The Funding Dilemma for Bio Innovators

The Funding Dilemma for Bio Innovators

Bio-innovators and entrepreneurs are often frustrated that investors don’t see the scope of biological opportunity. The industry’s funding models remain in flux. With appetite for risk unpredictable and a landscape that’s often unexplored, what’s a startup to do? How are big companies responding? In this video, Paul Gurney of McKinsey & Company moderates a discussion with Beth Seidenberg of Kleiner Perkins Caufield & Byers, Lindy Fishburne of Breakout Labs and the Thiel Foundation, and Steve Jurvetson of Draper Fisher Jurvetson and Synthetic Genomics, Inc.

Video Transcript Below

Gurney: All right, well hello and welcome to The Funding Dilemma. My name is Paul Gurney and I’m really excited to be moderating this very special panel. We’ve got a tremendous group of people here today to help us explore one of the most crucial areas of this whole topic, which is how do you take a bold, exciting new idea and move it to reality? And it’s kind of the Jerry McGuire moment of ‘show me the money.’

So let me start by introducing our panel and then we’ll jump right into the questions. On your far right is Steve Jurvetson, and Steve is known for being first. He was the first investor in Hotmail, and I remember jealously seeing a video of him driving the very first Tesla model S off the lot. He’s got serial number one. So, test drives after today. He’s Elon Musk’s go-to guy. So when Elon Musk was in the depths, the darkest moments at SpaceX, Steve is the person that he looked to. There’s a bit of a limit to Steve’s risk-taking, it doesn’t sound like he’s going to be number one on the flight, the first civilian flight. But maybe number two?

Jurvetson: That’s worth waiting for, the second flight.

Gurney: He sits on the board of Craig Ventor’s Synthetic Genomics, and works closely with lots of companies looking at biological applications for everything from bioconversion of waste feedstocks into specialty chemicals and—I love this one—humanization of pig organs for cross-species organ transplant, which they affectionately call the ‘Sarah Palin project’—putting lipstick on a pig. So welcome Steve.

Lindy Fishburne is the Executive Director at Breakout Labs, which is part of the Peter Thiel Foundation, and they’re trying to prove that a non-profit venture capital organization is not an oxymoron. They champion technologies that have the potential to really change the world and they cultivate and support really radical science companies at the very earliest stages. And Lindy’s been on both sides of the table, she’s managed several successful startup companies, and she knows the importance of a good story—she’s married to a novelist. So welcome Lindy.

And then I think many of you already know Beth’s story from the previous session. She’s led many large and small companies and now works at Kleiner Perkins and she develops companies that are also looking at breakthrough technologies to really improve human health. I think what has come through strongly for me is her drive and passion to take care of patients; it permeates everything that she does. One of the questions I asked her last week was if you had any superpower, what would you choose? And she thought about it and thought about it and finally responded. You know most people say, “I want to fly, I want to stop time, I want to, you know, make a lot of money.” She says, “If I could really choose, I would have X-ray vision to help diagnose disease much more rapidly.” Which I think really resonated given the talk that Jorge just gave. So welcome Beth. Thank you all for being here.

My own preferred superpower I think would probably be to predict the future, and our panel spends a lot of their time and a lot of their days trying to understand and predict what will happen in the future. So the first question I would love for each of you to kind of opine on is what are some of the areas within bio that you’re most excited about and think offer the most potential five years from now, ten years from now? And I may start with you, Lindy.

Fishburne: Okay, great. So at Breakout Labs we focus across advanced technology so we can actually fund quite a broad range of initiatives. And we like places where you’ve got disciplines banging into each other that haven’t touched before necessarily. We have a company that is actually using technology that was written about in the 1950s, but we didn’t actually have the facility to implement the idea. So they’re actually looking at an entirely new way to freeze and re-warm organs. So if you think about organ transplant today, we are at a bucket of ice, running through an airport, and hoping there’s not a rainstorm that holds up the plane. We haven’t done much. And as we talk about being able to actually grow and build organs, we don’t have any way to bank them, if we’re able to grow and build them. So they’re looking at an entirely new way to freeze without using tons of cryoprotectant, and they’d be able to re-warm and restore biologic availability for an organ, which would completely eliminate organ waiting lists and allow us to bank the organs that we’re focused on growing.

