Showing posts with label Venture Capital. Show all posts
Showing posts with label Venture Capital. Show all posts

Saturday, March 7, 2015

The Negative yield ecosystem

   In the Fynbos shrub lands of South Africa, an occasional forest fire is essential for survival of majority plant species there since their seed is released from its woody encasement only after being burnt (obligate seeders). By analogy, the on-going negative yield inferno that’s rapidly destroying investor wealth too may crack open a few seeds of hope and redemption - The core assumption of a fiscal conflagration ecosystem.
Unlike in a natural phenomenon though, any positive outcome from this dismal fiscal scenario has to be necessarily a derivative of human behavior in face of risk. The Prospect theory explains this when it says ‘the decision makers will be risk averse when choosing between gains and risk seeking when choosing between losses’ – This could mean the investing universe over next few months (& once the ECB buy-back bubble in 2016 too is suitably burst…) would stop sinking more money in government, sovereign bonds and look at riskier options like equity that don’t at least start with a chilling promise of sub-zero return – many articles like herehere & herecovered this possibility quite convincingly.
But again, just as forest fire burns down dry tinder first & then progressively dehydrates and engulfs vegetation that was relatively less-drier & safer before, the investors’ new found appetite for risk gradually could expose the relatively self-correcting equity and other asset classes to the risk of long-term under performance. While this eventuality may not be completely unanticipated by the investing junta, the reason why they’d still ignore it in the shorter term once again is explained by the prospect theory’s ‘reference level dependence’ characteristic, whereby a poor performance of a much riskier equity investment would still look eminently better than a known negative yield of a bond.
So if it isn't even equity, what seeds of hope would crack open?
In their quest for the feel-good investments, it is likely the investor interest in PE will spike in the short to longer-term. This expansion of the PE pie will of course be helped by its historically steadier IRR as compared to other asset classes (@ annual return of 15% calculated across 10 years)
While any such incremental flows into the PE may still be a blip compared to what’s at stake in traditional asset classes, considering the critical nature of capital availability in building/ growing companies that’d eventually feed the future equity market, I’d think Private Equity in its glow of new found investor love will turn out to be the quintessential seed that’ll regenerate the fiscal ecosystem.
Well it just might be that the hot winds of negative yields could prove a windfall for the VCs & FoFs currently raising funds.

Thursday, December 11, 2014


Don't worry folks, this isn't yet another Uber bashing or defending article. Since so many are already on that job, I'd rather pass the blame up & rile the investor universe a little instead :-)
First a disclaimer:
Conceptually I admire Uber - I dig the fact that something as mundane as local commute can have such disruptive business potential. As a user I loved the sheer convenience & practicality of an app based cab service that eliminates the fuss of 'booking' a chauffeured cab & thrilled that I'd always know how far my ride is & jus' how many more are creeping around near where I am. I liked it that this company made it possible for quite a few folks in the recession hit USA to make a decent living without looking too bad doing that.
Okay the real poser now
Among all the financial greats such as Fidelity Investments, Wellington Management, Black Rock Inc, Summit Partners, Kleiner Perkins, Google Ventures, Menlo Ventures et al who poured in a whopping $1.2 billion into Uber merely a few months ago, is there one that had raised/ browsed over the possibility that Uber with it's now famous thumbing-its-nose-at-rules approach is potentially waltzing each day into a new & huge regulatory risk?
Is it possible at all that there were absolutely no indicators of this looming risk in July 2014 considering that by December 2014 Uber managed to get into trouble in 15 different countries ranging from USA (California, Nevada, Portland); Canada, UK, France, Germany, Spain, Belgium, Netherlands, Japan, Thailand, South Korea, Philippines, Taiwan and India?
Are the PE, VC organizations in their quest to go after high potential start-ups not sufficiently factoring in any ethical, livelihood & regulatory aspects, that could turn into risks, before unloading truck loads of money? If indeed these aspects were overlooked by them, is it that in their over-enthusiastic support of Uber & it's disruptive enterprise model, the investing universe did a major disservice to them by not letting them get aware of a potential risk they're aggregating (pun intended) with each city they are expanding into?
I really hope Uber cleans-up & pursues its definitive potential so I could hail my fav' cab again soon within my city and elsewhere too - I could be dead-wrong but I feel though that the investor organizations need to do some soul-searching into what exactly their due-diligence is all about or not & if their multibillion valuations are indeed less market regulatory risk.
Post Thought - 11th December
The banning of Uber in India is akin to a parent banishing the teenager from home just because she/ he is caught smoking for the very first-time. The normal approach would be to tell em' 'you are grounded' & proceed to put some sense in the kid which in case of Uber would be asking them to suspend their operations till all aspects are cleared out - I hope Mr. PM will raise above petty politicking and be the stern nurturer of progress people expect him to be.

