Union Labs: Bridging VC and Corporate Expertise for Hard Tech Startups

Chris Kim and Nate Williams established Union Labs based on their belief that a stronger collaborative relationship between investors and companies is essential for startup success.

Kim previously served as the co-founder and chief technology officer at August, a company specializing in smart locks. His initial connection with Williams occurred while August was exploring the creation of a collaborative network for participants in the Internet of Things market.

“Williams quickly demonstrated a strong aptitude for market entry strategies when he joined the team, spearheading our expansion into retail channels,” Kim explained.

Following August’s acquisition in 2017, the two continued their professional relationship, with Williams taking on a role as an entrepreneur in residence at Kleiner Perkins. Kim contributed to due diligence processes as they further developed their core idea—that aligning stakeholders is a vital factor in the success of emerging technology companies.

This concept became the foundational principle for their Union Labs fund, which has currently secured $29 million towards its $50 million goal.

“We are noticing a growing distinction between companies focused on highly complex, foundational technologies and those that incorporate deep tech into a smaller portion of their overall business. Chris and I identified an opportunity to focus on ‘applied’ deep tech,” Williams stated.

This specialized area centers on early-stage technology companies that require guidance from individuals with experience in hardware operations, rather than the software-as-a-service specialists commonly found within venture capital firms. “It can be exceptionally challenging to educate a SaaS-focused partnership about the intricacies of ‘hard tech’,” Williams added.

Alongside Williams and Kim, Union Labs includes two directors: Thomas Lee, with a background at Enphase Energy, and Annie Le, formerly the chief operating officer at Pryze.

An illustration of the types of companies Union Labs aims to support is Strella Biotechnology, which has created sensors to detect ethylene gas released by produce, enabling accurate assessment of fruit and vegetable freshness.

Union Labs plans to make 20 investments with its initial fund, encompassing 15 direct investments and an additional three to five incubated companies.

Currently disclosed investments within the fund’s portfolio include Carnect, a service optimizing car rentals, and Encircle Labs, a home safety toolkit (which is currently maintaining a degree of business confidentiality).

Another portfolio company, which has not yet publicly announced its services, is developing solutions for training-related challenges within the field service management sector.

While these areas present industry hurdles, with the exception of the sensor technology, they do not necessarily represent “hard tech” in terms of hardware complexity—and often share similarities with the software-as-a-service businesses frequently funded by other firms.

Union Labs is making pre-seed and seed-stage investments, averaging $890,000 for an 11% equity stake, with individual investments ranging from $500,000 to $1.5 million.

A key benefit for startups is the firm’s ongoing connection to the Internet of Things consortium that Williams helped establish during his time at August Homes. This consortium has facilitated partnerships with corporate entities in telecommunications, utilities, consumer electronics, and insurance, as well as investors such as Kleiner Perkins and GV (as noted by Williams).

“We’ve observed an increase in corporate venture capital activity,” Williams said. Both Kim and Williams intend for their firm to function as a hybrid model, combining elements of corporate venture capital and a traditional venture firm.

The ultimate success of their approach remains to be seen.