Gurney: Will that ever help unfreeze Ted Williams?

Fishburne: I think we only have his brain, right? I don’t think we have his whole body.

Gurney: Ahh. So we can’t recreate the swing.

Seidenberg: We’ll transplant the brain.

Fishburne: We have a whole other—one of our companies that’s here, 3Scan, their ultimate goal would be whole brain emulation. So there’s an option out there for Ted down the road, if he’s not pickled fully yet.

Gurney: Steve, how about you?

Jurvetson: So at DFJ we have not traditionally invested in life sciences the way Beth has, so we’ll be an interesting counterpoint. We try to do everything outside of human health. And we’ve been really inspired by the power of biological systems, not just directly, but metaphorically as well. So how we build complex systems in general I think is being infused and informed by what we’re learning from the information systems of biology¾the incredible power, robustness, and resilience. You heard some of that from Drew Endy, these bizarre combinations of the computer world and the biological world. And we’re investing mainly in that, re-engineering microbes to make specialty chemicals, edible oils, specialty proteins, vaccines, eventually things that will help human health, but in the near term we’re trying to stay away from that regulatory world. So that’s kind of what we have been doing. It’s brought us into AgBio, it’s brought us into sectors we may not have otherwise invested in. But metaphorically what I’m excited about for the next sort of ten, twenty years, is how it changes the way we build, how we engineer artifacts that exceed human understanding.

So in many cases in biology this has been the problem they’ve dealt with for eons, which is that we don’t know how systems biology works in the human body. We do studies, we do tests, we have ways to mitigate risk. Yet at the microbial side, you have people who are literally re-engineering life forms from scratch. You’ll soon see results of the first completely artificial life form, unlike any species on earth, a living organism that reproduces that was created from chemicals. In other words, the code, at least, was entirely fabricated without any animals involved.

And this will start to challenge people’s thinking, that we have this great power to re-engineer life, yet we don’t know quite what to do. How do we build larger, more complex systems than single-cell organisms, moving on to plants and mammals and eventually Sarah Palin projects. And I think what that will expose is that our traditional engineering models break down, that we need to look to biology itself for inspiration. And in the fields of machine learning and deep learning, that is where it is exposed. It’s a technique that underlies just about everything Google is doing in their labs, everything that we’re doing within the companies we’re seeing in synthetic biology, and frankly, in almost every interesting computer science project out there from, you name it, autopilot systems to eventually AI. They’re going to be doing something that looks a lot more like the iterative algorithms of evolution and training a neural network than traditional programming models. And that, to me, is almost like the grand unification of the information systems of biology with information science in general. So a bit of a metaphorical answer, but I think it’s going to be a brave new world and it is mind-blowing when you see what’s coming down the pipe.

Gurney: Absolutely. And Beth, you talked a little bit about immune therapies and how you’re excited about that. Do you want to expand a little bit on that? Or are there any other areas that you’re especially excited about?

Seidenberg: Yeah, that’s definitely an area of interest, and some of it was touched on today, so why don’t I focus on two key areas that are affecting the biggest population that we’re going to have to deal with, which are the Baby Boomers. And if we think about 80 million people, there are about 52 million today who are in that category, and the two, or probably three, four biggest things that are affecting that age group are cancer, Alzheimer’s, diabetes.

So we can talk about cancer. There’s no question in my mind, the biggest breakthrough that I’ve seen in now decades of doing research in cancer is harnessing our own immune system, whether it’s through a small-molecule therapeutic that basically triggers the right type of T-cell to attack the cancer cells, or to keep the cells that regulate and actually allow those cancer cells to proliferate, to keep them in check. Very dramatic results are coming to fore for a set of cancers. That’s going to continue to get more and more interesting.

On the Alzheimer’s side, we are in dire need of something that’s going to help aging and health of the human brain. I know it’s the right place to be when Art Levinson decides that he’s not retired and Google funds him for this company called Calico. And I chatted with him very recently and said, “So come on, like we’re not going to stop the aging process.” Of course we’re not yet, although at some point we may be able to if we want to. So be careful what we wish for. But we can address diseases like Alzheimer’s and cancer.

