Adair Newhall is a Principal at Greenspring Associates. Founded in 2000, Greenspring is a leading global investment firm that today manages over $3.5 billion in capital commitments worldwide. Greenspring acts primarily as a fund of funds, backing a host of dynamic venture capital firms, including Greycroft Partners, Revolution, and Volition Capital. Additionally, Greenspring has been involved with private companies such as GrubHub, FanDuel, and Alibaba Group. Before joining Greenspring, Adair managed several portfolio companies as a Principal at Domain Associates, a venture capital firm specializing in healthcare. Earlier this year, citybizlist interviewed Adair’s older brother, Ashton, who acts as the Greenspring’s co-managing partner.
Can you take us through Greenspring’s strategic focus and your role?
ADAIR NEWHALL: Greenspring Associates is a venture platform. It started as a fund of funds in 2000, but we’ve evolved. Now we have both a direct and secondaries funds as well, which allows us to engage the ecosystem of venture capital from micro VC all the way to growth equity. I believe that is the most enriching and exciting platform to reach the entire venture capital ecosystem. Our strategy is that we back national venture managers out of the fund of funds. They source the deals. They’re not in the Baltimore area. When we do our deals, they’re expansion stage, so Series B to Series D revenue generating. What we need to do is put a spotlight for the Series A managers here in this ecosystem, get them to fund those companies, and then rally around that to our strategy.
You have a great deal of experience in the healthcare industry, and your former company, Domain Associates, is a Greenspring fund manager. How did Greenspring get involved in healthcare, and what can you tell us about venture capital in this highly specialized market?
These transactions focus mostly on specialty pharma and tools and diagnostics. The belief is that you can select a very small patient population and that helps you with getting drugs to the FDA faster. The costs are less and the efficacy can be better if you can identify the patients that react to the drug better. And so tools and instrumentation were incredibly important. I think you’re going to see a new wave in healthcare: you’re going to see a lot more M&A events, but it has a lot to do with the tools and instrumentation that came out of the San Diego area, because of Lumina, because of Life and Thermo Fisher—these are all the biggest companies in those spaces.
Since joining the firm, you’ve spearheaded a direct investment initiative. How does that compare to the fund of funds model already in place?
Greenspring was competing. It started as a fund of funds; we’re now a venture platform where half the money that we raise goes towards directs and secondaries. All of a sudden we’ve become a very big player in the direct side. I started to see that the exits that they had were actually outperforming those on direct venture firms, not only in the healthcare side but in the tech ground. If you talked to my brother, Ashton, I think he would say that it was always in the plans and the first fund of funds that he created had a component where you could do directs, but it’s grown. Then, all of a sudden—and we’re lucky to have this—but because of the returns we generated, our investor group came to us and said, “We want you do to independent funds outside of the directs that you’re doing in the fund of funds.”
I give a lot of credit to Jim Lim and my brother, who have been visionary in the sense that we now have an investment vehicle that caters to the whole venture capital industry. We can touch the groups that are as low as micro VCs, funds that are as low as $150 million, and then we can have touchpoints with the groups that are in growth equity. This is a platform we found, whether it’s through directs, secondaries, or fund investments, that gets us exposure and keeps us engaged with those decision makers, those company builders.
What are you working on at the moment?
The deal that I’ve done just out of the gate is GreenChef. It’s a competitor to Blue Apron. What we love about it is it’s the only organically certified food delivery company, and they also play in niches that I think are important to get a devoted following: Paleo, kosher, gluten-free—these are all the groups that I think are there that will follow you in up and down markets. And since we’ve invested in that company, it’s been a quick riser. They’re just now starting to do a marketing campaign, so a lot of room to grow.