Saturday, November 15, 2014

The eleventh commandment: Share thy health data

You know you've got one compelling business plan when your investor starts promoting your wares even before you hit production. Like I've said here earlier, at the base of Google's healthcare ambitions is the health data of its users & now one of their earliest believers is bearing the torch to its data quest & how!
Beth Seidenberg, a partner at Kleiner Perkins Caufield & Byers (@KPCB) that famously invested 25mio USD (along with Sequoia) for a 20% stake in Google way back in 1999, in a recent blog piece of her's exhorts the users saying "You Should Share Your Health Data: Its Value Outweighs the Privacy Risk". Beth of course invests in digital health start-ups and hence could be speaking for those too, but it's anybody's guess which of KPCB's investments this would help the most.
Not that people need to be pressurized much these days to voluntarily part with their data, health or otherwise, but this dictat by the good doctor will surely makes 'em feel good about the 'why' part of it.
Update: 15th Nov 2014
allrighty...... now Accel's Rich Wong is going bullish on Android platform over IOS for investments in mobile health technologies. From making appeals of voluntary data disclosure to enabling automated data recovery through internet of things, the (investing) universe is truly conspiring to give it all to Larry & Sergei :-))

Friday, October 31, 2014

Why did Scott Adams give up on Venture Capital?

More than the brilliant humor & the tough to ignore desi-connect called Vijay, what caught my attention in today's DILBERT section of Times-of-India was the date of strip itself viz., 1.20.09 - Now that's pretty dated even for an average Indian newspaper that's stuck in a time-warp when it comes to being current on syndicated comic content.
My subsequent query on the website revealed that there're no strips on either 'venture capital' or 'venture capitalist' after the above strip of 2009 – Whoa! If that isn't disillusionment what is? particularly considering how the age-old crib of 'VC model being broken' got a lot more traction post the recession-wreaked 2009 and that would've meant a lot more meat for Scott to chew on!
I wonder why Scott gave up on this wonderful pun-amenable character called VC so very unceremoniously.
VC = Vijay = No good?
Of course I did search for more strips of my compatriot Vijay too. It was rather interesting to note how this chap’s tagline/ descriptor changed from "Vijay, the world's most desperate venture capitalist" in 2005 to "Vijay the venture capitalist" in 2008 to "Vijay, the world's worst venture capitalist" in 2009 ---- Despite my respect & awe for Scott Adams, I can't help but wonder if there's a botched-up fundraising behind this obvious gripe.

Thursday, September 11, 2014

Forget ageing, let Google manage you!

I can visualize the oodles of intellectual optimism and excitement generated when Bill Maris & Ray Kurzweil sat down for the very first time to envision Calico to ‘Tackle Ageing’ & prolong lives. But despite an equally bold mission statement saying Calico will ‘Devise interventions that enable people to lead longer and healthier lives’, I find it difficult to believe that Larry would’ve agreed to sink millions in this seemingly altruistic goal of creating a clutch of wonder pills that increase human lifespan, in about a decade plus, without fully addressing some key questions, most importantly why Google, why ageing.
Even if in their new-covert enthusiasm (to healthcare), Bill, Larry et al would’ve down-played the primary question of why Google, it’s unlikely a battle-worn pharma baron like Richard Gonzalez would ignore the same. But the fact that Gonzalez is firmly sold on to this idea now indicates that Calico’s actual potential is not definitely limited to mere (& slow) fruition of their stated long-term vision.
Secondly, while it may look like a really compelling cause given the promise of long-life, scientifically I’m still unsure what makes ageing research an attractive business proposition considering Alzheimer’s drug development is struggling with a depressingly high failure rate of 99.6%? Perhaps Google saw some merit is in this very realization that ‘Alzheimer’s Cure’ is pretty much an oxymoron and prevention is where the hope lies. Of course ageing is much more than Alzheimer’s and hopefully the rest of the pathways that arrest degeneration don’t have as many pitfalls and mines as Alzheimer’s does, but how is this untested promise of tackling ageing alluring enough for a healthcare upstart like Google to jump-in with a big-ticket investment?
Through my freestyle inquisitive ramblings below, I have tried to better understand this stealth start-up & see if my above hypothesis makes some sense. Also, despite knowing CALICO is set-up as an independent company, I have dealt with this like Google’s still the boss.

