopefully, we pick some winners.”