Any biotech entrepreneur who’s ever spent time with their IT counterparts notices one thing in particular; how young these guys are. It’s a feature of the IT world that business tend to succeed or fail quickly, which means that a technology entrepreneur has several attempts at building a successful company over the course of their careers. This contrasts with the life science business, especially in Europe, where individuals typically join companies for the long haul. It’s by no means unusual to spend >10 years in one company, I did it myself, but the odds are against any one of these companies being successful. If you consider your professional career lasting 20-30 years, this doesn’t give you many attempts at ‘the one’.
It’s perhaps no surprise then that Index Ventures, a mixed IT/life science firm, has come up with an IT-like platform for life science entrepreneurs. The asset-centric platform (ACP) is discussed in detail [here, see link] but the key feature for a life science entrepreneur is that it’s easier and quicker to build and manage a project than it is a fully built-out company with all the trimmings. Projects that fail to live up to their billing are killed off quickly and the expected lifetime of a successful asset centric company is 3-4 years. This gives you way better odds than a full buildout option. The capital efficiency of these entities pay dividends to entrepreneurs too. Of course, it isn’t unusual to have a personal equity stake in companies. What is unusual is an alignment with your investors that’s only possible when you have a defined project with defined milestones and a reduced cash distance to an exit, short-circuiting the usual loading of dilution and ever more stringent liquidation preferences at each round of investment. Most entrepreneurs will have first-hand and bitter experience of boards with multiple agendas and the use of liquidation preferences to improve VC returns at the expense of their own. In my view, life is too short for this.
The cherry on the top is that these are fun companies to run. Anyone who’s worked in a large organization will know how much of your day gets consumed in meetings, HR stuff, PR, IR etc., management with a capital ‘M’. And don’t get me onto the subject of team-building exercises, which I’ve come to hate with a passion. In contrast, asset-centric companies are a breath of fresh air. They’re no walk in the park of course, you’re always running on a tightrope, but you really are the master of your own destiny. In my experience, people tend to confuse ‘pressure’ and ‘stress’; the biggest cause of stress is that of your fate being in the hands of someone or something else. Your job in an ACP is very clear; take this project from here to over there, no mission or vision statements necessary. For the last 30 years my motto has been ‘do good, have fun, make money’ and I can think of no better place to execute on that than in an asset centric company. PanGenetics, the prototype ACP we put together when we were experimenting with investment models bears this out. We were always under pressure but it was good pressure, the sort you could do something about. It was also a lot of fun, much like a full buildout company in the early days, before it got too big. Small teams, all hands to the pump, win or lose together and no room for politics. And it stays that way. This is worth getting up in the mornings for.
When I started hanging out with the people at Index Ventures in Geneva several years ago, the last thing on my mind was becoming a VC. Before starting my next company, I was trying to understand how VCs win, based on previous experience that the best deals were always those where each party in a deal wins. After a few months it became clear was that there was no shortage of ideas or cash (liberating the latter is always a mission, but there is no actual shortage of it). The real rate limiting ingredient, particularly in Europe, was the supply of serial entrepreneurs. I concluded that what European biotech needs was a ‘machine’ for making serial entrepreneurs. The ACP is that machine. This way, everybody wins.