Archive for the 'Venture Capital Industry' Category
July 22nd, 2011 by Dick
The Wall Street Journal has recently devoted some coverage to dramatic advances in the field of personalized oncology, in which genomic responses to therapies are leading to breakthroughs in cancer treatment. One of our Florida-based portfolio companies, MolecularMD, provides highly validated, standardized pharmacogenomic tests that support regulatory approval and clinical adoption of such targeted cancer treatments.
MolecularMD is a vital part of the growing prominence and promise of the biotech industry in Florida, and is led by CEO Sheridan Snyder and Chief Scientific Officer Dr. Brian Druker. Mr. Snyder is a renowned leader in the biotechnology industry and behind several previous successful start-ups in the field, including Genzyme (NASDAQ: GENZ) where he served as Chairman, CEO, and President. Dr. Druker is a recipient of the Lasker-DeBakey Clinical Medical Research Award for his critical role in the development of Gleevec, a drug featured on the cover of Time magazine and described as a “magic bullet” that “convert(ed) a fatal cancer into a manageable chronic condition.”
Below you can find excerpts from the recent coverage of personalized oncology in the WSJ. The National Comprehensive Cancer Network provides an introduction to the topic of biomarkers and targeted therapy here.
(For those who would like to enjoy the inspiring story behind the development of Gleevec, please see “A Doctor in Full” from The Wall Street Journal and this interview in The New York Times.)
June 5, WSJ – Major Shift in War on Cancer:
New research is signaling a major shift in how cancer drugs are developed and patients are treated—offering the promise of personalized therapies that reach patients faster and are more effective than other medicines.
At the heart of the change: an emerging ability for researchers to use genetic information to match drugs to the biological drivers of tumors in individuals. Studies released at the annual meeting of the American Society of Clinical Oncology here are helping to support previous findings that personalized medicine—introduced more than a decade ago—is closer to being realized as a weapon to fight cancer.
Continue reading ‘The promise of personalized cancer treatment’
July 12th, 2011 by Robert
A few weeks ago we shared this abbreviated version of the “10 Rules of Entrepreneurship” presented at a conference in Austin by a founder of LinkedIn.
We’ve come across a parallel list at Working Knowledge (from Harvard Business School): “Top Ten Legal Mistakes Made by Entrepreneurs.” We’ll excerpt it as we did with 10 Rules… while also encouraging you to read the entire piece. Here are a money graf and 2 (of the 10) most directly relevant to this audience:
“While the language of the law can be intimidating, the concepts are usually quite straightforward,” she [professor Connie Bagley] says. “Lawyers tend to be risk averse, and if you delegate to them you will usually stay out of legal trouble but can often compromise your business objectives. [The coaching] I give entrepreneurs is to give them sufficient comfort with the legal concepts to feel confident in driving the process, to understand the ways in which the law is a constraint, but also the ways in which it is a tool that can help you create and capture value.”
#6 - Negotiating venture capital financing based solely on the valuation. Valuation is not the only thing one should consider when selecting a venture capitalist or when negotiating the deal. There are many other ways for venture capitalists to get compensated if they end up paying a high price for shares. These include requiring participating preferred with a high cumulative dividend, redemption rights exercisable after only several years, and ratchet anti-dilution protection with no cap. One must ask, what’s the reputation of this firm? Do they have a history of standing by the entrepreneur if the entrepreneur stumbles? Do they have good contacts in the industry? In trying to build alliances, do they know the big players? A no-name firm offering the highest valuation is often not the best source of equity.
#8 – Hiring a lawyer not experienced in dealing with entrepreneurs and venture capitalists. Many venture capitalists say that they often rate the judgment of entrepreneurs by their choice of legal counsel. Lawyers who have no experience working with entrepreneurs and venture capitalists will most likely focus on the wrong things while failing to recognize some of the more subtle potential traps. It’s better to hire someone who has played the game, who knows what’s standard and what isn’t, and who will get the deal negotiated and closed promptly.
As with most aspects of building a business, choosing the right partners – including who represents your firm and its interests – is crucial. The same rigor that is applied to building a sales force or augmenting an executive team should be utilized in selecting legal counsel. Credible counsel will both protect your legal interests and facilitate a successful launch to the entrepreneur-venture capitalist marriage.
July 5th, 2011 by John
Enjoy this potpourri of our twitter activity from the first half of 2011, in case you missed any of them:
- RIP Ray Townsend, the Thomas Edison of meat and member of inaugural HOF class w/Jimmy Dean and Frank Purdue.
April 21st, 2011 by Robert
Reid Hoffman, co-founder/chairman of LinkedIn and partner at Greylock Partners, recently spoke to the South by Southwest Interactive Conference in Austin. During his discussion he shared his Top 10 rules for entreprenuers, a few of which we list below. Although some may be geared a little more towards very early stage companies, take a minute to enjoy his entire list at Greylock’s blog.
- Build an amplifying network of advisors.
- Develop flexible persistence - the sense for when to stay committed to your vision and when to pivot in the face of new realities.
