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fund-past-winners strategy. Nicholas Naclerio, chairman and CEO of Quanterix, a startup focused on developing highly accurate, single-molecule analyzers, explains that his scientific founder David Walt was a selling point to investors. Walt, a professor of chemistry at Tufts University, previously founded, and invented genetic analysis technology for, San Diego-based Illumina, which completed an initial public offering of just north of $100 million in 2000.
Based in part on Walt’s reputation, Naclerio explains, Quanterix managed to quickly raise an initial tranche of a Series A round of venture capital last year. The firm’s VC backers—Flagship Ventures, of Cambridge, Arch, and Boston-based Bain Capital Ventures—completed the $15 million round this summer. Here’s our recent story about Quanterix. (Also notable is the fact that 5 of the 6 members of Quanterix’s leadership team are named “David.” This is perhaps a less practical strategy for the typical startup, but in this environment we’d be remiss in not mentioning a potentially valuable tip.)
The Non-Profit Startup Model:
One of the most interesting case studies at the forum was Diagnostics For All (DFA), a nonprofit developing inexpensive paper-based diagnostics for the developing world. It now operates with a $200,000 donation from founder and renown Harvard chemistry professor (and Xconomist) George Whitesides and $500,000 from director and Xconomy Forum presenter Myer Berlow. Berlow, whose day job is CEO and vice chairman of Cambridge nano-materials startup Nano-Terra, says that the reason for DFA’s nonprofit status and initial reliance on philanthropic donations is to ensure that the cost of its diagnostics remains low enough to save the lives of the poorest people in places like Africa. Xconomist Carmichael Roberts, a DFA co-founder now of North Bridge Venture Partners, wrote in our forum about the decision to create DFA as a non-profit. Roberts also moderated a fascinating panel—New Strategies for Getting Off the Ground—that brought together all five of the morning’s case study presenters and dove into greater detail about their strategies.
The Venture Philanthropy Model:
Though certainly a for-profit enterprise, Cambria Pharmaceuticals of Woburn, MA, has received some $5 million in grant awards from diseases foundations to develop a treatment for neurodegenerative disorders such as ALS (amyotrophic lateral sclerosis). Cambria CEO Leo Liu, who presented his firm as a case study, said that disease foundations are ideal financing partners because they represent leading researchers, patients, and the market for the experimental drugs they support—and they don’t take equity.
The Incubator Model:
This business model is typically built around sharing resources among life sciences startups in the form of lab equipment and space, administrative support, and service providers. Xconomy national biotech editor Luke Timmerman moderated a panel of incubator enthusiasts focused on life sciences. David Schubert, chief business officer of Accelerator Corp., a novel type of life sciences incubator in Xconomy Boston’s sister city of Seattle, explained that the pool of traditional venture capitalists willing to place bets on the young firms in his incubator continues to grow smaller and smaller. Accelerator provides initial investments in life sciences startups in its incubator to help them gain the validation of their technology needed to attract further investments from VC firms. Meanwhile, Novartis’ Chuck Wilson, vice president of strategic alliances, informed our audience that his company has an incubator with a twist: instead of incubating companies, Novartis incubates projects by issuing stock options to employees with novel ideas outside the scope of the company’s normal research and development programs.
The Bob and Terry Model:
There are quite a few VC-academic duos in the life sciences industry that have rallied more than once to launch startups. Take Ram Sasisekharan, a professor of biomedical engineering at MIT, and Polaris venture partner Alan Crane, who worked together to form Cambridge biotech startup Tempo Pharmaceuticals and Parasol Therapeutics in Waltham.
But perhaps no tandem has been as prolific as Bob Langer and Terry McGuire, who have together formed some 14 biotechs, including early hit Advanced Inhalation Research (AIR), a Cambridge, MA-based developer of inhaled drug formulas that was sold in 1999 to Alkermes (NASDAQ:ALKS) in a stock deal valued at more than $100 million. And McGuire made it clear that he believes the only way to replicate the success he and Langer have enjoyed since they began collaborating to form life sciences startups in the mid-1990s would be to find another Langer (who by the way has some 630 patents and more than 1,000 scientific papers to his credit). Of course, McGuire followed up, there is only one Bob Langer. (Look for an upcoming video of Langer and McGuire’s chat at the Xconomy Forum.)