What’s in a name? – Quite a bit actually

Other than the obvious fact that it’s short for ‘California Life Company’, the name surely reminds one of a Calico cat. Art Levinson was apparently okay with the cat connotation in connection with a cat’s nine lives (read: longevity). But looking at all the illustrious names on the team, one'd surely suspect the connotation is far deeper than it looks & there's more to Calico than the cat itself.
After some serious searching, I could make some connection. The biological background to the curious phenomenon called calico cats lies in a spontaneous genetic mechanism called X-inactivation & the effects associated with relative Degree of Skewing (DS) of paternal & maternal X chromosomes among female of the species.The most interesting find in this connection is a study published on NCBI that establishes a link between higher DS & longer lifespan – one of the authors of this paper incidentally is Prof. Kaare Christensen of Danish Ageing Research Centre, University of Southern Denmark.
Great conjectures all, but I’m wondering where does this leave male-longevity? :-)

Let me get this off my list

Is Calico Google Health 2.0? Google Health (GH) was merely a medical data management initiative, a natural offshoot of Google’s cloud aspirations but also Google’s first tentative entry into healthcare. As a “personal health information centralization” service, GH depended on people adapting the same and needed other support organizations to achieve scale. While Google never claimed they did, GH’s monetization was perhaps through positioning healthcare products, solutions to individual users based on the information available against their profiles. Given this background, it doesn't look likely Calico is just rehashed Google Health.
Now the primary reason for closing GH is stated to be ‘the low adoption’ of the platform by users - Really? Did Google really expect to cover the world within one year after it released the finalized version of GH in 2010 before announcing its retirement in 2011? This super-short life-cycle makes me suspect if Google Health was a recce for Calico if not its previous version. If indeed GH was planned as a recce or even if it was coincidental, I guess there would have been some key takeaways; learning from this escapade that went into design of Calico – a few that come to mind are;
  • What healthcare data an average individual is comfortable putting up on cloud & what she/ he isn’t
  • How easy or tough it is to ensure consistent updating of good quality, verifiable data?
  • The minimal data points required to estimate an undisclosed indication(s) (user needs) and have a firm basis for monetizing the venture.-------- E.g.when someone uploads Vitamin-D levels on a quarterly basis, other than the fact that the subject is Vit-D deficient if), estimating the manifesting condition is not still possible unless some other kind of data is uploaded which when read together with the first throws up a tangible story. Now if the same user uploads data on bone-density and say a Vertebral CT Scan, it may be safe to assume the user’s actual condition is that of spondylosis pain & thus attempt reaching out to the user and propose solutions.
  • Did the solutions advised/ advertised, push-notification made to the users translate to any tangible change in their choices (of where/ what to spend) & what percentage of users were inclined to take endorsements as ‘real’ health solutions?
It’d be reasonable to assume that Google Health conceived in 2008 was piggy backing on the quantified-self trends that incidentally are still strong and was essentially designed to accept, process data fed manually either by user or by supporting stakeholder organizations. However given the proliferation of the wearable digital health feedback systems in past 2 years & given the inherent limitations of the GH platform to integrate internet of things may have prompted Google to discontinue GH and think of a completely new to way pursue its Health ambitions.

Why is Google thinking health?

