June 5, 2017
Show Me the Money: 5 Biotech-Ready VCs
Investing in biotech is like eating your greens and waking up at 6 in the morning to go to the gym. Everyone knows it’s the way to go, and yet most don’t actually do it. Biotech has rapidly gained more and more adepts among VC giants and tech companies alike, with synthetic biology specifically accounting for over $1 billion USD invested in the last year, and showing that bio-based innovation can not only have good returns, but also be enormously impactful at a societal level and yet, when compared with the timelines for apps, web-based services, and basically everything that does not depend on whether you had a perfect day at the lab or not, it’s easy to be swayed to the digital side of innovation.
What can biotech startups, generally viewed as slower, riskier and more labor-intensive than their counterparts do to compete on even grounds? What needs to happen at the ecosystem-level to generate a VC community that doesn’t see biotech with a bit more weariness and skepticism than necessary?
Lindy Fishburne, Breakout Labs
Just last April, Breakout Labs announced their investment in 4 highly promising biotech companies: Envisagenics, creators of a software platform that replaces manual work with machine learning algorithm in drug making development; Gel4Med, which develops smart biomaterials that promote safe, infection-free tissue healing without the use of antibiotics; LogicInk, company that produces electronics-free temporary capable of changing shape and color to convey health information about their user; and SciBac, which tackles antibiotic resistance and while fortifying the microbiome in lungs, guts and skin.
Breakout’s program provides funding, exposure and networks for early-stage companies creating new technology. Lindy Fishburne is the program’s Executive Director, and also serves as Senior VP for Investments at their parent organism, the Thiel Foundation. She hopes that Breakout Labs’ novel revolving fund model will accelerate innovation and redefine how early stage startups are funded. During Techonomy Bio, she stated that whenever they’re looking at proposals and new entrepreneurs, they’re always wandering in which side of the thin research project – market opportunity they fall. “A lot of the things that we’re engaged in,” said Fishburne during the presentation, “it will take a long time to get to the full benefit, so we’re also looking at their ability to fund intermediate steps along the way to the big vision. So we have a number of companies that ultimately you’d like to see in the clinic, but they may have a research application first. And so we’re excited because that research application can help fund the path to the clinic, and being able to balance that short and long term is a key part of it.”
Matt Ocko, DCVC
With a name like Data Collective, one wouldn’t expect DCVC to invest in biotech, but their mission of backing “entrepreneurs applying deep tech to transform giant industries” more than definitely includes life sciences and synthetic biology. The fund presents an unusual model, uniting a team of experienced VCs with over 50 technology experts ranging from C-level tech executives to Ivy league professors and research leaders. Their biotech focus was highlighted with news that hit very close to home: Last April, DCVC launched a biotech-specific fund through a partnership with (yes, you guessed it), SynBioBeta itself: DCVC Synbiobeta Fund.
“The synthetic biology industry, driven by advances in computational biology and related tool chains, now resembles the Silicon Valley semiconductor business right at its sharp takeoff in the 80s and 90s,” said Matt Ocko in the last Synbiobeta London Conference. Ocko is a co-Managing Partner at DCVC, and brings three decades of experience both a tech entrepreneur and VC to the firm. His range of action covers everything from computational drug discovery to synthetic biology and quantum computers, and many of his prior investments have been acquired and become core tech capabilities of companies like Illumina, Cisco, Google, IBM, Amazon/AWS, among others. “Synthetic biology companies are now becoming more like the disruptive, industrial-scale value propositions that define any technology business,” Ocko told Reuters last month. “The things that sustain and accelerate this industry are today more effective, lower cost, more precise and more repeatable. That makes it easier to extract disruptive value.”
Jenny Rooke, 5 Prime Ventures
5 Prime Ventures is an early-stage life sciences venture fund. They have funded giants like Caribou Biosciences and Zymergen, per their focus on research tools, molecular diagnostics and of course, synthetic biology. The fund was founded by Jenny Rooke, investor, executive and strategist in life sciences. Besides her work in 5 Prime Ventures, she’s a Venture Partner at Fidelity Biosciences. She has also served on the boards of Accuri Cytometers and U.S. Genomics. Prior to her work in the VC area, she spent 4 years as a Senior Program Officer in the Global Health Discovery group at the Bill & Melinda Gates Foundation, where she worked to shape strategy and develop and manage grants, always with a focus on synthetic biology.
Jenny gave a very interesting interview for Angel List last year on the subject of investing in life sciences. When asked about risks and how biotech compares to other types of investments, she stated: “If you don’t bring some level of technical diligence and investigation to the science, “Does the science work? Is it likely to work? Is it likely to solve the problem that we want it to?” It would be very easy to, frankly, waste all your money, and in life sciences and these heavy technologies, we tend not to have Ubers. We don’t have many billion dollar exits, unless you’re talking about therapeutics. That’s kind of the rare case, but I don’t specialize there. The portfolio thinking is more that there will be, rather than 1 out of 10 will work, and it’d better be an Uber, probably 5 to 7 out of 10 will work to some extent, if we’re smart about making those choices. They might not be billion dollar exits, but they’re going to be in the $200 million to $500 million exits, so you need to stack up more wins, and that means being more diligent in the early stages.”
Karen Kerr, GE Ventures
GE Ventures spun out of General Electric to invest in areas tied to the parent company’s strategy and focus areas: Healthcare, Advanced manufacturing, Software, Energy and Corporate. Within Healthcare, the fund highlights digital health, precision medicine and minimally invasive procedures, among others. Their emphasis is not only in providing capital, but in fully supporting the technology’s scaling phase, leveraging GE’s networks and partner companies worldwide. An example of their investment portfolio: None other than Human Longevity, INC.
Karen Kerr is the senior managing director for the funds’ Advanced Manufacturing division. Before joining GE Ventures, she served as Senior Director of New Ventures and Alliances at the University of Northern California Stevens Center for Innovation, lead business developer for Intellectual Ventures, Managing director at ARCH Venture Partners and founded Agile Equities LLC, a venture development company specializing in emerging technology companies. Karen is also a director of the National Association of Seed and Venture Funds, and is a member of both the National Science Foundation SBIR/STTR Advisory Committee and the Florida Technological Research & Development Authority Advisory Board.
Andreas Jurgeit, Merck Ventures
Merck Ventures wants to drive innovation through both investment and support in fields that could impact Merck’s current and future businesses, focusing on healthcare, life sciences, performance materials and new businesses. They aim for early stage startups at a global scale, as well as for the creation of spin-offs that can leverage Merck’s science and technology base. Some of their highlighted exits are: Ambrx, a company capable of engineering proteins with new amino acid building blocks beyond the naturally existing 20; EpiTherapeutics, which develops epigenetics-based cancer drugs; and Padlock Therapeutics, which creates medicines targeting protein-arginine deiminases for complex autoimmune diseases.
Merck Ventures will be represented by Andreas Jurgeit, who joined the fund’s Life Science team as Investment Director last year. Before Merck, Andreas held positions as Investment Manager at Redalpine for life sciences and ICT, and as Lead Business Developer for Redbiotec in Switzerland. He currently lectures on Business Strategy (IFJ, ETH Zurich) and advises academic institutes on the commercialization of research findings.
Join the conversation and find out what VCs think of Biotech in the Investment Panel at the upcoming SynBioBeta SF 2017.