Any fair assessment of Seattle biotech over the past five years would have to count Accelerator as one of the bright spots. But the past year or so has been unusually quiet at the biotech startup incubator. Accelerator recently endured a six-month dry spell when it didn’t see any exciting new investment ideas enter its pipeline, according to CEO Carl Weissman.
“We can survive these kind of times easily, because what the board really expects is that the quality [of investments] never goes down,” Weissman said when I stopped by his office on Seattle’s Eastlake Avenue last week. “We don’t have to lower our standards on quality in order to satisfy a quota.”
For those who aren’t familiar, Accelerator is one of the central players in the local life sciences innovation scene. Biotech pioneer Leroy Hood, along with a number of prominent venture firms, founded Accelerator in 2003 to provide some lab space and operational support for scientific entrepreneurs with potentially groundbreaking ideas that need a little more proof before they can secure serious venture dollars. Accelerator has raised a total of $43.8 million, some of which it has put to work in 10 startups so far. The roster includes four Seattle companies that have emerged and raised a combined $144 million since graduating—VLST, Theraclone Sciences, Allozyne, and Integrated Diagnostics.
That last company, known as InDi for short, is the most recent startup with roots at Accelerator to score venture bucks. It was known as Homestead Clinical in a previous incarnation, and it didn’t win follow-on financing from Accelerator’s primary VC backers, but it emerged in October anyway with a $30 million commitment from outside VCs largely because of Hood’s “force of will,” Weissman says.
OK, so InDi may be another notch in the Accelerator belt. But I wondered about the other three startups that were founded at Accelerator in the past two years—PharmSelex (formerly known as GPC-Rx) in June 2008, Mirina in August 2008, and Xori in May of 2009. All three are still operating, and Weissman wouldn’t say much about their future prospects other than, “We’re really pleased with the progress from two out of the three.”
So we’ll have to sit tight a while longer to see whether any of those three emerge, or fade away. What was more surprising to me is what he said about the slowdown in the flow of new ideas for companies. From about June through December, “there wasn’t much,” in the way of exciting new scientific ideas coming in to Accelerator, Weissman says, even though it has historically been inundated with pitches. That improved a bit last month, when Accelerator found three new ideas that it considered “very exciting,” Weissman says.
The feast-and-famine cycle at Accelerator “is to be expected,” he says, and that is why the organization doesn’t have a hard quota for the number of investments it needs to make each year. The Accelerator received some added runway back in November 2008 when it received an additional $4.5 million investment from PPD, the giant contract research organization. That means it has enough capital on hand to finance at least two more startups without seeking any new capital until 2011, Weissman says.
But before I left, Weissman assured me that he’s bullish about Accelerator’s outlook for 2010. It’s likely Accelerator will make two or three more investments in startups this year, compared with just one in 2009. He also made some cryptic comments about how the new investments might represent a shift toward slightly later, or earlier, stages of investment than Accelerator has traditionally focused on. He wasn’t more specific than that.
Weissman also wanted to address some of the rumors he’s heard from people who wonder if he’s ready to walk away from Accelerator, now that’s he’s a full-time managing director with Kirkland, WA-based OVP Venture Partners. His current arrangement calls for him to spend 60 percent of his time at Accelerator, which is a natural overlap with his OVP duties, because OVP is one of the venture firms that backs Accelerator, he says.
David Schubert, the president and chief business officer at Accelerator, has shouldered some more day-to-day management responsibility when Weissman is away, and there’s no plan to change that arrangement, Weissman says.
“I’m here for the long-term,” at both Accelerator and OVP, Weissman says.