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Part of the AgeTech Collaborative’s™ mission is to help make connections between startup companies in the AgeTech space and venture capital firms eager to see innovative new solutions come to market.  

But a startup’s fundraising journey can be a labyrinth, and a natural question founders might ask is: Just what do investors look for in AgeTech startups? 

For some insight, we turned to Max Zamkow, founder and managing partner of Third Act Ventures, an early-stage venture capital firm that invests exclusively in AgeTech startups, with a portfolio of 28 companies and counting. Zamkow is also the CEO of AgeTech News, a website that aggregates breaking news in all things AgeTech.  

This interview has been edited for length and clarity.
 

Can you tell us a little bit about yourself and your company? 

I’m the managing partner of Third Act Ventures, which is a seed stage venture capital firm that focuses exclusively on AgeTech. I'm also the CEO of AgeTech News, which is a media site that helps disseminate more information about all the things that are happening in AgeTech, especially the deals and transactions that are happening around the space. That grew out of my own newsletter which I sent out to other investors and to entrepreneurs, trying to show them how much is happening in the AgeTech space, to get them to start investing. It’s all about trying to grow the AgeTech network faster. 
 

Third Act Ventures invests exclusively in AgeTech startups. What inspired you to focus on that sector in particular? 

Like a lot of people in the industry, it comes from a personal experience. My grandmother had reached that age where she couldn’t live by herself anymore. So my family sprang into action. They did all the research with her and picked a community they thought would be the best fit for her to live in. But once she moved in, she went from being gregarious and talkative to being isolated, lonely and really just a shell of herself. I wanted to help, but I lived across the country, so I couldn’t be with her in person with any regularity. 

My background is in mobile software engineering, and I was seeing toddlers using their parents’ iPhones without any problems. So I started looking around, wondering, "Where are all the apps for my grandmother? Apps that could help us stay in touch better, or help her build a community, or even help the nurses who care for her?" I was incredibly frustrated and surprised at the lack of options. And the more I looked into it, the more I realized there were just not nearly enough entrepreneurs thinking about making apps and other things for the AgeTech space. 

In your experience, do you think the growth of innovation in AgeTech is often fueled by personal experiences like yours? 

Definitely. With entrepreneurs, it’s frequently a personal experience or a personal frustration that gets them to start thinking about the AgeTech space. And now that more funding has become available in the past few years, when these entrepreneurs start looking at working in AgeTech, they see real opportunities that maybe weren’t available a few years ago. 

Why did you decide to be exclusively a seed-level investor? 

That's where I think the industry needed the most help, and still does — at that seed level. When I started Third Act Ventures, very few of these startups had any source of early-stage capital to help them get off the ground. Most were having to bootstrap themselves up.  

More recently, more and more investors have been coming in at later stages. But the major need that I see is still at that seed level to help these companies get a little bit of traction, to get to that place that’s big enough that the VCs with all these dollars are willing to come in and help them grow into something more mature. 
 

How does Third Act Ventures find startups you might want to fund? How does the process unfold? 

I find companies — or they find me — all sorts of different ways. Pre-COVID, I would go to a lot of conferences and go through a lot of the expo halls where I would help and volunteer. Now that I tell people more about what I'm doing, I receive cold emails all the time. And I’m willing to look at any company in the space that I can find. 

From there, the founders and I have a brief call where we get to know each other better. I learn more about what they're doing, their background, the status of the company, and what they're going after. And I outline what Third Act Ventures is all about. 

Then we hold a number of due diligence calls. And this is important: I always make sure to speak not just with customers, but with the actual end users. For example, let’s say a startup wants to make some kind of product for a senior living home. I’ll speak with the buyers at the facility. But if the product will be used by the frontline staff, I’ll talk with the frontline staff; if it’s for the residents, I’ll speak to a resident or two — because it’s critical to know that the people who will be using the product will love it. This is one of the most important parts of my job. 

After that, we’ll go through the financials to understand how much fundraising they’ve already done, how they've been spending money and what goals they’re targeting. Anywhere in this process the answer could be “no,” if we realize it’s not the right market, not the right timing, or not the right fit. But a “yes” comes at the end, after this whole process. 

Even though they’re all within the AgeTech space, the companies you invest in represent a variety of sectors. What are some criteria you look for across the board when making an investment decision? 

The biggest factor I look for in any startup is that the end users have to love the product the startup is offering. They have to be excited about using it and love coming back to it — all because it makes a big difference in their lives. If the users really love it that much, you can generally find a way to get better at selling it or positioning it better to make the economics work. But if you don't have that user love, it's hard to build a lasting company. 

Another is that the startup needs a clear understanding of the market it’s targeting. There are a lot of different sub-sectors within AgeTech, and some are easier to break into than others. If you're going into a market that’s newer or has less competition, it's easier to get a foothold. But if you’re going into a large market with a lot of competitors, you really have to understand that you need a differentiated product or differentiated approach to be successful.  

Let’s say I’m an entrepreneur, and I have what I think is a great idea for a product or service for the AgeTech sector. Where are some common pitfalls that could throw me off track? Where do you see the danger signs? 

The biggest danger for any startup is running out of money. Life never goes as planned, and a startup is no different. Rounds of fundraising take a long time, so if you start going out to raise money with only a month or two of runway left, you’ll be facing some difficulties. I always advise companies to raise at least 12 months of runway, and ideally 18 months. This gives you a lot of buffer to make sure you can hit the numbers that the next round of investors wants to see. You need to give yourself enough wiggle room, enough "shots on goal," so to speak, to be able to make those numbers. 

Another danger point is this: Maybe you build a product and it starts working. You get a community of users that love it, so you start trying to build more and more business lines instead of staying focused on that one initial thing. This will dilute what you're trying to do — and all of a sudden, you're doing 10 things not very well instead of doing that one thing with excellence. That can really stall you. 

You’re a participant in the AgeTech Collaborative™, and you’re an investor in some startups who are also part of the Collaborative. Can you tell me a few things about what makes those companies stand out? 

One of those companies is Attn: Grace, which makes specialized personal care products for women. Mia Abbruzzese and Alexandra Fennell, the founders, are incredibly passionate, and they have a great understanding of their target market and the needs that were not being serviced. So they started their company to solve that need. And people really love their products — they loved finding that brand that really speaks to them. That is just so impressive. 

Another is care.coach, which uses AI to help seniors create meaningful social connections via a digital avatar. The founder, Victor Wang, is one of the smartest people I've ever met. And he’s been able to create the technology so it’s incredibly easy to use and interact with — and people form truly meaningful relationships through this tech. It’s amazing. 

Again, the common denominator between those two companies is that they created products for a specific market, and that market loves their products. 

Do you have any final words of advice for startups looking to break into the AgeTech space? 

It’s so important to really focus on your end users, the people who are going to use the product. Of course, you have to make sure that you’re able to sell it to the people who are the decision makers. But first you have to create something that people will love and use all the time. That can be a small group at first. That's fine — it's better to have a small group that loves your product than a huge group that is lukewarm about what you’re offering. So focus on the lovers and finding more of them, because they are the ones who will help you grow in that earliest stage, and help you find that magical product market fit we're all looking for. 

#AgeTech101

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