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Jeff BehrensHead of Business Operations
Biogen Idec Innovation Incubator10/2/2007
Getting Initial Money to go from Nothing to Something
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My BackgroundMy Background
• Founder, The Telluride Group, Inc.– Managed IT services for biotech and VC– Sold in 2003
• Back to school– Harvard-MIT Biomedical Enterprise Program
• Consulting work with several venture firms
• Join Biogen Idec in 2006 to help form BI3
• Active with Launchpad Angels, MIT’s Venture Mentoring Service, local Boston entrepreneurial “scene”
• Board of Finale Restaurants
• Head of Business Operations for BI3
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The Telluride Group StoryThe Telluride Group Story
• Remotely managed IT outsourcing services = “MSP”
• Founded ’95; bootstrapped
• 750k angel funding ’99
• Sold in 2003 to mindSHIFT (funded by Fidelity)– 35 EEs, ~1700 seats managed, ~40 clients
• Key lessons– Profitable every year but 1
– Used bank debt and angel
– Avoided VC; with VC, exit would have been disappointing
– Hard to grow service company fast
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Telluride, Banks, AngelsTelluride, Banks, Angels
• Banks– Credit cards to no personal guarantee in 5 years
– Cycles of lending/excitement and tightening of credit
– Always ask and network; better deals are out there
– Debt, used carefully, is much cheaper than equity!
• Angels– Advisors became angels
– Ask for advice, get $. (and the reverse!)
– Angel groups – good and bad
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Angel funding is moving away from early- Angel funding is moving away from early- stage companiesstage companies
• Whereas the bulk of angel investment in the past was largely in the seed and startup stage, this amount has dropped significantly
Angel investments into seed and startup-stage companies
80%
45%
0%
20%
40%
60%
80%
100%
2003 2006
Source: University of New Hampshire's Center for Venture Research
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VC activity is also diminishing in VC activity is also diminishing in early-stage dealsearly-stage deals
• Trend towards larger venture funds ($500M+), BUT the number of investments per fund is staying constant due to management bandwidth limitations
• More capital per deal means partners cannot justify seed (<$1M) or early-stage ($1-$5M) investments
– Typically 4-6 new companies are funded per partner per fund
<$100M $100M-$500M >$500M
Source: Nature Biotechnology
Significant trend towards larger funds since 1996
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Funding alternatives: Other forms of support Funding alternatives: Other forms of support for early-stage translational medical researchfor early-stage translational medical research
Source Description
Angel Investors Traditionally one of the largest sources of funding for seed-stage ventures of funding for seed-stage ventures
Traditional Foundations Provide small amounts of funding to support initial research in the form of reimbursable grants with expectation of royalties on potential sales
Venture Philanthropist Organizations (VPOs)
Traditional venture capital investment model applied to social entrepreneurship
University seed funds University funds applied to increasing the commercial value of university IP and advancing technologies to the market
Local/regional seed funds Early-stage funding support for economic development
SBIR/STTR DoD grants for early-stage technology R&D projects with commercial applications that also serve a DoD need
Corporate partnerships Partnerships between industry and academic or mature companies and startups to support early-stage R&D activities
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Biogen Idec:Biogen Idec:A Global Biopharmaceutical CompanyA Global Biopharmaceutical Company
• Formed in 2003 through merger of Biogen Inc. and Idec Pharmaceuticals. 3,700+ employees
• Headquartered inCambridge, MA.Research centersin San Diego, CAand Cambridge, MA
• 2 blockbusters
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Collaborative Inquiry• Grants to academic
researchers
• Early discovery stage
• Not milestone-driven
• Typically “no strings attached”
• No direct impact on pipeline
How Biogen Invests ExternallyHow Biogen Invests Externally
New Ventures• Investments in biotech
opportunities in preclinical or Phase 1
• Typically in syndicates with other VCs
• Strategic investments with indirect impact on pipeline
Business Development• Focused on Phase 2
and 3 products
• Immediate contribution to pipeline
• Lower risk, shorter timelines makes this approach very attractive…
• …but is also highly competitive
SRAs, CI
Biology Drug Disc Preclinical Ph 1 Ph 2 Ph 3
BDNV
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• Targets innovative lead-stage product candidates with clear path toward R-to-D transition or rapid proof-of-concept in the clinic
• Provides funding and entrepreneurial environment to efficiently execute aggressive R&D plan
• Directly contributes to the company’s R&D pipeline
Biogen Idec Innovation Incubator (Biogen Idec Innovation Incubator (BI3BI3):):Biogen’s Newest External Innovation EffortBiogen’s Newest External Innovation Effort
SRAs, CI
Biology Drug Disc Preclinical Ph 1 Ph 2 Ph 3
BDNV
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What is What is bibi33??
• bi3’s goal is to create an environment that allows entrepreneurially minded scientists to convert novel biological insight rapidly into life-saving and life-changing therapeutics
• To this end, bi3 provides a unique and comprehensive set of resources
• We get equity & an option
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Approaching Larger Companies for Approaching Larger Companies for Funding/PartnershipsFunding/Partnerships
• Multiple POCs are essential/multiple routes in
• Try to learn what the larger company cares about/believes (not easy!)
• Networking within a large company is as much effort as broad networking in general
• Innovation matters to smart large companies and they are willing to pay for it!
