Building the future and working in venture
By Thomas Vanderstichele, Managing Director of the Science Entrepreneur Club
Mid-move to Boston I caught up with Lucio Iannone, the Director of Venture Investments at Leaps by Bayer, a new initiative to drive breakthrough innovations across healthcare and agriculture. We discussed how Leaps by Bayer differentiates itself from other corporate VCs; his personal journey into investing and advice for entrepreneurs seeking to raise funds.
How did you become an investor and what advice can you give to scientists who are interested in becoming investors?
I never planned it. At the end of my PhD I already had a postdoc position at Harvard ready; however, there was something about the startup and biotech world that intrigued me. In particular, the opportunities to work on different projects simultaneously and learn about topics that weren’t part of my core expertise. If anyone wants to be part of the venture capitalist world my advice is to study how it works, what is needed to get in the game and try to get as much experience and exposure to this world. For example, I worked as an intern in a tech transfer office where I learnt how the ideas were generated and the importance of intellectual property. I would also recommend going to conferences and workshop; the VC world is always looking for smart people.
As an investor, what are the most important points you focus on when you review a company?
Personally, I would always look at the science and people. Meaning a robust (or intriguing) scientific case as well as a talented, determined and passionate founding team. Of course, the intellectual property is a key factor too, but this can be created after the investment.
In making investments do you take a different decision-making process to institutional investors or do the fundamentals remain the same?
For us, the first thing is that the idea must be intriguing. If it makes sense from a scientific point of view then the fundamentals are the same. Of course, a very deep due diligence is a must before investing. In the case of Leaps, the main criterion is that it must have a huge impact on the world, so we don’t care about market space etc. but we do care about what impact this technology can have on people worldwide.
How is Leaps by Bayer different from the crowd of life science investors across the world? What makes it special?
Leaps by Bayer is a unique approach in accessing breakthrough innovation. It is built for the specific purpose of tackling fundamental breakthrough solutions in the fields of health and nutrition with the help of new technologies. It’s an approach that helps Bayer access cutting-edge technologies which may impact on human health as well as crop science. The operating model is unique and stands for building new companies in collaboration with third parties such as biotech companies, venture capital funds or hedge funds.
What does Leaps by Bayer offer to startups that other VC funds cannot/do not offer?
I would say the bold attitude that we are bringing to the life sciences. We have a mindset of thinking big and not accepting the impossible. At Bayer, we have more than a 150 year history in innovation and core competencies across healthcare and agriculture and therefore we feel it is our responsibility to set a new standard and find the courage to begin where others resist. Additionally, the companies we invest in have access to Bayer’s expertise and technologies while remaining independent. We do not seek to exercise control over startups and do not own a majority share in our portfolio companies. We only want to give a helping hand and not take full control of the company decision making. We trust our founders to execute their vision. This is also another main difference between classic CVC and Leaps.
You have set yourself some very ambitious goals, ten in fact, curing cancer, building the next generation of high-performing crops and curing neurodegenerative disorders to name a few. How do you plan on achieving all of these?
Normal investment cycles in the venture capital world are often around two or three years, while research and development takes around 5-10 years to bring a final product to market. With Leaps we want to address this mismatch. Bayer makes substantial series A investments (traditionally the first round of financing for a startup company) so that the scientist have at least five years to entirely focus on the science and don’t have to raise additional financing rounds or even go public. Because Bayer seeks to be bold and innovative we choose to invest in high-risk, high-potential assets which will have a real impact on the world.
Earlier in your career you transitioned from working in Imperial College as a postdoctoral researcher to working at Silence Therapeutics. What was it like to move from academia into a startup?
A completely different world, especially if you are not working as a scientist in a biotech company. For researchers, the move is not too disorientating if you are working in the lab of the biotech company. In my case, I started at Silence as part of the translational team trying to look for new target related diseases. It was a completely different job, and I am glad I made the jump. The company went through several restructurings (still does apparently) but that gave me the opportunity to have a 360 degree view of a biotech company. Suddenly I was involved in IP, business development, science and finance. It really makes you learn how to build a company, a key skill for the VC job and I am glad that I tried biotech before getting into the VC world.
Having experience in both academia and the commercial side of science, what are the biggest differences in your opinion?
Probably the pace. Biotech has a faster speed, less opportunity to fail and try again and also faster career advancement if you are doing well. Academia is essential for finding new approaches, targets and technologies but the biotech world is essential for turning these advances into products.
If you look back at your career what are the pieces of advice you would give your younger self coming out of university?
Please get some basic financial skills! I had to study finance during the last year of my PhD while writing my thesis and finishing the last experiments; it was crazy! I would strongly recommend studying it early on if you are interested in working in venture.
What tips or recommendations would you give young scientists who are seeking to start their own companies?
Believe in yourself and be passionate about your company. If the idea is good someone will pick it up. Do your homework, study the market appetite as well as competitors. Talk to other entrepreneurs that have been in your situation before and they can connect you with very interesting and useful people. These people are your free university lecture - well not really free - a pint or coffee needs to be paid.
What advice would you give to startups seeking their first round of investment?
Think carefully about whom you ask money from. Whoever will give you the investment to start your company will be your partner for at least the next 2-3 years. This partnership can be a dream or a nightmare. It is essential that you do deep due diligence on them and talk to other companies in their portfolio who can provide you with feedback about their behaviour at board level. When presenting your idea, be honest on the issues that could come up and try to find a solution or just admit that you are aware of the problem and you don’t have a solution yet. You can also use the investor to help you! Be prepared for your pitch, enthusiasm can get their attention but if you are not prepared it is definitely not going to be a good experience. Personally, a good 3 min pitch (elevator pitch) on the idea can generate curiosity and then you want to know more. I suggest being confident but not arrogant. Prepare your pitch; do your homework and aim at investors that have the right skills to help you.
The golden triangle is ranked just behind Boston and San Francisco as the third leading global life sciences hub of the world. What do we need to do to catch up with these clusters?
Historically, the UK is known for its science. In London, there is a more conservative approach to entrepreneurship and investing while in the US there is more willingness to risk and fail but at least try. I believe the gap in terms of investment is getting smaller but the exit opportunities in the US are still making their hubs more successful for VC returns. Making bolder investments with the “go big or go home” mindset could close the gap. All the hubs have great academic institutions and smart people who can transform an idea into a product, therefore in the long run if the UK takes a less risk-averse mindset they can definitely close the gap even more. The golden triangle is definitely a good place to invest and work with brilliant minds. Hopefully, Brexit doesn’t ruin it.
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The Science Entrepreneur Club (SEC) is a non-profit organisation of curious minds that aims to explore and unite the life science ecosystem by educating, inspiring and connecting. We give scientific entrepreneurs a network and a platform to showcase their innovative technologies, find investors and accelerate their company.