A brief story about Alzheimer’s that’s really interesting: You’ve heard of—I mentioned and Alex mentioned—induced pluripotent stem cells, so reprogramming of cells. A major discovery was made using that platform and work that we did in a company called iPierian that was recently purchased by Bristol-Myers Squibb, where we discovered a unique form of a protein that was expressed. And we only could have found this based on the IPS technology that we believe will be applicable for Alzheimer’s disease and a couple of other neurodegenerative diseases. And that will be going into the clinic this year, so within eight years of discovery of a breakthrough, massive technology, that’s a very fast cycle, if you think about it. And I hope that we’re going to see more of those types of technologies applied quickly. It takes a lot of guts and leaning forward. Thank God there are people like us around that still are willing to do that, to see those advances happen so rapidly.

Gurney: That’s great. So you talk about leaning forward, and I think that the billion-dollar question that we’d love to kind of explore together is how each of you draw that line between what is a really cool technology and what is a fundable technology in this space? I’ll let anybody jump in.

Fishburne: I’ll jump in. We probably fund the earliest.

Jurvetson: Yes, there’s a spectrum.

Fishburne: Yeah, so we focus on going from the lab and out to that first stage of commercialization. And there’s always, as we’re looking at proposals and we’re looking at companies and meeting entrepreneurs, we’re trying to walk that line of “Is it still a research project? Or is it actually ready to make that jump out?” And we’re looking at the strength of the entrepreneur and their experience and why they think that it’s time, and also what those initial milestones are and the need in the market. So what aspect of that do they think they can commercialize? And a lot of the things that we’re engaged in, it will take a long time to get to the full benefit, so we’re also looking at their ability to fund intermediate steps along the way to the big vision. So we have a number of companies that ultimately you’d like to see in the clinic, but they may have a research application first. And so we’re excited because that research application can help fund the path to the clinic, and being able to balance that short and long term is a key part of it. And I’m sure we haven’t guessed—I’m sure as much as we’re trying to walk that line, we will ultimately have funded things that turn out to be research projects, and hopefully we’re starting to see, two years in, a number of our companies raising Series A’s. So they weren’t research projects; they’re ready to show substantial steps to commercialization.

Gurney: Yes, they’re starting to prove that the model is working.

Seidenberg: Exactly.

Gurney: Steve, how about you?

Jurvetson: Yeah, I agree with what she said, and I think part of the premise of the question is that much of the venture community has a hard time with basic science. The term ‘science project’ is a euphemism for ‘next’ in money venture halls and it’s unfortunate. They’d rather fund, on average, the next social network, crack cocaine-type experience of immediate feedback and making the world safe for ad matching. But, you know, the big heavy projects tend to get unfunded. So I do lament for the overall status. We at DFJ also try to pride ourselves on looking for those disruptive technologies, not just a science project, but something that is ready for commercialization within a three to five year timeframe. I’m occasionally a little ahead of myself and, you know, quantum computing was probably ten years too early when we first invested in that. But generally we try to look for things that are ready to go, perhaps a step or so after what she referred to. What we generally hold, though, is a similar filter, I think, to what I heard Lindy mention, which is we’d like to see that big bold vision, the change the world perspective out on the horizon, you know, ten years out, twenty years out, maybe even fifty years out to fully realize the vision. But in a way that chains back to the present, in a way that iterates with customers in a pragmatic way from day one. So it doesn’t wait for other companies to ship product before you’re viable. It doesn’t wait for laws to change or the environment to shift. It is a remarkably difficult proposition for most entrepreneurs to both have a near-term pragmatic path to customer engagement that is directly on-path to something that will change the world. It is a bit of an enigma in a number of cases, but if you think of Elon Musk and colonizing Mars as a goal, that should inspire you that it can be done. If he can get that funded, then so can you. And I say that with utmost respect. We sometimes will look to a future, let’s say 500 years out, and everyone chuckles, especially people in government, whenever you say something like this because they can’t even think five years out or five quarters out. If there are certain things you believe in your heart are inevitable trajectories, like for Elon all vehicles will be electric, it is just so obvious. We will no longer debate the point ten, twenty years from now, but when he started everyone debated it. It’s inevitable; it’s just a question of when and how. Or that we should become a multi-planetary species, or that robots will do all work eventually that humans don’t want to do. These—

Man: What about life extension?

