BVE Blogs
Life Sciences Venture Capital
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Psychedelics seem to be a permanent fixture in the headlines and don’t appear to be going anywhere soon. From former Texas Governor Rick Perry to NFL quarterback Aaron Rodgers, why are so many public figures touting the benefits of taking mushrooms?
Considering psychedelic drugs are a Schedule I controlled substance, and long associated with counterculture, to the casual observer, it would seem that a “psychedelics renaissance” has come out of nowhere. The answer, of course, is more nuanced and has been a long time in the making.
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While we are seeing a number of favorable activities like those mentioned above, investing in start ups is risky business, and not for the inexperienced. As investors we all need to go beyond the headlines, no matter how exciting. Investing in disruptions requires an institutional investment rigor designed to flush out interesting ideas, and back the founders actually building the companies of the future. Our Predictions for 2023 cover three trends prospective and current investors should expect.
See our Predictions -
Ross O’Brien (Founding Managing Partner), Greg McKee (Journey Life Sciences CEO), and Derrick Mayes (Managing Partner) had the opportunity to visit UC San Diego’s Altman Clinical and Translational Research Institute which is a leader in the study of psychedelic and cannabinoid drugs for the treatment of a range of medical conditions.
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The presence of cannabinoid and psychedelic focused companies at this year’s conference was palpable as we had the opportunity to meet with the likes of Atai, Cannaformatics, Filament, Numinus, Sensorium, (a notable BVE portfolio company), Tryp, and many others, including a handful of investors and strategics contemplating a move into the space.
By contrast, attending the 15th annual “state of play” of the Cell and Gene Therapy Alliance – now in its 15th year and its first drug approvals on the horizon, the cannabinoid and psychedelic space felt like the Rebel Alliance, about to take on Vader’s Death Star.
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In Peter Thiel and Blake Masters best seller Zero to One, Mr. Thiel shares the question he likes to ask in job interviews: “what important truth do very few people agree with you on?”. He goes on to explain that what he is looking for is contrarian thinking whereby most people believe in X, yet the truth is actually the opposite (or Y represents the real opportunity).
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Venture Capital “VC” is a concept common to entrepreneurship. Yet it astonishes me how simplistically entrepreneurs and investors alike perceive VC investing to be. Just think about how many people you know who have made personal investments in early stage private companies with the hope of striking a major return.
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“Not all readers are leaders, but all leaders are readers.” - Harry S Truman.
A healthy consumption of reading is one of the few habits that every successful person, from athletes, to artists, to scientists and entrepreneurs swear by. When it comes to entrepreneurship and leadership, there are a number of essential reads.
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Entrepreneur Capital as a contemporary adaptation for venture capital and how this concept can help founders today
After almost two decades spent financing startups and early-stage ventures, it occurred to me that we use many different phrases and concepts without much deeper thought and they become part of the standard lexicon of the founders and investors they work with. Venture Capital, or VC, is more nuanced than one might first think. I started to look through the other end of the telescope and, as an investor, wanted to adopt a more founder-focused perspective to how startups are successfully funded.
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I'm not the smartest fellow in the world, but I can sure pick smart colleagues. - Franklin D. Roosevelt
As the year winds down, my team and I are assessing 2020 and finalizing our goals for Q1 of 2021. Throughout this process, something occurred to me. I have worked with each core team member for a period of 5-10 years, which totals ~30+ years of relationships. My firm, like others, has experienced its fair share of turnover, but the core team remains the same dedicated, high-achieving individuals. How did we get here? I've narrowed it down to two key actions and one recommendation.
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Who you choose to share your time and resources with has never been more important. In part I of my December journal, I shared the tremendous value I have found through empowering my team. Key relationships saw us through this year and in the year ahead we plan to nurture those relationships and look to partner with those who meet our high standards. How do we plan to accomplish this? I’ve narrowed it down to two key concepts and one recommendation.
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Venture capital is a long-term investment strategy that is designed to generate extraordinary returns and outperform other investment strategies. The equity that an investor owns through investing is illiquid, meaning it cannot be readily bought or sold as there is no explicit marketplace to do so. Therefore, in order to monetize the investment, investors seek to capture equity appreciation over time and extract that value creation through a liquidity event, also known as the exit strategy.
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Any leader who has started and or taken the reins of an emerging business knows that there is never enough time in the day to complete all the tasks that should, or could, be done. One commonly overlooked area is human resources, and in particular, the allocation of sufficient time and effort to work with employees on their roles and responsibilities. If disregarded, this can lead to duplicative efforts, missed targets and low morale. However, a bit of time and attention to this key area and founders can a make significant, positive impact that aligns teams around core objectives that drive productivity.
