IBM, AMS and CCC

Tuesday morning I attended “Connecting Companies with Capital,” one of a series of events at IBM’s Innovation Center in Waltham designed to, well… connect companies with capital. This one was co-hosted with AMS and was focused on life sciences. The morning session consisted of networking (to which I was an hour late, thanks to the inability of New England drivers to remember from one week to the next how to drive in a little snow, and that a Statie giving out a ticket on the Pike is not cause to stop and rubberneck) and two great panels. The stage was set by IBMer Karen Parrish who provided an overview of their interest and commitment to life sciences, and provided some staggering statistics about waste and inefficiency in the “system,” which of course, represents tremendous opportunity. (They also gave a plug to their centennial celebration which you can get a flavor of from this YouTube video.)

The first panel on funding for all stages was moderated by my good friend and colleague, Dan Davis at AMS:

• Michael Greeley – General Partner, Flybridge Capital Partners
• Peter Fair – Principal, Velocity Financial Group
• Bernadette Michaud – Team Leader, Northeast Life Sciences Team, Silicon Valley Bank
• Peter Handrinos – Partner, WilmerHale;

and the second, on how to build your company, was moderated by my other good friend and colleague (yes, I have more than one), Lauren Celano, CEO of Propel Careers:

• Stuart Haber – CEO, Infoscitex Corporation
• Mike Webb – Executive Chairman, Virtify
• Lauri Halloran – Founder and CEO, Halloran Consulting Group
• Larry Wittenberg – Goodwin Procter, LLP, and the always entertaining
• Rob Jevon – Managing General Partner, Boston Millennia Partners.

So here are some of my takeaways.

Karen spoke about the importance of standards for a collaborative community. I immediately thought of the VHS/Beta battle, the CDMA/GSM debate and many others. I agree with her entirely – they’re necessary for collaborative interactions. But when there’s a profit motive involved, all bets are off. The biggest impediment to a true EMR system in my mind? the reluctance of hospital systems to relinquish patient data to another hospital system. What’s in it for them?

Michael spoke about the increase of Pharma deals as an exit for startup biotechs. A million years ago at Feinstein Partners, we used to sit around and speculate that Pharma would swoop in and pick up struggling biotechs every time the IPO window closed, which, in those days, was measured in months, not years. It never happened, but I agree with Michael and believe that as Pharma continues to shed their bloated and underperforming R&D, they will increasingly (finally) look to biotech for pipeline.

Bernadette talked about the increase in tranched deals. My thought was “why wouldn’t you?!” Every time we have an economic downturn, the screws get turned a little tighter, and become the new standard. We’re running a much tighter ship than we used to, and we’ll continue to get better. It’s the silver lining of a recession. Rob made a similar point about a prospect he went to visit but never did after discovering on arrival that they had valet parking. Although, having said that, if I hear one more person talk about capital efficiency, I’m going to hurl.

She also spoke about the need for a short path to a strategic deal, and speculated that Venture is returning to truly “venture” investing. I certainly hope so, because God knows we need someone to take some risk around here…

I asked the second panel about building teams after their endorsement of virtualized companies. Mike took me to task a bit, and I guess we’ll just have to disagree on this one. I’m all for unbloating companies, but in a startup particularly, I believe there’s immeasurable value in having a team that can have hallway conversations and work together in the same space and share an occasional beer after work. I agree that it’s different if the team has worked well together before, and may not need to be in the same physical location, but it can be very risky. Rob, at least, agreed, and shared his story of an investment that failed because it took a year to discover that, despite the overseas R&D team’s insistence that the prototype worked as intended, it was, in fact, trash.

Finally, we heard from Ron Newbower, CTO and Strategic Director of CIMIT after lunch. In a very approachable and entertaining style, he made some great comments about the overall state of healthcare, but I won’t elaborate except to point out my main takeaway. The reason the word “system” is in quotes at the end of the first paragraph above is that as Ron correctly points out, the healthcare system is not a system. He gave Air Traffic Control as an example of a system. It’s a great point. If left to individuals, there would be a lot more plane crashes. Maybe what we need is a similar approach in healthcare – a patient advocate role? Or primary care physician? Oh, wait. We tried that. Didn’t work because of profit and turf battles. Silly me.