Jurvetson: Which one? Life extension. Well yeah, that could be a debatable point. Is it inevitable, and if so—

Fishburne: Do you want it?

Jurvetson: —to what extent? And for whom? And yeah. Extending it for sure. Unlimited life extension? Very interesting question. But certainly doubling life span, no question, right? I mean, can you imagine a world 500 years from now where human evolution just ended—we stopped, you know? We didn’t push forward in cultural or mimetic or technological evolution. We didn’t do human germline engineering—which already is happening in certain places around the world off the radar screen. I’ve seen a number of cloned dogs and played with them from Korea. It’s not that unthinkable that it’s already underway.

Fishburne: Did they fetch and do—

Jurvetson: Oh, they’re adorable, yeah. They’re all from this mother Missy, so they’re called near-Missys. Anyway, that’s a digression, but trust me, you can read—was it “Beyond Human,” is that Gregory Stock’s book on this? I find it compelling that it will come out of China first. So if you think about those futures and then chain back to the present, you can imagine investments that start to make sense in that direction, around a future of global connectedness, around Internet devices for the next three billion. These are going to be some major trends that impact both the global economy and the business milieu. And then that’s generally how I find entrepreneurs can then pitch, “Well I’ve got a business that makes sense today, but if this near science fiction-sounding, as reality plays out, it’s going to make all the more sense. But if it doesn’t, it’s still a good business.” So that’s how we try to bridge that gap.

Gurney: Beth, how about at Kleiner Perkins? How do you draw that line?

Seidenberg: Okay, so let me bridge Lindy and Steve, or try to. Let’s see, probably the best way for me to articulate it is we look for things that are on the leading edge, not bleeding edge. And having spent a lot of time in operating rooms, anybody that understands that¾you’ve got to be careful, we think, in where you choose, and there are a lot of examples that many of us can talk about where it’s just a little too early—

Gurney: There’s a reason they call it hemorrhaging cash, right?

Seidenberg: Hemorrhaging cash, that’s right. If you’re on the bleeding edge, you have that risk for sure.

So you’re trying to find that line between what is really breakthrough—I have to say, as a venture capitalist, I am somewhat frustrated by a number of my colleagues, not the two up here, but they probably can relate to this, where I have to stop and say to them, it is venture capital. There is risk and we are paid to take risk. And if we don’t fund things that are risky, then who will? I mean, thank God we have Lindy and Peter and others who are filling the gap, but venture capitalists need to be bold enough to take some risk. And at least some of us are trying to do this and doing well, actually, beating all the statistics on our returns. And some of that is the other component that Steve mentioned, I think very clearly, is there’s got to be a market, there’s got to be a need for something. You know, there are a lot of cool ideas or things that you say, “I believe I can do this but there’s no proof” or “I believe if I do this, there will be interest,” but there really isn’t. And there doesn’t have to be an established market, but there has to be in medicine, and kind of the way I’ve been trained to think about it, a real unmet need, that we can fill the gap. One of the things that I—it’s not the topic for today, but an area that we’re incredibly bullish about, is digital health. And the reason being there’s so much low-hanging fruit, it is ridiculous. Now, not all of these companies are going to be huge, there are going to be some incremental companies, but we have to digitize healthcare in the same way that we’re digitizing biology and everything else in our lives. We’ve got to do that quickly in the United States in order to be competitive, and quite frankly be able to address what consumers what. The fellow—sorry I can’t remember your name, from UC Santa Cruz—I mean, people will have zero tolerance for “why can’t I have my information?” and “why can’t I text my doctor?” or whatever. So a lot of low-hanging fruit there.

Gurney: I’ve often heard people say that we’re about fifteen years behind in healthcare versus the consumer world, so that means, you know, we’re kind of in 1999, which is where—we’re almost there in healthcare. We’re so close.

Seidenberg: The reality is that’s true but we didn’t have the technology that we have today. I mean, you really needed mobile technology. Medicine and healthcare is distributed, it’s not a fixed—and it will become more distributed. And mobile’s huge. We needed the computing power for a lot of this information, you know, cloud capability with storage. I mean, all of this is enabling much more rapid progress. If we’re sitting on a stage five years from now and we’re talking about there’s still a big gap, shame on us. I mean, you know, all you guys, whoever’s in the audience thinking about stuff, keep thinking, make sure we fund you. It’s important.