- You are at least partially wrong about your product. Launch early enough that you are embarrassed by your first product release, and find out how people are using it.
- Aspire, but don’t drink your own Kool-Aid. …[A]lways look for good perspective on how you are doing. It is very easy for creative innovators to get caught up in their own story rather than learning where they should be headed.
- The best product doesn’t always win; great distribution is even more important. How will you get your product in the hands of millions or hundreds of millions of people?
Hoffman then adds a little sauce to the dish, urging entrepreneurs to feel free to ignore rules set by other people. They’re “guidelines, not laws of nature” since entrepreneurs are, by nature, inventors who make new rules.
April 6th, 2011 by Dick
Holman Jenkins, writing in The Wall Street Journal, succinctly and perfectly describes the brilliance and, sometimes, serendipity involved in breakthrough entrepreneurship. From Medical Progress, Please:
How does a device like MelaFind come into the world? It begins when a small defense contractor specializing in computer vision is approached by pharmaceutical giants seeking objective ways to evaluate unguents for hair growth, wrinkle reduction or wound healing. An adviser to the small company, a world-famous dermatologist, pipes up: “Wound healing is cool, but if you really want to do something for humanity, help us detect melanomas.”
America having great capital markets, it’s possible to raise $130 million for a speculative venture.
In addition to extolling the wizardry of American medicine and the strength of our capital markets, Mr. Jenkins recounts some of the challenges faced during FDA approval by the current “wave of devices bringing artificial intelligence to bear on medical diagnosis.” The details Mr. Jenkins reports are a clear example of what our friend Rhys Williams has argued before Congress: in addition to streamlining its approval process the FDA needs to switch from the “zero defect” to the ”calculated risk” model.
March 24th, 2011 by Dick
At WSJ’s Real Time Economics blog, Justin Lahart reports on Census Bureau data that indicate the most recent recession has been exacerbated by a dearth of start-up activity, which is down 17.3% from a year ago and is the lowest level since records began in 1977. Even more worrisome is the fact that the slowdown in investment activity in the last three years is far worse than we have experienced in past recessions.
One reason that fewer companies got started in the most recent recession is that the availability of financing dried up. Angel investors and venture capital funds cut back on putting money into new businesses, and opportunities for self-financing, like taking on additional mortgage debt, became more limited.
Mr. Haltiwanger [a University of Maryland economist] worries that the drop in start-ups could make the U.S. economy less vibrant. Fewer new businesses amount to the country not rolling the dice as often on creating the innovative, fast-growing companies that will help drive the economy. “Not only did we lose all those jobs, we may have lost future, successful businesses,” he said.
Mr. Haltiwanger’s point about future growth is worrisome, since over half of the Fortune 500 were started during a previous recession or bear market.
Although it does remain a challenging environment for entrepreneurs – due to both the scarcity of early stage capital and an uncertain tax/regulatory environment – the good news is that venture financing has rebounded and is higher than last year. The bad news is that venture financing is still well below where it was two years ago. While we’ll take any movement in the right direction, it is clear that legislators at both the national and state level need to think hard about enhancing the incentives for both individual and institutional investors to invest in small, private growth companies as key elements of their economic recovery strategies.
March 16th, 2011 by Drew
“Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better.”
Samuel Beckett – Worstword Ho
Irish playwright and Nobel Laureate
In a recent Working Knowledge, Carmen Nobel interviews Harvard Professor Shikhar Ghosh about Why Companies Fail – and How Their Founders Can Bounce Back.
Professor Ghosh describes three categories of “failure” for start-ups, and estimates the occurrences of each:
1. Liquidate all assets, investors lose most/all money: 30-40%
2. Not realizing the projected return: 70-80%
3. Falling short of initial projections: 90-95%
With “failure” this common, he urges executives to distinguish between business failure and personal failure. It’s vital to not let the former, which can be a valuable learning experience, pressure you into the latter, which can become a career-damning ethical lapse:
A personal failure is one in which an individual does something that violates a fiduciary duty, commits a crime, or acts in a way that goes against the normal tenets of morality and fair play… Ironically, a personal failure often occurs because an entrepreneur is trying too hard to avoid an enterprise failure. Trying to keep the venture capitalists happy and the bankruptcy at bay, the founder or CEO will resort to illegal acts such as fraud, or to morally problematic acts such as blatant misrepresentation of the company’s capabilities or prospects when talking to customers or financiers. And when you do that, you’re then on the slippery slope of taking an enterprise failure and making it a personal failure.
Professor Ghosh closes with an endorsement of Schumpeter’s gales of creative destruction: “manage failure so that enterprises fail but people can still succeed…[and] build a society that can reinvent itself as the world changes.”
