of continuing the search for the cutting edge, we need to re-think the numbers of biotech investment. The true cost of biotech capital must embrace the realities that it is time-consuming and expensive to back a raw, but promising idea. This means no more chasing the pharmaceutical also-rans or remakes. Consider your recent movie going experiences. Remakes abound and traditionally bring in abysmal returns, as well as leaving the consumer dissatisfied: “The Women” (1939, 2008); “Invasion of the Body Snatchers” (1956, 1978, 2003, and 2007); “Godzilla” (Japanese original to American spin off generated 28 total films).
Slightly better or slightly different doesn’t work for generating return on investment. We need to continue the progress of finding and backing newer, bigger, game-changing ideas. And this was exactly the topic of discussion at my second module in the Kauffman Center for Venture Education program last month, which introduced us to the culminating effort of our two-year training: The Kauffman Field Project. Going solo or working in teams, we are offered the opportunity to ideate, create or validate any idea we believe salient to VC. If you read Jens Eckstein’s Xconomy post on the Kauffman Summit in Japan, then you have unwittingly met a Kauffman Field Project that went from idea to a global summit. Audacious, ambitious, heartfelt and passionate – these projects are a chance to tilt at a few windmills and maybe even bag a few giants.
With one-third of the Kauffman Fellows in the foundation’s 14th class operating as sole Life Sciences investors, most of our Kauffman Field Project ideas are keenly focused on building new models for biotech investing. The bar is high; these new models must be as innovative as the very scientific technology they hope to support. We figure it’s what we have to do to keep capital interested in the sector and balance the nay-saying turmoil.
Interestingly, our nascent ideas in progress have some commonalities, including the idea of going further on less. Making capital work, and in turn, working ourselves more closely with the idea and the entrepreneur. Our ideas read a bit like the success stories from thirty years ago (Immunex) or one hundred years ago (Bell, not Tesla), and the common thread is a return to so-called Old School VC. We need to build it and believe in it. Not ignorant of the bottom line, we need to imagine and invent new ways to keep (not make) biotechnology profitable and attractive to limited partners, at pension funds and university endowments who make VC really go.
But the drive for returns alone is not enough. To paraphrase the author David Foster Wallace, from his commencement speech at Kenyon College, one must know what one worships: ‘Worship money alone, you die.’ There must be a greater cause to drive us forth once more into the breach. So find it. Build it. And Own it.
Is the sky falling? It already fell. And what do I see when I look up? Blue sky. What’s the point of seeing anything else?