Gurney: So I’d love to hear a little bit about some specific pitches or presentations that you’ve seen recently that really wowed you. What does it take to cause a spark in you and make you say, “Ah-ha”? I’d love to hear some stories about an exciting moment in one of those pitches and what the entrepreneurs, what the innovators did to kind of bring that home?

Jurvetson: So ideally things we haven’t invested in, so we’re not just, you know, plugging for another one of our existing investments? I could throw a couple that—every week I’m just blown away. I mean, so the meta-point is oh my gosh, I’ve seen so much innovation, just qualitatively, than ever before. And that generally is true every year; it just keeps accelerating.

The ones of late that I’ve loved are when I asked someone when did this first become simulatable? And there was recently, a particularly esoteric domain on microwave circuitry, and it was just two years ago, and like the light bulb goes off. It’s like, “Ah-ha, now maybe it’s moving from a trial-and-error experimentation science to a simulation science. This may be that pivotal moment where a given field will be revolutionized.” So I try to look for those kind of “why now?” answers to questions¾why could no one have thought of this or executed on this idea five or ten years ago? And that’s why I focus more on process innovation kinds of things. The capability to innovate around, let’s say, machine learning versus any one artifact of innovation. But lately I’ve just been blown away by people working—which we have not invested in—in synthetic meat. That also seems like an inevitability; we won’t kill animals to get—

Fishburne: Which we have invested in.

Seidenberg: And so have we.

Jurvetson: Yeah, exactly, and Khosla Ventures I think have five synthetic meat investments. We have zero—

Fishburne: Yeah, that’s a big deal.

Jurvetson: —so I’m giving them kudos. To me it’s one of those inevitabilities. We’ll look back at our present selves and condemn our own moral behavior, when we can get good bacon and steak without killing things. And then we’ll actually look in slaughterhouses, which we won’t want to look in today.

So there other things where¾you know George Church just keeps coming up with amazing stuff, so anything he does just blows you away. And even though he didn’t pitch me in the last week, when I hear about companies—

Fishburne: That’s surprising.

Jurvetson: —that he’s involved with, it’s just about everything. Like “Hey, let’s introduce a few more Neanderthal genes back to the human gene pool.” That’s an interesting one more recently that he’s come up with. You’re going to hear about Revive & Restore later, but I’ll save that one for Ryan and Stewart, which is a mindbender in its own right. You know, every day an entrepreneur who’s thinking and imbued in this technology domain could probably knock the socks off just about anyone you meet in a bar or in colloquial conversation if they could just translate the vernacular to something everyone could understand, you know, people would—their jaws drop, like, “What? You are doing what? Like, that’s actually happening?” So, I mean, I don’t know if people in the room realize that you’re sitting on a can of miracles and no one seems to know about it.

Fishburne: So I have the same response in terms of just unbelievably blown away by what we see entrepreneurs bringing in. And I think the tell-tale sign of the success and dedication and jaw-dropping has lately been, I guess we’re quantifying the amount of our entrepreneurs and CEOs own blood and bodies that are being used for things. So they’re coming in already having demonstrated their product as much as possible on themselves, on their family members, on whoever else was able to participate. So one of the companies that we just funded has had multiple family members and themselves sitting in a chair for three hours drinking—what is it?—milkshakes and hamburgers to test this new EKG for the gut. And so we’re finding all kinds—

Gurney: I’d sign up for that one.

Fishburne: Yeah, exactly, it sounded like a good trial.

Seidenberg: And you lose weight at the same time.

Fishburne: So we’re seeing the extremes to which entrepreneurs will go to to demonstrate the potential viability of what they’re working on and how excited they are about taking it out of the lab. And it’s pretty compelling. At times disturbing, but pretty compelling.

Gurney: Wow. So those are the things that kind of get you excited. I’d be curious about the flipside also, of what are the big barriers, especially within bio, that keep you up at night, make you worried, make you a little more skeptical than you would be evaluating a new matchmaking application or…?