March 9th, 2011 by Patrick
Kent Hoover at portfolio.com helps make a critical distinction about the sources of job growth: it depends less on small businesses than it does on 
new small businesses. Hoover reports on the second annual “State of Entrepreneurship” address by Kauffman Foundation CEO Carl Schramm:
“The widely repeated claim that small businesses are the vital source of new jobs isn’t supported by the facts,” (Schramm) said. “It may sound good on the campaign stump, but here’s the reality: Companies with fewer than 500 employees—the official definition of a small business—account for roughly four out of 10 jobs. Firms of less than 100 employees—a more commonsense definition of small business—account for less than one-third of American jobs.”
The key to growing the U.S. economy is helping more new businesses become billion-dollar companies over time. Currently about 15 of the 600,000 new businesses launched every year in the U.S. grow to become billion-dollar businesses, according to Kauffman. If we could increase that number to 45 to 70 a year, “we’d permanently increase the economy’s growth rate by one full percentage point.”
Schramm’s recommendations (discussed in his address and in Kauffman’s Rules for Growth) include: enabling more high-skilled immigration, streamlining university technology licensing practices, tax reform, and patent/IP reform.
As we’ve noted before, new businesses do account for a large percentage of the NEW jobs created each year, so encouraging new business formation remains critical to putting Americans back to work. Beyond that, it’s a number games. The more new businesses, the more likely that some of them will go on to be billion dollar businesses. But you don’t get the latter without the former, so it’s critical that our tax and regulatory policy encourages new business formation.
February 23rd, 2011 by Paul
Bill Draper – industry pioneer and author of The Startup Game – recently discussed his career, entrepreneurs, and the evolution of the venture business at the Commonwealth Club in San Francisco.
The wide-ranging interview (recounted here at The Wall Street Journal Venture Capital Dispatch blog) covered several topics critical to a successful vc-entrepreneur marriage: maintaining long term relationships, communicating good news and bad, promoting honesty in business, and maximizing board effectiveness.
Draper wove several money quotes throughout his remarks; here are a few of our favorites:
“When an entrepreneur has a first board meeting, we called that the ‘Oh sh—meeting.’ That’s when the VC finds out the bad news he didn’t know when he made the investment. How the VC reacts to that defines the relationship – it either becomes more brittle or closer.”
“We often tell (entrepreneurs) they have underestimated the timeline” – toward becoming profitable or becoming an exit candidate, for example. “They’d say, ‘No, we’ve doubled the time we think it will take.’ Then we double that timeline, and very often that’s not enough.”
“When the bubble burst (around 2000), it was a very scary time. We had sold off a lot of investments when the bubble was rising, or even at the peak, and we were feeling probably less humble than we should have. We had a convertible debenture, and when the two years were up, we said, ‘We’ll take our money back.’ It later sold for a billion dollars to Amazon. If a VC looks you in the eye and says he hasn’t made mistakes, he’s lying.”
“I used to always say to the CEO, ‘Why don’t you charge $2 per reservation, instead of $1? He’d say, ‘Bill, you don’t get it, we want to own the market.’ Or I’d say, ‘Why do you lease the machines, why not make them pay you for them?’ He’d say, ‘Bill, you don’t get it, we want to own the market.’ Thank God he didn’t take my advice.”
“Make sure you have operating experience, do your homework, try to be humble at all times, think about each opportunity from the entrepreneur’s standpoint, and be gracious to all of them, because they are the future of this country.”
February 16th, 2011 by Drew
I am Patchwork V - Soraia Almeida
This outstanding article in the Sun Sentinel about the entrepreneurial ecosystem of Florida is written by Jeremy Ring, who represents District 32 in the Florida Senate and has fought tirelessly in Tallahassee for policies that encourage entrepreneurial activity in the State. (We have written on the topic ourselves here, here, here and here.)
Senator Ring argues, convincingly, that Florida has all the necessary pieces for a “21st century innovative economy [that] creates wealth and results in consumer spending and ultimately a strong work-force” and has only to interconnect those pieces and better market them to the rest of the world.
He also offers recommendations to strengthen the entire ecosystem – from primary research through to large public companies – and laments an issue we see all too often: even our state’s (and region’s) attractive overall business climate cannot ensure that our entrepreneurs will get the support they need.
In order for innovative ideas to grow to profitable and sustainable levels, there are many steps that are required — and that Florida must embrace. The initial step is to have an incubator environment. Seed funding is crucial for entrepreneurs to develop business plans, hire attorneys to ensure proper governance, apply for patents and trademarks, secure proof of sales, and to attract executives and additional engineering talent. All this must be in place before a real venture capital commitment could be considered. The next challenge is to ensure that a robust venture capital network exists. Without it, companies that do ultimately attract professional funding are often relocated to other parts of the country, where the investor can monitor or oversee their investment.
We once wrote of America’s hodge-podge of scientists, institutions, and funding; innovative companies are generated not only from the availability of seed capital but the structure of the early-stage investing ecosystem. What is true for the nation is true for Florida, perhaps more so: our widely dispersed urban centers present additional challenges to networking, collaboration, and the ongoing management of ventures. Efforts by leaders in the state government or private actors (such as the Florida Venture Forum) can thicken and strengthen the connections amongst our researchers, investors and entrepreneurs.
