On June 8th, 2017, the San Diego Entrepreneur Exchange (SDEE) hosted an event to get to know your venture capitalists (VC) at the Bella Vista Social Club & Cafe and The Roth Auditorium at the Sanford Consortium for Regenerative Medicine. Barney & Barney and Marsh & McLellan Agency sponsored the event.
Before the panel discussion, the attendees snaked on delicious pizza, meatballs, caprese skewers and other finger food, and enjoyed wine or beer while walking on the patio among the 15 exhibitor’s tables (the list of exhibitors is at the end of the article). It’s always great to speak with the innovators and entrepreneurs who exhibit at SDEE’s events, and to chat with old coworkers, friends, or acquaintances.
As customary, the event started with the 30” pitch, where entrepreneurs have 30 seconds to describe their company. Sunny Al-Shamma (Beacon Discovery), Sylvia Norman (Sandhill Crane Diagnostics), Paul Chen (JET Lasik), Jack Pan (Hydrokinetic Energy & Storage), Richard Encarnacion (Watchmybud), Brett Goldsmith (Nanomedical Diagnostics), Marlyn Bruno (Aequor), Cody Midlam (3JC Solutions), Mike Simson (One World Lab), Neil Thompson (Sterilliant), Michael Kelner (Califia Pharma), Daniel Dempsey (Venomyx Therapeutics), and Shaw Lin (TeraStim) did a great job in highlighting in such a short time the main focus of their companies.
Randy Schreckhise spoke about SDEE’s mission and moderated the panel discussion. Panelists were Paul Grossman, JD, PhD, Venture Partner at Telegraph Hill Partners; Clare Ozawa, PhD, Managing Director at Versant Ventures and COO of Interception Sciences; and Niall O’Donnell, PhD, Managing Director at RiverVest Venture Partners.
Photo, from left: Randy Schreckhise, Paul Grossman, Clare Ozawa, and Niall O’Donnell.
Why join a venture capital firm?
All panelists have a scientific background: Paul has a PhD in Chemical Engineering, Clare in Neuroscience, and Niall in Biochemistry. At different stages in their career and following various circumstances, they decided to use their scientific curiosity to invest in promising new companies to return a profit for investors while helping companies bring new therapies, diagnostics, or devices to patients. Telegraph Hill Partners is based in San Francisco and invests in devices and diagnostics, usually late stage. Versant Ventures focuses on biopharmaceuticals and starts companies independently or with entrepreneurs. RiverVest’s focus is on repurposing drugs that are not going to be pursued by big pharma.
What do you really enjoy in your work?
Talking with people and making deals is interesting and fun, even if sometimes a negotiation does not go well and the deal is not made. At the same time, managing people in your team and human resources issues can be challenging, like in any other company. From a scientific point of view, it is exciting to give a second life to compounds that have been dismissed by the original inventor.
For example, RiverVest Ventures invested in Lumena Pharma, a company that licensed assets from Pfizer when the big pharma decided not to develop them for cardiovascular disease. Lumena saw the opportunity to use these compounds for orphan liver diseases. The company was later bought by Shire, which is continuing the development of Lumena’s compounds.
Also Clare shared a success story. Versant Ventures invests in Inception IBD, a San Diego-based company that aims at translating an academic discovery in the field of inflammatory bowel disease (IBD) from INSERM in France into first-in-class small molecule drugs. Celgene has the option to acquire Inception IBD, with potential revenues for investors and new therapies for IBD patients.
How and where do VC find deals?
Opportunities come for a variety of sources, from big pharma to academic institutions around the globe. In general, one finds opportunities via networking, talking with people, going to conferences, and reading the literature.
The journey between due diligence and deal is long, and making one deal out of 100 opportunities is a pretty good record. Sometimes a VC may pass on a good opportunity, but the VC needs to think about risks and rewards, and invest in what makes sense for the firm and the investors. A certain firm, like Telegraph Hill, may be interested in late stage opportunities, while RiverVest and Versant focus on new ideas and novel therapeutic areas.
When considering an opportunity, it is important to talk with the company’s customers, look at the executive team, and see how the company is run: a huge sales force in place before the company tested its market is a red flag. In addition to the company’s team and the market, valuation is a very important consideration for a VC.
What do entrepreneurs need to do to make a deal?
The venture capitalists advised the attendees to send non-confidential material to firms and to schedule meetings or lunches. This allows entrepreneurs to practice their pitch and to get useful feed-back to sharpen their slide decks and presentations. Your presentation needs to be good, but focus on the content and, most importantly, make sure that the value proposition comes across during your pitch to investors. Approach CEO, CFO, or CMO of small VC firms at first, as it may be easier to get in the door, and make sure to listen to their feedback.
Entrepreneurs may think that they know everything, but they need to be humble and acknowledge their limitations. Not all scientists are good CEO, and sometimes a scientist with a good idea needs to recognize that he is not suited for the difficult job of the CEO, and needs to give those responsibilities to someone else.
What is your presence in San Diego?
All panelists love living and working in San Diego. The biotech/pharma/device industry in San Diego is very vibrant and, at the same time, there is not as much VC competition as in San Francisco. In addition, the Bay Area is set at “tech time”, fast and big, which is not the pace of life sciences.
In addition to lots of opportunities for investors, San Diego has a healthy academic environment, good infrastructure, and a good collaborative spirit. Certainly, San Diego is not as close to Europe as Boston, and this can be a disadvantage, but San Diego has carved its niche and does not need to compete with Boston or San Francisco.
Last but not least, SDEE offers great opportunities for San Diego’s entrepreneurs in the life sciences to help one another.
Sandhill Crane Diagnostics, Sylvia Norman & Metin Bilgin
Occupational Services, David McQuade
Dinsmore & Shohl, Aubrey Haddach
Aequor, Marilyn Bruno
Lisa Mead Consulting Group, Lisa Mead
Cardinal Health, Michelle Yankauckas
MaxCyte Inc, Jessica McClure-Kuhar
Reveal Biosciences, Spencer Gordon
CureMatch, Stephane Richard
Driven Staffing, Meredith Dow
California Life Sciences Association, Sam Assmann
Goldfish Consulting, Amy Duncan
Managed Laboratory Services, Taylor Moyer (SDEE President) and Melissa Moradian
Al Peterson, Engineering Consultant