Saturday, March 7, 2015
Thursday, December 11, 2014
Saturday, November 15, 2014
Friday, October 31, 2014
Thursday, September 11, 2014
Saturday, June 21, 2014
It’s not very often one comes across an article, a cover story at that, in Newsweek on the start-up scene & VCs – So there was no which way I could have let-up an opportunity to read through, read in between the lines, postulate, extrapolate and generally make my own merry conclusions on stuff the article never intended to dwell on - Call me extreme, that’s okay – like the partners at Greylock, I don’t back down easily either :-)
It isn’t perhaps about trying to find/ fund the next Facebook at Greylock
While the title has enough oomph to grab eye-balls, it could be fundamentally misleading. A quick look at the recent investments (mentioned within the article) of Greylock partners shows it is bullish on startups that are waltzing back into the realm of real-life albeit through cyber gateways – i.e. ones that have built revenue models on O2O commerce platforms; think Airbnb; Coupons; OneKingsLane; Shopkick (all Reid Hoffman investments..); Sprig; (Simon Rothman) – Though it’s just one subset of investments primarily by one partner, the sheer millions pumped in indicate there’s a lot of enthusiasm at Greylock on O2O commerce.
Just may be David Sze should display a real apple (besides Apple Newton & Apple iPhone) in his timeline collection of technologies – a sweet reminder that any technology’s ultimate potential lies offline
Incubate a potential acquisition? – Sounds like a nice strategy or is it?
It is perhaps a strategy/ wish to utilize the (insider) knowledge of a current investee companies that are avid deal-hunters themselves by way of incubating a few custom designed startups & facilitating (evetually) their acquisitions by the aforesaid companies – Consider the investments in Nextdoor, Path, Jelly, Medium, Pandora (all David Sze investments..) & the likelihood of these companies getting acquired by either Facebook or Linkedin at some point of time.
Startup scene in USA is raining Asoks* – and they’ve been raking in some moolah, finally
The article starts with Gagan Biyani (Sprig), dwells on Aneel Bhusri (Greylock) and mentions the likes of Nirav Tolia (Nextdoor) – not an inconsequential acknowledgement of the increasing presence of Indians in the American entrepreneurial scene.
*’Asok’ is used in the context of any techie of Indian origin rather than just the IITians.
A final dig I can’t help – The article by Katrina Brooker is far superior to anything related I’ve come across in HBR magazine till date.
Thursday, April 24, 2014
If anything, the recent news of Novartis agreeing to sell its vaccine & veterinary businesses while simultaneously acquiring oncology assets from GSK consolidates my earlier view/ observation that the investment philosophy of a corporate’s venture arm seldom reflects the strategic goals pursued by the corporation itself - effectively meaning that there’s hardly any difference between a CVC and a VC as far as the ‘intention behind the investment’ goes – the intent in this context being a tangible ROI.
There is albeit a definitive difference between a CVC & VC as far as the ‘intelligence behind the investment’ goes – the intelligence in this context being the insider-edge the CVC enjoys when it comes to identifying, qualifying and investing in a promising enterprise, an edge seemingly acknowledged by the VC & angel community given the sheer number of fundraising rounds led by the likes of Google, Intel & Novartis compared to than those led by non-CVC brave-hearts – This propensity of the investing junta to look up to the CVCs to take lead is demonstrated once again by the quantum of followers the likes of Kevin Rose (Google Ventures) & Jerry Yang (Yahoo) command on AngelList, the new age pit-stop of investors & enterprises alike.
I realize though that compared to the regular VC, an average CVC can afford to be lot more adventurous/ less-conservative since the LP, which is the corporate itself, has a far less looming presence given the non-financial nature of the corporation. This context of less-intense LP scrutiny thus affords a CVC greater liberty & hence their investment strategy may not be that de-risked after all & this isn’t saying anything.
With no prejudice whatsoever on the relative merits of a CVC vis-à-vis a VC & going merely by the data, I think Novartis Venture Funds (NVF) is what one could refer as the ‘Google Ventures of pharmaceutical innovation’, a yard-stick, if not a bench-mark other VCs could use within the pharmaceutical domain. With this premise, I went about analyzing the NVF’s investments data, of both current & exited portfolio, the key takeaways of which I have discussed below;
DUALITY OF VISION
A quick comparison of NVF investment focus & Novartis business focus;
INVEST SMALL – EXIST FAST
When it comes to making small molecule therapeutics work both as a business strategy & investment focus, few seem to be able to bend it like Novartis. Despite Small molecule therapeutics being a mere 20% of the total invested value, this segment is a star performer at 63% when it comes to exits. This performance is consistent in both the major exit types of IPO (69%) and Acquisition (59%) – the relatively higher contribution of IPO as an exit also seems to suggest that the chances of an IPO are higher for an enterprise developing small molecules & that going public isn’t an easy game for a company developing biologicals.
