Flagship VentureLabs, Creating and Spinning Out Cleantech and Life Sciences Startups for 10 Years, Takes the Veil Off
A number of innovative cleantech and life sciences startups we’ve written about have been funded and staffed by Cambridge, MA-based Flagship Ventures. But not all of these companies made traditional pitches to Flagship like they would any other investor. A large chunk of the firm’s portfolio includes companies that have been created, developed, and incubated directly at the firm, in a program called Flagship VentureLabs.
“It’s an activity we’ve done somewhat quietly and consistently for 10 years,” says Flagship Ventures co-founder, CEO, and managing partner Noubar Afeyan. But now the firm is being a bit more vocal on this aspect of its business, by more explicitly advertising Flagship VentureLabs as a differentiating feature of the firm, on its newly revamped website.
Flagship VentureLabs has created 24 companies in the life sciences and cleantech sectors, several of which have gone public, been acquired, or risen to notable success. Many of the names are well-known in the Boston life sciences and cleantech communities and beyond (more on that below).
“Our team are the founders, inventors of the technology, and play the initial management role in conceiving and launching the company,” says Afeyan. Ideas can come from Flagship members, outside academics, and from studying the intersection of technologies within existing portfolio companies, he says.
“We can launch a company, fill one unmet need, and in the process create another unmet need,” says Afeyan (an Xconomist). “That is another opportunity.”
Unlike other startup incubator programs, VentureLabs is looking more to academics than seasoned entrepreneurs to generate the ideas that will become portfolio companies. For the time that the startups are in VentureLabs—a period that can be as short as three to six months and as long as two years—the firm works on protecting and vetting the technology and business model, Afeyan says.
“We’re thinking about asking tough questions early in the company’s life,” says Afeyan.
As any venture incubator would, Flagship provides cash to companies as they develop in VentureLabs, but it also “attracts a syndicate of other investors,” Afeyan says. The firm has invested about $200 million in VentureLabs companies, which have raised roughly another $400 million from other investors. VentureLabs startups account for a sizeable chunk of the 62 startups Flagship has invested in throughout its history.
Check out this link for a more thorough list of the VentureLabs portfolio. Meanwhile, read below for information on the companies we’ve covered before:
—ModeRNA Therapeutics, started out of VentureLabs last summer, announced in October that it had developed a method for producing human induced pluripotent stem cells, which are adult cells reprogrammed to function like embryonic stem cells. The startup, whose research comes from Children’s Hospital Boston, was founded by scientists from the Harvard Stem Cell Institute, the Massachusetts General Hospital Cardiovascular Research Center, and MIT. The stem cells formed with ModeRNA’s method could create an array of cells useful in medicine, such as blood cells, neurons, and muscle cells.
—Joule Biotechnologies got its start in Flagship in 2007, but launched publicly in 2009. The Cambridge-based startup is tapping key elements of the photosynthesis process to make ethanol—at a price more competitive with fossil fuels. It collected a $30 million Series B round from Flagship and other investors last April, and in September got a U.S. patent for an engineered bacterium that produces liquid hydrocarbon fuels from sunlight and carbon dioxide.
—LS9 is working out of South San Francisco, and recently pocketed $30 million in equity-based funding, for its technology that modifies bacteria to convert sugars to fuels. The firm’s name is actually a nod to its beginnings at VentureLabs; it was the ninth company that started as part of the program.
—Adnexus Therapeutics of Waltham, MA, was acquired by Bristol-Myers Squibb (NYSE: BMY) in 2007, a month after filing for an $86 million IPO and two months after pulling in a $15.5 million Series C round. Flagship put the most money into the company, which makes biologic therapeutics derived from the protein fibronectin. Bristol-Myers paid a net $415 million in cash for Adnexus, with another $75 million committed for hitting milestones.
—Eleven Biotherapeutics emerged from stealth mode a year ago, raising $35 million in its Series A round. Third Rock Ventures also partnered in that funding round and supplied partners as interim executives for Eleven. The company is looking to engineer proteins for treating autoimmune diseases and blood clotting disorders.
—Seventh Sense Biosystems of Cambridge raised a $4.75 million Series A round in late 2008 from Flagship, Third Rock, and Polaris Venture Partners, putting the VentureLabs startup on the map. Flagship partner Doug Levinson is CEO and co-founder of the company, which is developing a device for the less painful collection of blood samples.
—Cambridge-based T2 Biosystems has raised about $31 million from Flagship and other investors to put toward its development of a portable diagnostic machine that aims to identify a range of biological substances, such as proteins, small molecules, viruses, and DNA—better, more quickly, and more cheaply than existing lab instruments.
—Helicos Biosciences got its start in 2003 and went public in 2007. The firm has had a rocky past few years. It was delisted from the NASDAQ last November because it was unable to meet listing requirements, “due to the state of its finances and near-term business prospects.” The Cambridge-based developer of gene sequencing instruments has also filed lawsuits against Menlo Park, CA-based Pacific Biosciences, San Diego-based Illumina, and Carlsbad, CA-based Life Technologies for patent infringement.
—Selventa (formerly named Genstruct) is developing computational methods for matching patients with the drugs best suited to them.
—Waltham-based BG Medicine (NASDAQ: BGMD) went public at $7 per share earlier this month, in its second attempt at an IPO. The diagnostics company started at VentureLabs in 2000, and last year won FDA approval for its test for measuring the progress of patients with chronic heart failure.