It goes without saying that the
University City Science Center is home to many innovative and promising healthcare startups. But as Brenda Gavin, a founding partner of
Quaker Partners Management, a Philadelphia-based healthcare investment firm, reminds entrepreneurs, it takes more than a good idea to win funding in a competitive investment climate.
Gavin answered questions last month at
Quorum’s "Coffee & Capital" event and offered this concrete advice.
"Both established companies and startup companies should do their homework and know their customer," she said. "That is, they should know as much as possible about the fund they are pitching: When was the fund established? What types of companies are in their current portfolio? What is the previous experience of the partners? How much capital do they have under management? What is their preferred company stage for investment? Don’t waste time pitching a fund when your research indicates they are unlikely to invest.
"All entrepreneurs should remember that most venture funds are limited partnerships with a 10-year life," she added. "This means that a fund must assemble its portfolio, grow value in the companies and get to a profitable exit in 10 years. Most funds invest in companies during the first five years of their life, and harvest in the second five years. So, if a company is a very early-stage discovery company, it is unlikely a fund that is over five years old will invest -- it is unlikely the fund will get to the profitable exit in five years. Entrepreneurs should definitely explore investment from corporate venture funds. They are typically not limited partnerships, so do not have the 10-year limitation."
Since its own founding in 2002, Quaker has invested in dozens of innovative, high-impact healthcare companies at all stages of development and in subsectors including pharmaceuticals, biotechnology, healthcare services, and medical technologies such as devices, tools and human diagnostics. Quaker manages over $700 million in committed capital, and is currently investing its second fund.
Quaker typically invests between $5 million and $25 million in each company, with a focus on the East Coast. Its portfolio includes Science Center alum
BioRexis, which was acquired by Pfizer in 2007 only five years after its establishment.
From her vantage point at Quaker’s Cira Centre headquarters, Gavin believes that Philadelphia’s venture capital climate still has room to grow.
"There is an abundance of scientific expertise and pharmaceutical development talent in this region," she enthuses. "Unfortunately, there is a shortage of entrepreneurial leadership talent and local venture capital for later stage investment. On the plus side, there is substantial early stage investment from
Ben Franklin,
BioAdvance and the Science Center. These groups are unique to this area -- in addition to their capital, they bring contacts and mentoring. So while our climate is not as robust as that in Boston, the raw materials are here, and I am optimistic that we will see more companies growing here."
WRITER IN RESIDENCE is a partnership between the University City Science Center and Flying Kite Media that embeds a reporter on-site at 3711 Market Street. The resulting coverage will provide an inside look at the most intriguing companies, discoveries and technological innovations coming out of this essential Philadelphia institution.