Agilent Ventures, the investment arm of semiconductor manufacturer and No. 2 microarray player Agilent, was an investor in a recent round of private financing completed by Genospectra (see p. 1). Eran Raber, an investment manager with Agilent Ventures who specializes in life sciences and chemical analysis, talked with BioArray News about the company’s investment strategy and the types of start-ups Agilent considers as potential investment targets.
Raber previously was a partner in Israeli venture capital firm Giza Venture Capital, and before that had spent a few years as an equity research analyst with Deutsche Bank Alex. Brown covering the information technology sector. He holds an undergraduate degree in physics and a master’s degree in electrical engineering.
When Agilent Ventures invests in a firm, what specifically is it looking for? Does the company have to be involved in a field that Agilent is in?
Yeah. That is correct. We are a strategic investor and we look for companies that are strategically aligned with Agilent. For example, in life sciences we focus on life science tools companies and a little bit on molecular diagnostics.
Is the investment done with an eye toward some sort of further collaboration?
Typically, when we invest we are able to identify with the company what could be a potential engagement in the future. At the time of the investment, in some cases it’s just too early for implementing an engagement. In some cases, we can immediately engage in exploring a potential relationship near-term. But there’s always an alignment in mind that both sides recognize and would like to pursue.
What is the level of collaboration between the Agilent Ventures unit and people within Agilent — say business development staff — in identifying companies to invest in?
I would say in 10 to 15 percent of the cases, either the business development group or someone inside Agilent makes an introduction of a company to Agilent Ventures. Sometimes they have a strong opinion about something we should look at. Sometimes it’s a more friendly type of introduction. In most cases, companies would either come directly to Agilent Ventures or we get an introduction from a venture capital group. We basic-ally go out to the main VCs in the different fields we are interested in — so I go to the life sciences VCs — and tell them what kind of opportunities we would be looking for, and what kind of areas. It’s a combination of being focused on certain areas, but at the same time being open and opportunistic, meaning sometimes you go to VCs and talk to them and tell them, ‘I look for companies that cover certain applications,’ and I get one or two leads. At the same time, I get an introduction to a company we were not considering necessarily earlier, but after learning what the company is doing, we can see a link to what Agilent has in mind. When we explore the link further, it could lead to some potential engagement.
What kind of factors do you look for in a firm when deciding to invest?
I look at two different aspects. The first one is the strategic, and under that, factors I would look for are the general space the company is operating in, technology, the link into what Agilent is doing or plans to do in the future — whether that’s platform compatibility or marketing application compatibility. Once the strategic side is identified, then we decide whether Agilent and that company are interested in that opportunity. Then we go beyond the strategic side and see how the company looks from a financial perspective. This is basically like any other financial VC, meaning it’s a due diligence that covers the technology, the market, the business opportunity, the financials, and everything else. I need to make sure that financially it’s a viable investment as well.
Earlier this year, Agilent invested in Genospectra, which already has products on the market. How important is it that a firm has a commercialized product when considering an investment?
I invested in Genospectra and Fortebio, which used to be called Aria Biosystems. Fortebio didn’t have a commercialized product when we invested, so everything was based on the future. Genospectra has an existing product, but what we’re interested in strategically is a much more longer-term engagement. So, the answer is no, we don’t need a [commercialized] product when we make the investment.
Is Agilent looking specifically at investing in life sciences, or is it any field in which the firm is involved?
We have three major portfolios — life sciences and chemical analysis is one of them, and there are two other investment managers, one of them is responsible for wireless communications and the one for wire-line communications. And we have other sub-areas for each of the investment managers. We have an alignment with the different business units of Agilent. So, our general interest is not just necessarily life sciences and chemical analysis, it goes beyond that.