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It is common for entrepreneurs to find themselves in a reactionary role when seeking investment. It is natural to want to please an investor and cater to their every request. It is also common for businesses to fail at the 11th hour because they cannot continue without the financing that a potential investor can provide. Thus, there can be an inherent imbalance when the investor holds the keys to a critical resource.
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Observations from MJBizCon Las Vegas 2019
As we wrap up 2019, we are delighted to have officially launched Cannabis Capital at the MJBizCon conference in Las Vegas. There was a record attendance this year and it proved to be an enlightening experience. There were two main themes that we came away thinking about. Firstly, that the capital markets are in turmoil, which is predicted to continue for some time. Secondly, that the exhibit hall was packed with companies that are exceedingly similar. We have known for some while that pubic market valuations were being driven by the irrational exuberance of investors and a reset will over time be a good thing for the sector. In the interim though, capital will continue to be scarce in particular for private companies [the thoughts here may need to be tied together more as irrational exuberance would imply too much capital chasing too few deals not a scarcity].
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We recently co-hosted a roundtable on investing in Cannabis with Duane Morris and HLB Gravier in Miami. In attendance were 20+ prominent family offices. Our discussion was lively and engaging, with a cross section of experiences represented. There were investors who have already made cannabis investments or are thinking about the ways to enter the market, and others who had taken the approach to invest in one single operating company.
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While researching and conducting interviews for my book Cannabis Capital, I interviewed over a dozen cannabis investors and found that of the 125 or so investors, there are really only about 30 true venture capital funds investing in Cannabis today.
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In Peter Thiel and Blake Masters best seller “Zero to One”, Mr. Thiel shares the question he likes to ask in job interviews: “what important truth do very few people agree with you on?”. He goes on to explain that what he is looking for is contrarian thinking whereby most people believe in X, yet the truth is actually the opposite. As the research for Cannabis Capital developed, it struck me that everyone is calling cannabis an industry, when in fact it is far greater in terms of influence, and impact.
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While I was in the research phase of writing “Cannabis Capital” something stood out that seemed out of place. Referring to cannabis as an “industry” no long fit as I explored the overall impact that the legalization of cannabis will have in society and business. The initial purpose for the book was to provide a detailed resource for entrepreneurs to help them be more successful in raising the capital they need. The disconnect between companies that secure funding and those that don’t, comes down to many factors.
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Less than 1 in 300 business plans ever receive funding. Yet all 300 of those companies believe they are a good investment opportunity. This disconnect is even more evident in the world of cannabis investing where there are very few explicit sources of investment and a massive wave of entrepreneurial startups.
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As a venture capital investor, I have spent the better part of my career negotiating. It is an integral part of the investment process. And yet, I have found this to be one of the most misunderstood components of any capital raise endeavor. Startup TV series, of which I have an insider’s point of view, would have you think that every VC is a shark out for their bottom line only, which is quite misleading.
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Risk is inherent in everything we do. But what are we actually saying when we talk about “risk” in the context of entrepreneurship? Is the accepted assumption that entrepreneurs have a high tolerance for risk accurate? Can the risk be defined? Is it the risk of the business failing, or the founders failing? What informs how we think about risk, and how can we better manage it?
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Dear Founders, today is Groundhog day and it would seem that Punxsutawney Phil, the all knowing prognosticator of precipitation, the swami of the seasons, has indeed seen his shadow and therefore will return to his rodent rotunda and hide out for the next 6 weeks. And what is the lesson in all this clever alliteration?
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Our venture capital fund has developed an investment thesis based the Life Sciences Verticals of the cannabis economy. After years of investing in the space, and pouring over the data, we believe that from the transformation of healthcare, AgTech and Therapeutics, will emerge the most dynamic, and impactful areas for investment, entrepreneurship, innovation, and investment.
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Venture Capital “VC” is a concept common to entrepreneurship. Yet it astonishes me how simplistically entrepreneurs and investors alike perceive VC investing to be. Just think about how many people you know who have made personal investments in early stage private companies with the hope of striking a major return.
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I think it’s fair to say we find ourselves in unprecedented times. We are on the tailend (hopefully) of a global health crisis, geopolitical instability and war, and the U.S. is experiencing the swing of the economic pendulum. In the short life of this decade, we have been challenged by unforeseen paradoxes. As of this post, unemployment sits at 3.6% and there are over 11 million job openings, meaning there are literally more jobs than people to fill them.