Getting Initial Money to Go from Nothing to Something

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Getting Initial Money to go from Nothing to
Something
Jeff Behrens Head of Business Operations Biogen
Idec Innovation Incubator 10/2/2007
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My 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, MITs Venture
  Mentoring Service, local Boston entrepreneurial
  scene
• Board of Finale Restaurants
• Head of Business Operations for BI3

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The 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, 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- stage
companies

• Whereas the bulk of angel investment in the past
  was largely in the seed and startup stage, this
  amount has dropped significantly

Source University of New Hampshire's Center for
Venture Research
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VC activity is also diminishing in early-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 (investments
• Typically 4-6 new companies are funded per
  partner per fund

Significant trend towards larger funds since 1996

100M-500M
500M
Source Nature Biotechnology
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Funding alternatives Other forms of support for
early-stage translational medical research
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Biogen IdecA 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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How Biogen Invests Externally

• Collaborative Inquiry
• Grants to academic researchers
• Early discovery stage
• Not milestone-driven
• Typically no strings attached
• No direct impact on pipeline

• 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

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Biogen Idec Innovation Incubator (BI3)Biogens
Newest External Innovation Effort

• 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 RD plan
• Directly contributes to the companys RD pipeline

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What is bi3?

• bi3s 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
Funding/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!

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Contact Info

• jeff.behrens_at_biogenidec.com
• www.biogenidec.com/bi3
• 617 914-7152