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Compaq s Life Science Investment Program Slowed, but Not Shelved

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A year and a half ago, Compaq Computer pledged to fertilize the ground for germinating genomics and bioinformatics startups with $100 million in direct and indirect investments. So far, it has funded two companies — Entelos and GeneProt — directly and has invested in the Applied Genomic Technology Fund, but there is more to come: “We are still talking to lots of interesting companies,” said Lionel Binns, manager of Compaq’s life sciences and material sciences group in the high-performance technical computing business.

Binns admitted that Compaq had expected to spend more by now, explaining that this is “a reflection on the state of the market, not on our readiness to actually make those investments.”

Although Compaq wants to help biotech companies get off the ground, he said, it is also looking for a return of its investment over a fixed length of time. He added that Compaq does not act as a lead investor in any of its funding efforts, nor does it seek a board seat.

Applicants for Compaq funding must match certain criteria: a completed first funding round, a well-known venture capital firm among its investors, an investment bank working with it, and other factors Binns declined to disclose.

Structural Genomix, for example, which formed a partnership with Compaq last fall, was “not ready to take an investment,” said Binns, adding that SGX is still among the top companies Compaq is considering for its investment program.

Once Compaq gives a funding candidate the green light, it encourages the firm to use Compaq equipment and services. Both Entelos and GeneProt decided to do so, but “we can’t hold anyone to ransom,” said Binns, noting that most companies seem to be happy to form a partnership.

Although no further investments are ready to be announced yet, Binns pointed out that part of the company’s $42.6 million contribution to the Buffalo Center of Excellence in Bioinformatics in New York is earmarked for venture capital investment in private biotechnology companies [BioInform 12-24-01].

— JK

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