No wonder then that the current portfolio of NVF once again is dominated by enterprises pursuing small molecule therapeutic dreams (53%). However the marginally higher percentage share of biologic therapeutics in the current investments indicates NVF is cautiously optimistic about these living herbs!
ATTITUDE, IT’S THERAPEUTIC
The NVF investment spread across therapeutics is nothing counter intuitive & is expectedly skewed towards oncology. What’s interesting is the sentiment/ attitude driving these investments in different disease segments.
Looking at the interplay of number v/s value of investments, NVF’s investor attitude can be summarised as follows for a few key segments;
Oncology --> Casting the net far & wide
Hematology --> Betting high
Cardiology --> Upping the stakes
Allergy --> Risking it big
Infection --> Seeding a promise
EXIT THROUGH ACQUISITION THAN IPO
With companies having FIC assets making up 60% of the total current investments & since FIC assets are typically more attractive acquisition targets, it can be surmised that NVF is not counting on IPO as the primary exit path.
BULLISH ON EARLY & BEARISH ABOUT LATE-PHASE ASSETS
Perhaps this is more of an alert to enterprises seeking venture funding than other VCs – the date clearly shows NVFs reluctance to risk its green-backs on the very volatile PIII assets – this once again underscores the primal premise that for NVF’s vision is limited to supporting viable clinical assets and NOT in seeing them through to the market.
The message hence for the biotech is - knock at the doors of NVF after your IND is filed & count on their support till end of Phase II & showcase the potential of your clinical asset to get acquired even as it is still in PI or PII.
SLOWER, LONGER & BIGGER – NVF’s NEW MOTTO?
VC is more a patient fund than earlier & NVF seemingly realizes that – that’s what the numbers say at least
Despite the now apparent & clear segregation of objectives of a corporate & of its venture fund, a CVC seemingly still employs the insider-edge in making its investment & exit decisions.
Friday, February 28, 2014
19 billion dollars for a company with one app & 20 million in revenue is of course a frickin’ big deal - No wonder that everyone from entrepreneurs to VCs to analysts want to have a go at cracking the code called WhatsApp.
Suvir Sujan in his latest blog post broached this quintessential topic & attributes the success achieved by WhatsApp to its founders keeping disciplined focus on superior product offering with an eye towards building a profitable and sustainable business – True, but I wished to be more direct and say an enterprise that starts with the intention of selling-off will probably never get this kind of supreme pay-off, my comment on Suvir’s post is as follows;
Communication & data privacy, precisely what I’m edgy about right now as a WhatsApp user - Will this remain intact when FB eventually attempts to integrate the app with its own & monetize the user-base? If I were Zuckerberg, I’d be worried sick thinking how to prevent the edgy half-a-billion junta from waltzing towards Snapchat & likes - that would be a real bummer, wouldn't it be?
Tuesday, January 21, 2014
It’s probably been true for IT/ ITES (particularly for e-commerce and social media & app-developers) much longer, but for the drug discovery start-ups hitherto unaccustomed to expecting anything under a mio given their rather pricey research, the writing on the wall is abundantly clear - Funds-on-Tap is a pipe dream & Drip-Funding is the new reality.
Over the past year, more and more VCs have started to unveil & employ their own versions of a ‘return-maximizing, risk-mitigated investment model’ that typically involves multiplying the early-stage portfolio & bringing down the average-size of seed-investment while maintaining the overall seed-stage investment at no greater levels than earlier - A case-in-study being the recent Seed-class of Atlas Ventures & equally demonstrated by Index Ventures developing its proprietary version of MonteCarlo simulation for optimally distributing precious funds across its portfolio of biotechs' with assets across different phases of clinic.
This holds largely true for the increasingly active Pharma CVCs too that not only are mimicking the VCs in increasing their early-asset portfolio, but have taken derisking a notch higher with their joining forces* with other CVCs (competing pharma) in funding rounds, quite apparently compromising on the eventual ownership of the commercial potential &/or IP generated in the bargain.
* OPSONA (Novartis, Roche, Baxter among other VCs) AILERON (Novartis, Roche & Lilly among other VCs); MERUS (Novartis, J&J & Pfizer among other VCs)
While this may sound like life sciences venture funding is slowly turning into a mere statistical exercise (venture-farming…?), a la the stock market, knowing what it takes to separate wheat from the chaff in the complex world of drug discovery, the users of these models will surely need a lot more than a practical knowledge of the probability theory – which even a cursory read of the above posts again will make it very evident. Just may be, a biotech VC can still showcase ‘proprietary deal-flow’ as a core-strength while making a pitch to the LPs.
Now how does this lean-funding scenario impact the development strategy of the start-up? – while a few indicators of change are already out there like the CROs being encouraged (~arm-twisted) to share risk with the biotech while providing services, I believe this'll trigger bigger changes & hopefully nudge the drug-discovery towards an innovation pathway that’s a lot more rational & predictable – but then this is something Drug Baron should talk about.