Calico in its stated vision is unabashedly a healthcare company & nowhere hints at anything even remotely Googlish (sic). So what prompted Google to enter a domain that’s clearly & completely unconnected to its core-competencies. If I let alone the self-actualization needs of Larry & Sergei and Google’s avowed itch for innovation & paradigm-setting, what unstated and unassailable advantages Google already has/ will have over other Pharma biggies who've been there and done but yet can’t confidently talk of prolonging lifespan?
Of course Sky Nash on LBB earlier did say ‘Utilizing the world’s leading minds and Google’s raw computational power, Calico promises to lift, correct and protect humans from aging’. Computational power is fine, but Google neither owns nor has even an indirect stake in any of the invaluable clinical data generated by pharmaceutical innovator organizations over thousands of clinical failures and some successes. So what other kind of data can potentially help them do a better job of putting out drugs and those that tackle ageing at that? – could it be;
  • Not to the same level of detail as FB has and not as structured, but Google has user information that could be put to use in wellness business.
  • Google’s probable access to the data of online sequencing companies like 23andMe & DNANexus (GV invested into these companies).
If user data is at the base of this opportunity, how is Google data better than FB's which is far better differentiated & spread across billions of users? - I guess the crux lies in the data semantics. The semantics of a structured data query peppered with specifics generated from mapping user preferences through “Likes” (as for FB) V/s of an unstructured, spontaneous search history based data (as for Google) can be greatly different.
However given that Google search is more personal & private than activity on FB account (contestable, as the lines are blurring ever since smart phones with ‘location-on’ took over) people are likely less inhibited in what they search for & this inherently makes their profiling based on search history a lot more accurate and actionable at a one-one level. Whereas on FB, the likes by the individual’s at best indicate a broad interest rather than an individual trait and importantly don’t necessarily indicate what the user is looking for – Let me just say that the data Google has access to & generates every second is more valuable than what FB would have when it comes to identifying a heath consumer's need!
Example: consider & compare the following Google search keyword composition, as recorded from a single advanced search or from a search history over a period of time…
  • 40ys+heart disease+arrhythmia+female+supplements?+self-diagnosis+vitamins+non-surgical treatment+jogging+yoga+meditation+fenofibrate+non-surgical+hereditary?+childhood eosinophilia+zinc+PCOS+India+traction safety+physiotherapy
With the following FB profile+activity
  • 40yrs+female+1500 friends across 20 countries+Likes “Yoga”; “Herbalife”; “working women” “Titanic the Movie”; “Savage Garden” “feel” worried, bored, depressed variably across a month & with status-updates that dealt with topics & images that demonstrate ‘feeling generally great”; “euphoria”; “health problems”; “heartbreak’; “depression” et al
When it comes to how much one can profile the user based on the above input, I feel Google search history wins hand down on the degree of specificity of data & for the sheer number of conjectures and probabilities possible. FB data on the other hand is specific on non-health aspects & even if an effort is made to interpret the semantics, it’s likely to end up with ‘probably-true-observations’ but not much actionable observations on aspects related to health. So as long as health info is considered ‘stealth info’ by users, Google is where people are going to end-up.
Also, with the big pharma companies increasingly open about sharing their clinical data (Ref: JnJ tying up with Yale university) with an intention to maximizing the data’s monetization potential, Google may find willing partners in them and thus access to clinical data may not remain a weakness anymore for Calico.

Does Google Ventures hold a clue to Google’s health ambitions?

Yes, it appears. Google Ventures (GV) portfolio does look representative of the arguments put forth earlier on why Google is into Health? The life science portfolio is populated with companies that have a definite personalized medicine/ health focus --à 23andMe (personal genetics); one medical group (personal medicine); foundation medicine (cancer diagnostics, genomics analysis); DNANexus (cloud based DNA sequencing); Flatiron health (Onco data platform); Predilytics (advanced healthcare analytics); Transcriptic (next generation lab automation); SynapDX (blood diagnostics); Rani Therapeutics (oral large molecule biotherapeutics); Doctors on Demand; AdiMAb (Yeast based antibody discovery platform). Other than life Sciences, GVs investment into upstart companies leveraging Hadoop for healthcare data management also is relevant to the personalized medicine, E.g. Cloudera; Clearstorydata etc.
As the trends indicate, it is imminent Google Ventures will start investing into companies working on wearable/ injectable health devices, such as the one by Proteus and obtain a stake in the high value vital body data domain? But once cannot ignore the fact that GV is absent from most of the big wearable start-up funding deals in 2014 namely, NanoHealth ($135 million), Alignment Healthcare ($125 million), Proteus ($120 million), MedHOK ($78 million), Lumeris ($71 million), Zenefits ($67 million), and Doximity ($54 million)) – This reluctance is surprising considering Google otherwise appears bullish on health.
Update 15 Sep 2014Though it isn't linked to Google Ventures, I did miss out including Google's smart contact project for which they have tied-up with Novartis - While at this stage it isn't clear the lens can send up the date to the mobile phone, assuming its on the cards, this could be a cutting edge usage of internet of things in medical devices. Similarly the recent Google acquisition of Lift technologies: while Lift spoon is indeed a amazingly simplistic and utilitarian device that improves basic quality of living for those effected by Parkinson's, I guess the Lift Pulse & Lift Stride technologies are what are going to help Google integrate this company into its digi-health future.

