• What Life Science VCs Got Right In This Last Boom

    healthcareIt’s long been the case that life sciences investors don’t get the attention that their more traditional tech counterparts do. They’re underrepresented on lists of top investors in venture capital. They’re also remarkably underfunded, according to institutional investors (or limited partners) who back venture firms.

    It’s the “life sciences guys who are smart as hell,” says one LP who’s grown frustrated with some of the tech-focused firms he has backed because they’ve haven’t produced the cash-on-cash returns he expected, yet who’s exceedingly happy with bets on firms like Third Rock Ventures, a 10-year-old, Boston-based outfit that incubates biotech startups and which took many of those companies public before the IPO window largely slammed shut last fall.

    Taking companies public is “exactly what the tech guys should have been doing,” says this person, who represents a sizable endowment.

    Whether the LP is being completely fair is an open question. Certainly, in recent years, many more biotech startups have gone public than consumer or enterprise startups, with public investors seemingly drawn in part to unprecedented levels of innovation, including new machine therapies and other treatments for a variety of diseases that couldn’t be addressed earlier in time.

    However, even healthcare investors are quick to point out that they took so many companies public in part because they didn’t have much choice.

    More here.

  • Now You Can Swipe for an Online Notary, Too

    pat_kinsel_spindle-750On-demand services have taken off, much to the delight of pretty much everyone who uses them.

    Now we can add notary services to the list of conveniences we can call up with a tap on our iPhones thanks to Notarize, a months-old startup with offices in Alexandria, Va., and in Boston. It offers a 24-hour service that enables people in all 50 states to have their documents notarized remotely. [Yay.]

    If you’ve experienced the ridiculousness of having to track down a notary, this may all sound too good to be true. And it would have been until very recently. But in 2011, Virginia passed a bill allowing documents to be notarized remotely, using audio-video technology.

    Founder and CEO  Pat Kinsel discovered this law soon after learning on, while on vacation, that a brokerage couldn’t accept a document that he’d given to a notary who lost track of it.

    Kinsel — who cofounded an earlier company called Spindle that sold to Twitter and who is today also a venture partner with Polaris Partners — says that out of his own “intellectual curiosity, I started researching this in my spare time.”

    One of the things Kinsel learned? That there’s a $30 billion potential market opportunity to chase, given that an estimated one billion documents get notarized annually in the U.S. (Many are these are done for free, we should mention, but Notarize is charging $25 per document for its ease of use.)

    More here.

  • Polaris Co-Founder Terry McGuire on the Faddish Nature of Healthcare Investing

    terry_mcguireTerry McGuire, the cofounder of the venerable venture firm Polaris Partners, was recently in San Francisco from Boston. As we caught up over coffee at a bustling cafe, the longtime healthcare investor — whose firm divides its resources between healthcare and IT deals and writes checks from $50,000 to $60 million — shared where he’s finding the best deals right now and why he doubts VCs’ sudden interest in healthcare will last long. Our chat has been edited for length.

    Healthcare is hot again, with even consumer VCs like Bill Gurley taking an interest. How do you feel about that?

    It’s wonderful that healthcare is hot again, and as consumers of healthcare, we should be thrilled. Technology is going to allow us to live longer, happier lives. The opportunities are changing and at a speed that’s accelerating, which has an impact on drugs and devices; bringing them to market is improving.

    I sense a “but” coming.

    On the life sciences side, billion-dollar exits aren’t as common as on the tech side, where speed to market is fast, things are more capital efficient, and the virality of markets are much more interesting. So you go through these wonderful moments as now, when everyone is again a healthcare investor, but in three years, they won’t be.

    To me, the biggest question mark is how does pressure on health care spend impact healthcare investing. I think in some cases it’s going to be a liability and in some cases an opportunity. There’s only so much money to go around.

    So where do you see the best opportunities right now?

    I’m following the whole biologics space — antibodies, peptides, the genetics space more broadly. It’s become exciting. We just funded a company in the business of editing the genome, so finding ways to knock down something that the body is producing too much of, for example.

    We’re also interested in the delivery of biologics. Most drugs are taken orally, and if a pill is chemical-based, it can probably withstand your stomach acids. With biologics, our stomachs do a good job of chomping up everything that [passes through them]. If you can improve delivery – most [biologics today, like insulin] are delivered intravenously or through injections – that’s interesting.

    What about medical devices?

    They’re out of favor, so I personally think the next five or six years will be marked by interesting medical device plays. When a sector is out of favor, entrepreneurs tend to be incredibly disciplined and efficient and clever. They know capital isn’t free and that if they need to go out for capital, it’s going to be expensive because the prices are low.

    And medical devices will always be a part of our healthcare system, and they’re only going to become more intelligent and more functional. In five years, people will be saying, “I wish I had been in this and that device deal.”

    Four of Polaris’s life sciences companies were acquired last year and another four went public. But the market cooled toward biotechs toward year end. Do you have any concerns about 2014?

    I’m delighted that public buyers had a reawakening when it came to biotechnology. People clearly thought there was a lot of good stuff going on last year. I’d just want people to pace themselves. If things went wrong, it would be because expectations were high.

    Mood is a strange thing. People get negative, then something breaks open – a drug gets approved or earnings come out that are better than expected – and people say, “Why was I sitting on the sidelines?” and they race over. That kind of funny dynamic concerns me more than the companies themselves.

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