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Medical Device and Package Integrity Testing Integr y Test g grity rity Exclusive Life Science Feature "Most of the team have been in venture capital for some time, so we all have our personal networks and brand as well," says Eckstein. "The venture business is still very personal; some deals we're looking at specifically because someone wants to work with a certain person on my team or vice versa. In a business like this, you pick up on ideas. We always go through an exercise prior to a deal: We look at all of our projects and identify white spaces — areas with medical need not yet addressed by VCs or entrepreneurs. We also have 'holy grail' projects in areas of huge medical need without current breakthrough innovation because of risk or lack of success through traditional approaches. In those areas, as in others, we bring a broad piece of science together and envision the best development path to patients." Eckstein marks a recent trend toward more investment at an early development stage. "More and more, we go directly to academia or the principal investigators and talk with them about the science, and if we like something, we will pay to repeat some of their experiments. We might even improve some of the critical experiments and create data sets that will help us make a decision, based on early-stage data, about whether we should go forward or invest more time on evaluation." SUPPORTING THE SURVIVABILITY OF FUNDING RECIPIENTS t Headspace and M.A.P. t Permeation O2, CO2, Moisture t Leak, Creep and Burst t Microbial Barrier (ISO 11607) t Odors and Volatiles Instruments and Testing Services Test. Measure. Analyze. 763.493.6370 Email: info@mocon.com www.mocon.com 34 LifeScienceLeader.com As a deal passes the selection stage and begins to coalesce into an investment relationship, Eckstein sees plenty of opportunity for reducing risk by ensuring the good health of the funded company. One of the points in his CV that helps account for his view is his membership in the Society of Kauffman Fellows. He explains, "Kauffman Fellows go about building businesses according to the old mentorship model, because venture capital is a business you cannot learn at the university; you learn by doing, by working together with people who know the business, who have been there before, and once you figure something out, you try to give back." The mentoring often begins with a business plan, a treatment that lays out all of the potential strengths and challenges of the company and how it will deal with them. Each company in the portfolio can use SR One's resources to improve its business model and operations, but the fund is also mentoring on a wider scale. It recently launched a business-plan competition in Europe named OneStart (www.oxbridgebiotech.com/onestart), offering a top prize of £100,000, plus free lab space and IP/legal advice. Mentoring extends beyond the business plan to help solve key challenges that are strategic, technical, and operational. For example, life sciences start-ups often run afoul of costly problems in manufacturing scale-up and supply of product for clinical trials. SR One can tap GSK's manufacturing expertise as needed to help. A TWO-WAY WINDOW FOR INVESTOR & INVESTMENT SEEKER Elaborating on the reasons for SR One's and other pharma funds' existence, Eckstein explains the implications of his original Big Pharma "window on innovation" analogy. "If you want to tap into the best minds, it doesn't matter where they are; you go there and try to work with them. Whatever knowledge you gain through conversation, you can pass along to someone else, and that's the best way to find what you're looking for." At the same time, Eckstein is eager to get a message to those who are looking in through the investor's window: "If your idea is sound, and you're willing to get advice and work together with people, you will get funded. I'm very optimistic right now. There are always great ideas out there. We have learned a lot through all our pains, and it is a fantastic time right now for life sciences investment." If nothing else, the note of optimism in an otherwise bleak VC environment might prove as stimulating to innovation as the investment itself. If the pharma-supported funds succeed in breathing new life into the industry, it will be by delivering money and mentoring where they are most lacking and needed — those brave little start-ups that could change the world. April 2013