Investing in veterans: Silicon Valley venture capitalists eye military veterans as tomorrow's startup founders

"Can anyone name a startup that came out of Stanford?" Ernestine Fu asked a small gathering in a courtyard near Stanford's engineering school.

Fu knows the answers all too well — and she's invested in some of them. A little more than a decade ago, Forbes proclaimed her Silicon Valley's youngest venture capitalist, after she closed her first startup deal as a college sophomore at age 20. She went on to get a bachelor's, two master's degrees and a Ph.D. from Stanford, all while continuing to work in venture capital.

"Google, Yahoo, Snapchat, Instagram," she began listing off tech companies that have become household names — all founded by Stanford students and graduates.

It wasn't always like this, Fu explained. A century ago, students came to Stanford hoping to build careers in law and finance. It wasn't until the dean of the engineering school began encouraging his students — notably, HP founders Bill Hewlett and Dave Packard — to stay in the area and work on commercializing their innovations, that Silicon Valley was born.

"This is a replica of one of their first products," Fu told the group, as she directed their attention to the audio oscillator on a table inside the Stanford library's life-sized model of the hallowed garage where HP began.

Fu's audience today is a mix of techies, investors and future startup founders who all have one thing in common: they've all served our country in uniform.

"Military veterans have this mindset of: 'I want to change the world,'" Fu explained. "So we see a lot of parallels between military veterans and successful founders."

In this case, "we" refers to the partners at Fu's latest venture fund, Brave Capital. They invest in technology that could have applications in the realm of national security or critical infrastructure. Far beyond just roads and power grids, Fu says rapidly evolving technologies like AI and autonomous transportation could also become critical infrastructure for the next generation of Americans.

"How many of the technologies that we take for granted today came out of the military?" asked Tom Kalinske, one of Fu's longtime mentors, and an investment partner at Alsop Louie, the firm that gave Fu her start. "GPS! The internet, for God's sake!"

Kalinske might be best known as the former CEO of Mattel, Sega, and a long list of other toy and game companies. But before he went into business, he was an Army tank commander, and later worked in military intelligence. He experienced the jarring transition into the civilian world firsthand.

"Whether they're an enlisted guy like me, or an officer, it's very difficult, when they get out, to make that transition," he said.

Now, Fu wants to do something about that. Being part of a military family, with a husband who's a former Navy SEAL, she said she recognizes her time at Stanford gave her a head start in the tech world that isn't afforded to most people.

"One thing I've noticed is: You serve in the military, you don't necessarily have access to the best opportunities in Silicon Valley compared to someone who maybe went to Stanford for undergrad," she said.

And that's why she's leading this tour of the Stanford campus. It's part of an event series called Brave Convenings, aimed at veterans interested in making their mark on the startup world. Today's event is centered around the future of transportation, and includes meet-and-greets with two autonomous car startups.

"We're providing exposure to: this is what's happening in Silicon Valley; this is the behind-the-scenes view," she said.

Fu said she wants to connect veterans with what's happening on the cutting edge of tech, and also with people already in Silicon Valley who share the common bond of military service.

"Not everyone is going to be able to relate to me telling a story about my time in Afghanistan where I took point through a minefield, because I wasn't comfortable asking the junior guy to do it," said Gregory Hake, a retired Navy SEAL who now runs a leadership consulting business.

Hake said his 22 years with the SEALs taught him how to lead by example — and how to prepare for the unexpected.

"SEALs will pick up new skills like you would not believe," he said.

For some veterans, it turns out change management can become a business superpower once they enter the civilian world.

"I think with military personnel, they've dealt with a lot of those outlier situations through their careers," said Bryant Ling, a former Navy pilot. "Situations that aren't necessarily addressed in a manual, or in the standard operating procedure."

Ling worked in federal law enforcement after leaving the Navy, but now he's wearing a new hat: he's an investor in Brave Capital's new fund called MilVet Angels.

"We have a group of 100-plus successful military veterans," Fu explained, "who have become actors, astronauts, successful business leaders."

And together, they've pooled their money to invest in a new generation of fledgling startups.

"We love it if the startups that we are backing are founded by military veterans themselves," Fu added.

The concept of veterans investing in veterans is something one of Fu's earliest mentors is excited about. Tom Ehrlich is the former dean of Stanford's law school, and co-authored a book with her during her undergraduate years.

"I knew Ernestine was destined for great things," he said. "It's going to help veterans, and it's going to help Silicon Valley. I don't have any question about that."

Ehrlich was at Stanford before most of the big tech companies sprouted up around it. Now, he says he can't wait to see what Silicon Valley's next chapter will bring, and what role his fellow veterans will play in it.

"We're about to see another huge revolution going on in artificial intelligence," he said. "And aren't we lucky to be here to watch it?"