Data + User engagement + Alliances + Tailored drugs = Longevity

From the above hypothesis & conjectures, it's safe to infer that Calico would pursue its vision of tackling ageing through its mission to engineer a large-scale, data driven personalized medicine revolution.
The various nuts and bolts that’ll naturally be part of this greater mission could include aspects like; Enabling users to get into the quantified-self mode & leverage this conversion to create a data-set that could be utilized for genetic profiling & drug discovery. Using the personal charisma of its start-studded team to cobble together alliances with other major pharmaceutical innovator organizations like Abbvie, get access to their idle clinical data & maximize the utility of the same by enabling open sourced research & thus create an ecosystem of mutually dependent pharmaceutical innovation clusters.
The leadership at Calico looks well suited for the purpose and their individual strengths in sync with the above vision & mission – Below is a quick peep into what individual value-add they’ll potentially get to the table.
  • Art Levinson: Innovator, administrator par excellence with a jaw dropping professional pedigree – Unquestionably most useful in getting alliance partners from pharma & technology domains.
  • Hal V Barron: Knows how stuff works or not in clinic, what pitfalls exist in clinical trial & just how much of it can be predicted genetically – Deep domain knowledge of another lifespan linked disease domain of Cardio Vascular therapeutics.
  • David Botstein: The one who’ll know what to do with big data on genetic ancestries from the likes of 23andMe - Can help put out diagnostic tools (mobility driven; home-use; Molecular diagnostics? Companion diagnostics for personalized medicine)
  • Cynthia Kenyon: Ageing expert, figuratively speaking the one who can map out a calico cat - The quintessential tea-taster, the screener of potential drugs that act on individual ageing triggers.
  • Robert Cohen: The one who understands the opposite of longevity, programmed cell death nee apoptosis, the devil’s advocate to Cynthia - Understands cancer triggers, and blocks & individual variances in each genetic make-up

Is Calico’s “challenge to ageing” the new drug-discovery paradigm?

Or is it just a play of words & a smart pitch to the healthcare consumer who hitherto had to make do with rather promise-less solicitations & six-month increases in survival after a year-long therapy?
Whatever may be intention & the outcome, Calico is sure to change the way healthcare is viewed, pursued henceforth and the health consumers are in for an entirely new & enticing solicitation.
Exciting times indeed!
Image courtesy (partly modified) - Wikipedia

Saturday, June 21, 2014

The next Facebook may not be found online after all

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

Being a CVC - A perspective on Novartis Venture Fund's investment (& exit) strategy

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;


A quick comparison of NVF investment focus & Novartis business focus;



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!  


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


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.


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.


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.

Meray Chaaraaney.

Friday, February 28, 2014

Not wanting to sell-off is key to being bought!

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;   

WhatsApp indeed pulled-off a coup and got this eye-popping valuation. While I agree they keeping the product no-frills helped in making its adoption viral, I'm not sure it'd have helped the acquisition costs - after all a 19 billion pay-out would cover any quantum of unreasonable asset stock-pile (bells & whistles..)   

In my humble opinion where WhatsApp scored is on how it did not go after the formulaic 'Built to Sell' strategy and instead adhered to it’s probable original idea of 'Built to Solve/ Differentiate' - Let's not forget that most of us got attracted to WhatsApp primarily since it offered what FB mobile chat denied/ couldn’t assure viz., communication & data privacy.


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

Funds-on-Tap is passé & Drip-Funding is the new reality.

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.