Member Profile: Crystal McKellar

Crystal McKellar Founder & Managing Partner at Aloft VC

A Harvard-trained lawyer, Crystal began her venture career in 2012, learning to invest from entrepreneur and venture capitalist Peter Thiel. Crystal supported several frontier health tech startups and developed a deep network in the national security tech arena before launching her first early-stage fund Anathem Ventures in 2019, later rebranding as Aloft VC. In Journal, Crystal shares why she makes contrarian bets in idiosyncratic healthcare and defense tech companies.

Tell us about your career shift from law to venture capital.

I worked as a lawyer for almost 10 years—at Davis Polk & Wardwell in New York and Morrison and Foerster in the Bay Area—and I really enjoyed engaging with some of the world’s largest companies and most important industries. While practicing law, I made my first angel investment in the national security space into SpaceDev, which designed and built the hybrid rockets for Paul Allen’s SpaceShipOne, the first-ever crewed private spaceflight.  In 2012 I was recruited by a college friend to work for my first venture capital fund, which was backed by Peter Thiel.  I had not done much work in venture during my legal career, and I learned from the ground up.

What inspired you to establish your own fund Anathem Ventures, now Aloft Ventures, in 2019?

I had a great network of early-stage founders that I was excited to collaborate with, and as a solo GP I had the flexibility and autonomy to invest where I found fantastic opportunities.

Aloft VC invests in early-stage technology companies solving urgent problems in healthcare and national security. Why does national security appeal to you?

Our country needs better tools to keep our citizens safe. With few exceptions, most notably Peter Thiel’s Founders Fund, which backed Palantir and Anduril, until recently modern Silicon Valley has reserved its biggest tech breakthroughs for commercial applications.  As a result, our military has lost its historical tech advantage. But a new wave of tech builders who care deeply about national security is emerging, and they’re building the next generation of defense tech in a wide-open field.

Peter Thiel really started things with big data analytics company Palantir, forcing the Department of Defense to think differently about how they contracted with startups versus the established primes. I worked with Palantir when I first started in venture, and Palantir is where much of my defense tech founder network got their start as well.

How do your healthcare investments complement your defense portfolio?

Just as in defense, better tech in healthcare saves lives. Hundreds of thousands of people lose their lives or dignity in the United States each year from diseases or disorders whose cures are known. These avoidable outcomes arise due to data failures, logistics, communication, and patient engagement; tech is ideally suited to solve these failure points.

Can you share some of your portfolio companies in healthcare?

The first investment from my first fund is Cooler Heads, a female-led company based out of San Diego that has created an FDA-cleared, easy-to-use, patient-administered scalp cooling device so people can keep their hair during chemotherapy. They received their FDA clearance a little over a year ago and have now treated over 600 patients who were able to keep their hair for a fraction of the cost of incumbent methods that are difficult to use and disruptive for infusion centers.

Brave Health is a Miami-based virtual-first behavioral health provider focused on the Medicaid market. This market is tremendously underserved, with 40% of Americans living in a mental health professional shortage area and with the percentage of psychiatrists accepting Medicaid having been cut in half over the past decade. Telehealth services are so needed, and this market is primed, yet VCs didn’t want to touch it because it’s structurally so different from the commercial and Medicare markets. Brave Health is filling an important niche and creating an extraordinarily valuable company.

Which national defense companies are you excited about?

Vannevar Labs, which creates mission-critical software for our military, and Mach Industries, which revolutionizes defense tech capabilities using hydrogen fuel. These are extraordinary, innovative companies that I feel fortunate to have had the opportunity to invest in.  For good reason, their rounds were oversubscribed, with multi-billion dollar funds eager to get in. I give credit to my network and the fact that I’ve been a friend of the defense tech space for over a decade when much of Silicon Valley wanted nothing to do with it.

Are you personally interested in working with female founders?

