Seven Years Into Personalized Medicine Foray, Mohr Davidow Stays Patient, Keeps Betting on Big Idea

7/22/10Follow @xconomy

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making any predictions about exits for any of them, but he said the field still looks promising enough for the firm to keep putting money into it.

“There’s always a lag between vision and reality. We’re in the phase of moving toward the reality,” Ericson says.

The movement toward personalized medicine isn’t going to flip like a switch, like, say, when everybody seemed to start using e-mail or ATMs overnight. It’s more likely that personalized medicine will catch on in certain market segments first, like breast cancer, where the need is acute and the products have been in the game longer. Tethys is far along with a commercial product to predict diabetes risk, and it should begin to capture much bigger market share as awareness climbs over the coming years. Other fields may take a few years, or even a decade, for the evidence to emerge to support the value of some of the new personalized tests to the healthcare system.

“It’s hard to generalize, but 10 years from now, I think it will be widespread,” Ericson says.

To hear Ericson talk, it’s OK to wait. Mohr Davidow, which has $2 billion under management in nine funds, still has about half of the capital left to invest from its most recent fund of almost $700 million, Ericson says. While a lot of VCs are clearly shooting for lower-risk, more incremental, short-term bets that could help improve their return-on-investment stats when it’s time to raise their next fund, Mohr Davidow’s latest investments don’t appear to be following that trend. The firm has decided it will stick with the idea that if it can get in early with a groundbreaking field of technology like personalized medicine, it will be rewarded.

“It’s who we are and it’s in our DNA,” Ericson says. “If you try to switch to late stage consumer e-commerce, it won’t work well. We are who we are. We want to be early-stage investors.”

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