In the glory of IPOs, it’s easy to forget how startups begin. What really goes on: seven days in the life of a genomics VC
By Meredith W. Salisbury
Richard Sloan hasn’t been in the genomics world for long, but that hasn’t stopped the Asian history major from plunging right in. A cofounder and managing partner of Sloan Ventures, he provides seed and early-stage funding for platform-technology companies, and genomics has him intrigued. “[The firm] dedicated over 75 percent of my time to the development and growth of new life sciences companies,” Sloan says. “I focus on genomics, proteomics, and bioinformatics.”
Sloan Ventures has 13 companies in its portfolio, five of them genomics-based. Compared to other VC firms, it’s a small number. “There’s a tension between quantity and quality,” Sloan says. “We are much more on the quality side.”
Sloan Ventures, based in Birmingham, Mich., evolved from an automotive invention brainstormed by older brother Jeff and developed by both in the late 1980s. “We thought we’d sit back and watch the royalties stream in,” says Sloan, who transferred from the University of Colorado to the University of Michigan to help Jeff. Instead, they faced an onslaught of calls from people with their own invention ideas, wondering how to strike it big.
By the mid-’90s, the brothers were working with start-up companies that had platform technologies. They initially gathered $1 million from angel investors to cover operating budget and development. Now, they facilitate $60 million and their two-man business has expanded to nine people, four of them partners.
Sloan’s pursuit of genomics was greatly boosted by Michigan’s recent $1 billion commitment to the life sciences industry. Sloan Ventures set up a Michigan Life Sciences Corridor Catalyst Fund, through which it manages $843,000 of state money and can give up to $150,000 to startups in fields such as genomics and proteomics.
Monday 10:05 p.m.: Sloan Ventures office, Birmingham, Michigan
After his normal workday from 8:30 in the morning to 6 or 7 in the evening, Sloan, 33, returns to the office around 9 or 10 most nights for another couple of hours of work, mostly reading business plans (“Read: get a life,” he jokes.) He gets so many plans that most get a quick skim through the cover letter before being passed to someone else or deep-sixed.
A crucial aspect to this filtering is keeping up with the industry. Sloan reads trade publications and books such as Gary Zweiger’s Transducing the Genome and never misses a chance to network. He’s a regular on the conference circuit, and hit Beyond Genome, BIO 2001, BioMed Expo, and the Chase H&Q investors’ conference this year. He also peruses project lists from the technology transfer offices at Michigan State, the University of Michigan, and Wayne State University for new investment possibilities.
“I don’t know if the man ever sleeps,” says David O’Hagan, CSO of Streamline Proteomics, who’s setting up his company with Sloan.
Tuesday 3:40 p.m.: Fairmont Hotel, San Francisco
Tatiana Nikolskaya’s giving a conference presentation on her startup GeneGo, and Sloan’s never far from her. This is a critical part of the due diligence phase as he decides whether to take GeneGo into the portfolio. “I wanted to see how she talked with customers,” he says. “I wanted to see how appealing her solution was to them.” He’s encouraged by the throng of people approaching Nikolskaya after her talk.
Trips like these can make all the difference to Sloan. He recalls a meeting he attended with one of his companies, Rubicon Genomics, which is based on DNA amplification and analysis technology. Rubicon pitched its idea to 12 scientists at a multibillion-dollar pharma, and it was their obvious interest that sent Sloan’s confidence level in the company soaring.
Wednesday 11:54 a.m.: Back at the office
It’s a normal workday — well, as close to normal as it gets. So far, Sloan’s fielded phone calls from a bioinformaticist with too much market interest in her product, a CEO whose CSO is threatening to quit, and someone else with $38,000 in credit card debt and a great technology idea. He’s also met with a gubernatorial candidate to work on his technology vision platform.
Every day, Sloan or someone from the firm is in touch with each of the portfolio companies. The most critical steps with a new company are development of the business plan and ensuring intellectual property. “The first thing that Richard needed to do was to take some cash and pay for the IP for our company,” says O’Hagan. Then Sloan focuses on the business plan — tearing apart an existing one or writing one from scratch.
Thursday 2:24 p.m.: Sloan Ventures board room, Birmingham
Sloan spends the day meeting with O’Hagan and the executive-search Whitney Group to discuss CEO recruitment. O’Hagan, whose scientific background provided the basis for Streamline Proteomics, recognizes that his lack of business savvy means he shouldn’t try to fill the CEO role. “I wouldn’t ask a CEO to come into the laboratory and amplify DNA,” he says.
Occasionally, Sloan says, genomics startups are unique in that their founders are the only people who can adequately explain their technology — and in those cases, the founders may start out as CEOs until a more experienced, better connected person can fill the position. More commonly, founders become CSOs, and Sloan might temporarily take the reins. “Many times you have to step up to the plate and fill the void,” he explains, “and as quickly as possible replace yourself.” Then, the search is on for the perfect CEO, either through a recruitment agency like Whitney Group or through what Sloan calls “guerrilla” networking. Getting high-quality people up to Michigan can be a problem, he concedes.
Friday 7:02 a.m.: Birmingham Yoga
Eight years ago, Sloan started doing yoga to relax and meditate. Now, from 6:30 to 7:45 every morning, he’s in an Astanga-style yoga class, training to become a full-fledged instructor through a six-week, 100-hour program.
Saturday 6:53 p.m.:WJR-AM 760 studio, Detroit
Since February, the Sloan brothers have co-hosted a weekly, hour-long radio show to encourage high-tech innovation and entrepreneurship. The last 15 minutes of the program are set aside for callers to pretend they have a potential investor trapped in an elevator for a minute while they give their dream pitch. Though the show can be heard in as many as 38 states, the brothers maintain a Michigan focus.
“There’s incredible research going on here, but we haven’t had the right culture or community support,” Sloan says of his home state. “We have world-class researchers here. What hasn’t been world-class is the entrepreneurship.”
Sunday 9:37 a.m.: At home, Birmingham
In a rare moment, Sloan is watching television — the only show he watches regularly is CBS’ “Sunday Morning.” It’s a day to relax and take stock. “I really like helping people get to a new place,” he says of the job he delights in. “It’s so gratifying to facilitate people’s endeavors.”