I love working with female founders, and I receive a lot of deal flow from female founders.  Some of the most extraordinary contrarian companies are founded by women—and I’m looking for extraordinary contrarian companies.

Why is defense underinvested in, compared to other sectors?

There’s been a historical antipathy in Silicon Valley towards funding companies that support our military, which is such a misplaced ideological bias.  The Department of Defense has also traditionally been difficult to work with, though this has shifted recently, and the DIU and Office of Strategic Capital, as well as other initiatives at DoD, have opened avenues for startups to win significant revenues early.  Today there is a small but growing circle of very smart investors who are investing in defense tech, and a group of us meet for dinner monthly,  spearheaded by Jake Chapman of Marque Ventures.  It’s still a drop in the bucket compared to the opportunity we are presented with today.

What are you most excited about for the next few years?

My portfolio company Mach Industries just closed a Series A round led by a great group of investors, including Bedrock and DCVC, that will allow the company to massively scale its game-changing technology. Mach’s founder is a Thiel Fellow who dropped out of MIT to found the company; he is incredibly smart and dedicated to the mission. Over the next five years, I’m looking forward to investing in another 18 to 22 fantastic companies in the defense tech and health tech space.

How do you approach sustainability in your business?

Fundamentally, the promise of technology is the ability to do more with less. That doesn’t mean having fewer people or fewer services but providing more with less of a footprint.

At its very core, technology is the ability to create more using fewer resources and create tangible goods for the betterment of society.

What are your benchmarks for success?

Returning a large multiple to my investors, that’s table stakes. In addition, any time I make an investment in a company, I pose the question: assuming this company does as well as I think it’s going to, who is benefiting and is anyone being harmed? I move forward if I believe the company’s success will benefit society, our country, and humanity.

How does being based at CANOPY support you in your work?

I learned about CANOPY in 2019 from co-founder Steve Mohebi. It was right around the time when I was starting my own fund and I was looking for an office infrastructure.

I took a tour of CANOPY Jackson Square, and I loved the energy. I love walking into a bustling office that smells like coffee—to me, that’s a hardworking place. I have a private desk and access to beautiful meeting rooms where I can host investors and founders—the design features are a huge plus for me. It’s a great space with everything that you want from an office.

Do you have any books or a podcast you’d like to recommend?

I enjoy listening to the Faith Driven Investor podcast. It inspires and affirms all the right reasons to be an investor.

I’m a big Neal Stephenson fan. His books are so well written, and he does an incredible job at imagining the world of technology 20 years ahead of time. He imagined the metaverse in a book called Snow Crash, which came out decades ago.

Is there a piece of advice you’d give anyone?

My father gave me the best advice I’ve ever received. When I was going through a difficult time professionally, my father made a suggestion: try doing everything you do joyfully, even the hard things. That’s made all the difference.

What’s your favorite thing to do in the San Francisco Bay Area?

Crossing the Golden Gate Bridge never gets old. It’s awe-inspiring and reaffirms that this is the most beautiful part of the world I’ve ever been to.

We’ve got a place in Sonoma County, and I love bringing the kids out there because they can see horses, get in the mud, and run around in open spaces.

Is there a destination you never get tired of?

I love spending time in Napa Valley, particularly Yountville. I love wine and learning about wine—I was on the competitive wine-tasting team when I was at Oxford—and I enjoy visiting vineyards and wineries. The countryside is so gorgeous, and the food is incredible! Before we had kids, Far Niente was our favorite winery to go to, although that’s a little harder to bring kids to–I have a 10-year-old and a six-year-old–because the tastings are two hours long. I also love Charles Krug in St Helena—there’s an outdoor pizza oven on the grounds in the summertime, and it’s a great place to hang out.

I also love going to brunch at Auberge du Soleil and sitting out on the balcony. Mustards is my favorite restaurant up there because the food and gardens are amazing, the menu is playful, and the restaurant is kid-friendly.

Follow Crystal on Linkedin and on X (formerly Twitter) @CrystalMcKellar.