Allied Minds Aims to Forge Early Alliances with University Researchers

3/21/08

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Allied funded, LifeScreen, which is working on a non-invasive breast cancer screening technology, was out of the University of Missouri, Columbia.

But then Allied started to hear from people in universities along the coasts, saying they were struggling with the same gap. A lot of VCs, he says, have gotten so big that it’s not worth it to them to spend the time required to make small investments. “If you’re looking for an investment and you’re $100 million or $1 billion in size, coming down and doing a seed round is hard,” he says. If such companies do want to invest at an early stage, they’re likely to go with a known quantity, like MIT’s Robert Langer (an Xconomist), who has started more than a dozen companies based on research in his lab.

Allied Minds tends to make investments of a few hundred thousand dollars to around a million dollars. A couple of its more recent investments have been in Massachusetts. Last October it spent $500,000 to establish SiEnergy Systems LLC, a company developing a new type of solid oxide fuel cell, based on research at Harvard. Last June, it founded BA Logix for an undisclosed amount. That company, based on research at Tufts, is developing algorithms to perform digital imaging and compression faster and more efficiently.

Allied Minds maintains it is not focused to any one technology, and is trying to build a diverse portfolio of businesses. That said, the first eight of the 11 companies it has funded were all in the life sciences. But Eichenberger calls the company simply “opportunity-driven,” going where it sees developments with a lot of potential, For instance, he says, a revolution in bringing engineering into the life sciences, coupled with plenty of funding from the National Institutes of Health, has produced a lot of interesting technologies in that area. Still, Eichenberger says that the firm is making more of an effort to diversify. For instance, its most recent company, founded in December and based on research at New York University, focuses on creating non-volatile computer memory.

One area where the firm is reluctant to get involved is in therapeutics and vaccines, just because the Food and Drug Administration’s approval process for such products is so long and expensive. And there are other areas Allied Minds may stay away from. “Some spaces are just so crowded that we just haven’t found anything disruptive enough,” Eichenberger says, citing a glut of developments in biosensors as one area where the opportunities aren’t obvious.

As for the current economic turmoil, he’s not too worried about it. “We had a major financing round last year that will carry us through for some time,” he says. And in some cases, a slow economy can be beneficial, if the value you’re offering is to be able to do something cheaply. “If you have a great diagnostic that can supplant a more costly procedure today, that’s just going to be very welcome in a tight money environment,” he says. “If the science proves out, they’re going to be successful in our mind, regardless of the economic environment.”

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