Transcript Getting Initial Money to Go from Nothing to Something

Getting Initial Money to go from Nothing to Somethin
Jeff Behrens
Head of Business Operations
Biogen Idec Innovation Incubator
10/2/2007
My Background
• Founder, The Telluride Group, Inc.
– Managed IT services for biotech and VC
– Sold in 2003
• Back to school
– Harvard-MIT Biomedical Enterprise Program
• Consulting work with several venture firms
• Join Biogen Idec in 2006 to help form BI3
• Active with Launchpad Angels, MIT’s Venture Mentoring
Service, local Boston entrepreneurial “scene”
• Board of Finale Restaurants
• Head of Business Operations for BI3
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The Telluride Group Story
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Remotely managed IT outsourcing services = “MSP”
Founded ’95; bootstrapped
750k angel funding ’99
Sold in 2003 to mindSHIFT (funded by Fidelity)
– 35 EEs, ~1700 seats managed, ~40 clients
• Key lessons
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Profitable every year but 1
Used bank debt and angel
Avoided VC; with VC, exit would have been disappointing
Hard to grow service company fast
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Telluride, Banks, Angels
• Banks
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Credit cards to no personal guarantee in 5 years
Cycles of lending/excitement and tightening of credit
Always ask and network; better deals are out there
Debt, used carefully, is much cheaper than equity!
• Angels
– Advisors became angels
– Ask for advice, get $. (and the reverse!)
– Angel groups – good and bad
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Angel funding is moving away from earlystage companies
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Whereas the bulk of angel investment in the past was largely in the seed and
startup stage, this amount has dropped significantly
Angel investments into seed and startup-stage
companies
100%
80%
80%
60%
45%
40%
20%
0%
2003
2006
Source: University of New Hampshire's Center for Venture Research
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VC activity is also diminishing in
early-stage deals
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Trend towards larger venture funds ($500M+), BUT the number of investments per
fund is staying constant due to management bandwidth limitations
More capital per deal means partners cannot justify seed (<$1M) or early-stage
($1-$5M) investments
– Typically 4-6 new companies are funded per partner per fund
Significant trend towards larger funds since 1996
<$100M
$100M-$500M
>$500M
Source: Nature Biotechnology
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Funding alternatives: Other forms of support
for early-stage translational medical research
Source
Description
Angel Investors
Traditionally one of the largest sources of funding for seed-stage
ventures of funding for seed-stage ventures
Traditional Foundations
Provide small amounts of funding to support initial research in the
form of reimbursable grants with expectation of royalties on
potential sales
Venture Philanthropist
Organizations (VPOs)
Traditional venture capital investment model applied to social
entrepreneurship
University seed funds
University funds applied to increasing the commercial value of
university IP and advancing technologies to the market
Local/regional seed funds
Early-stage funding support for economic development
SBIR/STTR
DoD grants for early-stage technology R&D projects with
commercial applications that also serve a DoD need
Corporate partnerships
Partnerships between industry and academic or mature
companies and startups to support early-stage R&D activities
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Biogen Idec:
A Global Biopharmaceutical Company
• Formed in 2003 through merger of Biogen Inc. and Idec
Pharmaceuticals. 3,700+ employees
• Headquartered in
Cambridge, MA.
Research centers
in San Diego, CA
and Cambridge, MA
• 2 blockbusters
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How Biogen Invests Externally
SRAs, CI
Biology
NV
Drug Disc
Preclinical
BD
Ph 1
Ph 2
Ph 3
Collaborative Inquiry
New Ventures
Business Development
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Grants to academic
researchers
Early discovery stage
Not milestone-driven
Typically “no strings
attached”
No direct impact on
pipeline
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Investments in biotech
opportunities in
preclinical or Phase 1
Typically in syndicates
with other VCs
Strategic investments
with indirect impact on
pipeline
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Focused on Phase 2
and 3 products
Immediate contribution
to pipeline
Lower risk, shorter
timelines makes this
approach very
attractive…
…but is also highly
competitive
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Biogen Idec Innovation Incubator (BI3):
Biogen’s Newest External Innovation Effort
SRAs, CI
Biology
NV
Drug Disc
Preclinical
BD
Ph 1
Ph 2
Ph 3
• Targets innovative lead-stage product candidates with
clear path toward R-to-D transition or rapid proof-of-concept
in the clinic
• Provides funding and entrepreneurial environment to
efficiently execute aggressive R&D plan
• Directly contributes to the company’s R&D pipeline
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What is bi3?
• bi3’s goal is to create an environment that allows
entrepreneurially minded scientists to convert novel
biological insight rapidly into life-saving and lifechanging therapeutics
• To this end, bi3 provides a
unique and
comprehensive set of
resources
• We get equity & an option
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Approaching Larger Companies for
Funding/Partnerships
• Multiple POCs are essential/multiple routes in
• Try to learn what the larger company cares
about/believes (not easy!)
• Networking within a large company is as much effort
as broad networking in general
• Innovation matters to smart large companies and they
are willing to pay for it!
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Contact Info
[email protected]
www.biogenidec.com/bi3
617 914-7152
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