When Henry McCance started at Greylock Partners in 1969, the venture capital industry had less than $100 million of capital flowing into it each year, he approximates. Now, it’s roughly a $20 billion-a-year sector of the financial world that has backed companies whose products are, in many cases, staples of modern living.
Five years ago, McCance, now Greylock’s chairman emeritus, started a nonprofit research foundation called the Cure Alzheimer’s Fund, based on many of the same principals he sees as driving the venture capital success he’s witnessed over the past four decades.
“I’ve seen the power of what a passionate, bright entrepreneur, coupled with some farsighted investors, can do in terms of changing an industry and transforming how the commercial world works,” McCance says. He hopes his foundation can bring about a similar transformation in the realm of medical research.
It all started about ten years ago, when McCance’s wife was diagnosed with Alzheimer’s disease, the degenerative neurological disorder. The couple visited a number of doctors, and McCance found that most doctors’ advice seemed primitive at best, suggesting patients do things like take Advil or vitamin E as ways to slow the disease’s progression, he says.
Determined to change that state of affairs, he connected with a few other wealthy families with a strong interest in Alzheimer’s research, he says. Veteran investors Jacqui and Jeff Morby and philanthropists Phyllis and Jerome Rappaport joined him as the founders of the Cure Alzheimer’s Fund, he says.
First they set out to find the brightest minds in Alzheimer’s research. This falls directly in line with McCance’s first tenet of venture capital success: find the visionaries. “The really great venture capitalists are proactive, not reactive,” he says. “They try to identify the best entrepreneurial talent and they go and sell themselves to those future leaders.”
So rather than sifting through unsolicited research proposals from across the country, the Cure Alzheimer’s Fund founders looked for the people who they thought were the best. Top of the list was Massachusetts General Hospital geneticist and Alzheimer’s expert Rudolph Tanzi, McCance says, who joined the foundation to head up its research consortium.
McCance’s second piece of advice for succeeding in venture capital is support the visionaries with top executive leadership. To apply that principle in the nonprofit context, the Cure Alzheimer’s Fund needed to hire the equivalent of a go-to-market person for the organization, McCance says. They brought on a president and CEO, Tim Armour, a Harvard Business School graduate who ran another nonprofit, the JASON Foundation, focused on improving science and math performance among middle school students.
The Cure Alzheimer’s Fund has also thoroughly embraced McCance’s third tenet, establish a frugal culture. Greylock donated office space to the nonprofit for its first two years. It has since moved to modest office space in Wellesley, MA. And the three founding families pay all overhead costs for the fund, so that 100 percent of every dollar they solicit from external donors goes to research, says McCance. “Everybody who knows me knows I stretch a dollar in every way,” he says.
It is largely by following McCance’s last piece of advice—dare to be great—that the Cure Alzheimer’s Fund seeks to set itself apart from existing scientific research organizations.
When the Fund was getting together in 2005, Tanzi gathered a group of scientists who he hoped would join the fund’s consortium of Alzheimer’s researchers. McCance and the other founders held a dinner for them in Washington, DC during the annual meeting of the Society of Neuroscience. McCance recalls the researchers saying that night that the organizations that traditionally dole out the grants are so risk-averse that they don’t want to fund anything that has the slightest potential for failure. “‘We are forced to submit proposals which we almost already know the answer to,'” was their lament, McCance says. “‘Research that does get funded is akin to a 1-yard plunge. There is no organization that is willing to throw to us a 20-yard pass down the field.'”
That dinner helped convince McCance and the other Cure Alzheimer’s founders that they needed to bet on riskier, but promising, research projects. “Most venture capital investments are not trying to improve something by 5 percent or 10 percent, he says. “They’re trying to do something transformational and change the dynamics of whatever industry they’re in.
The fund is also trying to transform how grants are made and managed, at a time when the head of an NIH-funded lab must spend roughly 30 percent of her time on grant writing and other administrative paperwork. The nonprofit streamlines the grant process by having its scientific advisory board consider only proposals it solicits—either from its research consortium of roughly a dozen scientists, or from researchers suggested by consortium members. Grant recipients must provide reports—ranging from three to five pages—twice yearly on the research progress, and give an update of how funds were spent at the end of the year.
At the time of the Cure Alzheimer’s Fund’s founding, researchers had discovered four genes believed to increase the risk for Alzheimer’s disease, McCance says. (Tanzi’s lab had co-discovered three of those four.) And the majority of drugmakers pursuing treatments for the condition were focused on those genes. At the inception of fund, Tanzi proposed a project that aimed to discover another 10 to 15 genes linked to the Alzheimer’s, in an attempt to give researchers and drug developers more “more shots on goal” for an Alzheimer’s cure.
With funding from Cure Alzheimer’s, Tanzi and his “dream team” consortium set out to do a so-called Alzheimer’s Genome Project and map out the genes he thought could spark further drug discovery, McCance says. They put together a research roadmap—which McCance likened to a startup company’s business plan—and started on their first set of 20-yard passes, McCance says.
In the fall of 2008, the first piece of the Alzheimer’s Genome Project came in, on time and on budget, McCance says. All told, the project discovered more than 100 genes linked to the disease, the first four of which were published in a paper in the fall of 2008. That year, TIME Magazine’s “Top 10 Everything of 2008″ list named it as one of the year’s major medical breakthroughs.
“It was nice independent verification that at least our initial project had been an important contribution to the field,” he says.
The organization is also looking to make a contribution by helping to break down what McCance sees as another barrier in scientific research: the “publish or perish” culture, where scientists remain highly secretive and protective of their work in order to be the first to publish a discovery. “That makes no sense at all on a more macro level if you want to solve a problem,” McCance says. “We want the best brains to be sharing their thoughts and cooperating with each other.” He says the Cure Alzheimer’s Fund consortium scientists regularly get together to update each other on their findings, the way different engineers at a tech startup would discuss their progress on a challenge or project. The fund also updates donors on the research progress with webinars from Tanzi, he adds.
The Cure Alzheimer’s Fund raised about $15 million between 2005 and 2009, with about half of that total coming from the founders. The organization is aiming to raise about $4 million per year from now on, McCance says.
The next step for the fund’s consortium of researchers is to examine the more than 100 genes mapped in the Alzheimer’s Genome Project to identify those most likely to lead to future drug discoveries, McCance says. Ultimately, McCance hopes that more of these promising discoveries by the consortium will encourage others to make bets on the nonprofit model, much as the early returns from the first venture capital funds helped draw new institutional investors into the field. “By taking this different approach, I think we can move the needle,” he says.
In the meantime, some more encouraging news: McCance’s wife’s condition has remained very mild and progressed slowly. “She’s doing remarkably well,” he says.