is also an investor in about 40 early stage companies. “I really think that’s a significant part of their motivation in this, to have investors walk away with making money and then be reinvesting that money back into the Houston life sciences ecosystem.”
Fannin has picked up steam in the last year, launching five new companies, including biotechs developing treatments to combat asthma, inflammation-induced cancers, and autoimmune diseases. The firm has nearly doubled its number of portfolio companies to 12 since 2013.
Some Fannin companies are starting to get traction. A notable standout is Procyrion, which is developing a catheter-based circulatory pump device and has raised about $12.9 million through two funding rounds. (Fannin had originally put in $150,000 in seed money.)
In addition to incubating young companies, Fannin runs a sort of managerial training program through its internships, which are designed for engineers or researchers interested in the business side. “We now have had over 70 interns over the last five years, over 30 just in the last year, nine of whom are now full-time with Fannin or our portfolio companies,” Varadhachary says.
Chris Durst, a Rice University PhD in bioengineering, says he always had aspirations to do his own thing, to, as he says, “hang out my own shingle.” After meeting Linbeck, he joined Fannin as an intern in 2008.
During the 12 weeks of the program, Durst says he got experience in deal screening, how to negotiate deals, and corporate operational tasks.
“I had to write down two-thirds of what was discussed because I didn’t know what any of it meant,” recalls Durst, who today is a Fannin principal leading two portfolio companies. “I was given enough rope to hang myself but I was also given a safety net.”
Varadhachary says that the firm now has at least 10 people that are either already at the CEO point or could get there in the next couple of years. “This number has doubled in the last two years, and we expect to continue to grow it steadily,” he says.
While naturally Fannin wants commercially successful companies, Varadhachary says the firm’s philosophy entails “actively looking for ways to disprove the idea.”
The thinking, he says, is that the quicker the firm can realize viability, less time and money is wasted on a flawed product or business model. The project can be scrapped or they can use the lessons learned to tweak their thesis or move on to the next idea.
“In any business you have a 50 percent chance of failure, in life sciences it’s 90 percent,” Varadhachary says. “We believe it’s a skill set that has to be learned by practice.”
