SA国际传媒

Sleep has long been the bane of the working world, particularly in startup offices where all-nighters are a rite of passage, or even a badge of honor. But that鈥檚 changing, according to one brand-new venture capital firm that has its eyes鈥攁nd money鈥攅xclusively focused on helping the world catch more Z鈥檚.

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San Francisco-based launched its first fund last month: $36 million dedicated to pre-seed through Series A startups trying to partner with medical teams to solve sleep disorders, make products that will help people get better rest, and explore some of the untouched corners of sleep science, including dreams.

Its own investors include medical equipment company and wealthy, health-conscious philanthropists, like the Hillenbrand family, Michael and Judy Gaulke, and the Quadracci family.

鈥淯ntil recently, investing our time and money to improve and enhance our sleep was seen as imprudent and unproductive,鈥� Supermoon co-founder said in a recent interview. 鈥淏ut today, people understand that sleep is really important for long-term health and wellness and demand for solutions is continually growing.鈥�

Supermoon may be the world鈥檚 first VC firm that exclusively focuses on sleep, but it isn鈥檛 alone in trying to tap into what the firm鈥檚 three co-founders describe as the 鈥渘ight market.鈥�

Venture capital funding into sleep-related technology and products has grown from $375 million in 2017 to $488 million in 2020. As of September, $747 million in venture capital investments has flowed to 37 tech companies working on sleep, setting 2021 up to be a banner year for sleep-related investment, according to SA国际传媒 data.

So far, Supermoon has invested in six companies, including Israel-based ; German app maker ; AI software developer in Wisconsin; Amsterdam-based FreshBed; and , which specializes in sleep research and R&D. The firm鈥檚 most recent pre-seed investment was in Bay Area-based software company Cerno Health.

The three co-founders, , and Judge hope to close out the firm鈥檚 first fund with around 15 investments. The trio spoke to SA国际传媒 News about the new fund and their dreams for the future of sleep.

This interview has been lightly edited for length and clarity.

Tell me about your personal relationship with sleep, and whether it influenced your decision to launch Supermoon Capital.

Connolly: I think I had always felt you could sort of sleep when you’re dead. 鈥� I found myself drinking a lot of coffee, even in the afternoon … and then waking up in the middle of the night and taking an Ambien to get back to sleep. I did that for a while, until I realized that taking Ambien on a regular basis is not good for you. It just really brought home how important [sleep] was, so I started using the , which really changed my attitude toward sleep, and improved every aspect of my life. 鈥� I see that as a great mission in life, to not only create a fund that can return outsized returns to our investors, but also do something that really benefits a large number of people. My vision is that at some point, through a series of funds, we are able to help a billion people sleep better and improve their health.

You brought on a panel of sleep experts across academia and industry. How do they influence your investment decisions and the startups in your portfolio?

Masterson: Our objective is to see every new idea on sleep around the world, so many of these are coming in through our sleep science experts. I think [four or five] of our first six investments came through that sleep science collective. Then we work with several of [the experts] when we’re evaluating these companies and understanding them and asking the right questions. 鈥� Once we invest, many of our sleep scientists get involved with our companies in some way, shape or form.

Do I understand correctly that a potential incubator could also be on the table?

Masterson: We have some great ideas that have come out of our sleep science collective and the greater academic community at large that we’d like to explore. 鈥� We might incubate companies going forward, and one idea in the future is to have a physical incubator of some kind, likely in the Cambridge area.

Is there a risk that focusing exclusively on sleep becomes overly limiting for future funds?

Masterson: Sleep is super unique, and it is a third of our lives. We’re the only fund on the planet focused on sleep, every other fund focuses on [waking time]. In our opportunity set, we can invest in both hardware and software, we can invest in consumer and in clinical, we can invest in services, we can invest in different types of business models. 鈥� So the aperture is actually rather expansive and wide and it’s global. 鈥� The field is in the early innings and new technologies across hardware, software, services, clinical and consumer are just at the early beginning here. We think we’re in position to bring these things to market over many, many, many years.

What emerging technologies do you have your eye on that some may think are 鈥渙ut there?鈥�

Judge: One of our sleep science collective members, Adam Horowitz, is at the MIT Media Lab and he and his team have been working on new dream incubation technology, so actually being able to curate somebody’s dream and curate the content of their dream 鈥� or actually using dreams to improve mental health and get rid of PTSD and start treating dream-related issues at night. The applications of this technology are pretty crazy and widespread.

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