ARCH Venture Partners is behind companies such as Illumina, Alnylam, Unity Biotechnology, Receptos, Agios Pharmaceuticals, Grail, Bluebird, and many more. This interview is part of the UCSF entrepreneurship series. In it, Rob talks about
- how ARCH got started (by a university which was not very successful at commercializing its research);
- how he got into venture capital (with a lot of stamina);
- his biggest criticism of venture capital (not taking enough risk);
- how early diagnosis will completely change the pharma business model;
- and much more
Very interesting is the part that discusses how opportunities are evaluated, namely, by the quality of the science and the “size” of the clinical problem. No market forecasting, no discussions about exit opportunities, no concerns about building a balanced portfolio of companies, and no NPV calculations. The same goes for valuations, ARCH simply wants to know how much they need to own (to have a decent return) and the “size” of the clinical problem. Thus, they can be extremely quick in closing. In one example, Rob talks about how he invested 25 million USD in a company within six days of becoming acquainted with it.
When starting a company Rob’s key recommendations
According to Rob, when thinking about starting a company it is important to identify the key questions that need to be answered as well as the data required to reach a value inflection point to then be able to raise outside venture money -I dare to say this is exactly what we are doing with BaseLaunch, namely, helping to de-risk early science to then be able to grow the company.
So, a highly recommended interview with many funny anecdotes, including one about ARCH losing money investing in IT in the 90s “in an area where you must have been an idiot not to make any money”. Click for the Video
Further information on Rob Nelson
A must read is the Forbes piece on Rob Nelson “Inside The Brain Of Biotech’s Top Venture Capitalist” by Matthew Herper
Text by Stephan