Biotech Startup Vet Daphne Zohar on PureTech, Follica, and Doing Rather Than Talking

1/13/11

If you’re a biotech entrepreneur, this might be the one week of the year when you hope to have the most interesting things to say about what you’re doing professionally. That’s because this is the week of the JP Morgan Health Care Conference in San Francisco, arguably the industry’s most important investor meeting. I knew I’d be marooned in New England this week, so last week I talked to one of the busiest biotech entrepreneurs in Boston, PureTech Ventures founder and managing partner Daphne Zohar.

Zohar (an Xconomist), who is regularly named to who’s-who lists in healthcare, has some great inside perspectives about starting and financing biotech startups. And one only needs to look up her name or the name of her firm in our archives to see that she has as much fodder for cocktail party chitchat during JP Morgan as anybody. In recent weeks, we’ve written about the launches of two new PureTech-affiliated startups, Vedanta Biosciences and Entrega. Also, we’re still getting a flurry of comments on our story last week about PureTech-backed Follica, a developer of treatments for baldness, where Zohar is a board member and formerly served as chief executive.

But for my recent chat with Zohar, I decided to focus on PureTech itself (except for one little question about Follica—read on). PureTech is one of the most interesting and misunderstood companies in biotech. The firm churns out more new biotech startups than I feel like I can keep up with at times, and each of the companies appears to be pursuing the commercialization of truly novel technologies. Despite the firm’s name, PureTech Ventures is not a venture capital outfit in the traditional sense, where partners find and invest in companies. The firm calls itself a “venture creation company” for reasons that Zohar explained during our chat (which began over the phone and continued via e-mail).

Xconomy: PureTech has been around for about a decade, but what might most people not understand about the way it does business?

Daphne Zohar: That we are a venture creation company that also makes investments, rather than being a venture fund that also starts companies.

X: What makes PureTech different from other venture firms?

DZ: It’s sort of like the difference between an independent film studio and a big Hollywood studio. We are able to identify great “scripts” (or technology that is at the forefront of innovation) and are therefore able to attract the leading “stars” (or academic founders and teams) because of the quality of what we do and not because we are going to throw a lot of money at it.

X: Does PureTech have its own fund?

DZ: We are structured as an … Next Page »

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  • Pushga

    Has Daphne ever had a successful exit with any company? I don’t think so.

  • Robert K

    For those outside of the venture world reading the comment above, “exit” is a term from the venture capital world referring to either selling a company or taking it public. From an entrepreneur’s perspective, an exit is thankfully also the time you get rid of all the annoying VCs on your board. Investing a bunch of money in a company that someone else formed several years earlier and that others are managing, then taking credit for an “exit” is typical of arrogant VCs. Despite whatever “exits” they are bragging about, most VCs haven’t made a positive return for their investors in over a decade. Furthermore, many of the biggest money “exits” in the life science VC space that made money for their investors, ended up being dismal failures for those large companies that spent the cash. I am much more impressed by what Puretech is doing and I think their approach is far more likely to have a long-term impact on the world than that made by VCs that are just moving money around. Forming innovative companies and doing deals with large companies as Puretech has is much more impressive than sitting around in a conference room, heckling poor entrepreneurs and then screwing them. VC is dead (dying), long live any other approach.

  • Bill

    PureTech is cool.Amen Robert K I’m with you brother

  • Pushga

    So, Robert and Bill, what other approach would you expect a company to take to raise money that doesn’t require an investment? Keep in mind, drug development is very expensive and SBIRs just don’t cut it. Any investor, VC or otherwise, is going to expect an ROI.

  • Bill

    Pushga, yeah all investors want ROI including entrepreneurs who are investing the currency of their time. The question is where does an entrepreneur get the best ROI? Better to build things more slowly and not line the pockets of parasites.

    Re your question, a combination of a. angels and other investors that are win/win (there are a very few VCs who are in that category), b. grants (you have to be creative-there’s a whole world of grants outside of SBIRs), and c. strategics.

    Anyhow the VC industry is hardly supporting innovation due to a combination of risk averse behaviour and venture fund-raising challenges so entrepreneurs need to start looking in other directions.

  • b_informatics_vp

    As a pharma and biotech insider who is also very familiar with PureTech and Daphne’s great talent for publicity, I would like to know which of the PureTech companies have been successful. Are any profitable? Have any been acquired? Or, is Daphne’s success still packaging stockings in a plastic egg :-)

  • anonymous

    As someone who knows very little about venture capital, I have a simple question:

    If PureTech wasn’t making any money or reaching successful exits, how have they stayed around for the past decade? Wouldn’t they go broke pretty quickly?

  • S. Jonas

    Bioinformtics VP, you should not waste too much time worrying about someone else’s success. Sounds like you are a little bit frustrated for some reason. In an attempt to answer your question success which any true industry insider knows is a long-term game, can be measured by multiple factors including (but not limited to): a)ability to identify important and novel science, b)quality of people affiliated with the company, c)ability to attract funding and strategic partnerships, d)impact on patients.

    Seems like PureTech’s track record is pretty impressive in the first three and potentially the fourth as well. Just reading through Xconomy’s most popular stories today, 3 of them relate to PureTech companies. These companies seem to be of high interest to the industry leaders who affiliate with them and to the industry insiders who read Xconomy. One can always find something to be critical about especially if there’s an axe to grind.

    Get a life :-)

  • Pushga

    B_informatics_vp,
    The answer to your question is Daphne is only good at tooting her own horn. No successful exits and technologies. Maybe she’ll get lucky with those plastic eggs.

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