Seidenberg: For me, particularly on the biotech side, whenever we’re taking something from an academic lab—so no offense to the academics in the audience—but there’s a lot of literature now that shows that many of the experiments cannot be reproduced and translated in an industrial setting. So every time I do that, and I still do look for technology out of an academic lab, I lose some sleep until we can reproduce the experiments. We also back ourselves up with multiple different options and know that we can work around, so we don’t rely solely on a single point or a single discovery.

You know, the other area that’s always important for all of us as venture capitalists is the leadership and the people. And serial entrepreneurs that have been successful and shown that they have the aptitude and interest in being an entrepreneur, those are easy and they don’t keep us up. But the ones who—

Gurney: —are new to the game?

Seidenberg: —are first time and transitioning from different roles, it’s not for everybody. And until you spend some time with the entrepreneur and you see that they transition, it’s a little bit of a—for somebody like me who’s been an operator, I want to help a little too much, and so it’s like I have to hold myself back.

Fishburne: I think it’s the proposals that we get and the companies we talk with that it’s a very small company, maybe an academic coming out of university, and they say, “We’re going to take on cancer and we’ll be successful if we take 1 percent of this billion-dollar market.” And we say, “That’s never successful.” You know, I’d really rather know that you know that you’re really going to solve this very specific problem in a much smaller market and you’re going to own that entire market. And then I know that you actually know what your need is, who your customer is. And if you’re 1 percent of this huge market, you have no idea who your real customer is. And so we see a lot of those proposals where they’re really excited about the technology, but there’s no sense of where it’s going to land. And that’s the big red flag.

Gurney: It’s the 1 percent plus or minus 1 percent problem.

Fishburne: Right. That’s a turn-off.

Seidenberg: Exactly.

Jurvetson: I guess I’d say in the near-term sort of immediate, pragmatic, here-and-now worries is the capital intensity of some projects and the lack of financing for later stages. And that’s, for most investors a really dangerous time to hit a snag, is after you’ve invested a bunch of money and then let’s say for scale-up or what have you, the expansion rounds aren’t there and the sector’s had its ups and downs, and whether you look at the biofuels category just disappearing or things coming in and out of favor. We found, increasingly, a number of companies have to depend on corporate investment for those later rounds, and that can come with both benefits and risks, so that’s a near-term worry.

A longer-term general worry, I think as Beth mentioned, is there’s a lot of surprises that can occur on the path to market. And things take longer than you expect, and that sort of robustness is something you can lose sleep at night about any given company at any given moment. And then long-term in the long arc of history, I worry the tech-accelerated rich-poor gap. And that might not seem related, but I think it is as more people come online and more businesses become information businesses, including the ones in the room today, they become a winner-take-all dynamic and you’ll have increased polarization of wealth, which could lead to increased dissatisfaction if you don’t have basic Maslow hierarchy needs provided for all people. So food, shelter, clothing, and if Maslow lived in the time of HMOs, I think healthcare would have the next one on the bottom of the pyramid of Maslow’s hierarchy of needs. You know, and I think the access to education thing is being addressed with MOOCs we need a MOOC for healthcare, right?

Seidenberg: Yes.

Jurvetson: Someone who’s going to make the information content of healthcare free for everyone forever. And I think that is a good business opportunity and I would love to find an entrepreneur who wants to tackle that—

Seidenberg: Absolutely.

Jurvetson: —and is already tackling that, because it’s like the big gaping whole that needs to be solved so that we can remove the motivation to do great harm with these technologies as weapons of mass destruction. And through the hands of individuals, it’d be great if we could remove the motivation to do such things.

Gurney: Absolutely. So we’d love to hear from all of you, and kind of see if you have any questions for our distinguished panel. It look’s like we’ve got one right there.

Natalie Nasseri: My name is Natalie, and I’m a founder of a non-profit organization Adsila. My question is mainly for Lindy, but it touches on what Beth said and Steve might add to that as well. One of the biggest issues, and you all mentioned that, is the issue that most of the VCs, as we know, or later-stage investors shy away from taking risks. And social entrepreneurs, not just in the U.S., but all over the world, have this issue. What is interesting to me is that I don’t see much of a collaboration between foundations that are recently getting more and more involved in—either through mission-related investment or patient capital or whatever¾investing in these social entrepreneurs with the VCs. I think, and correct if me if I’m wrong, but I think the problem is because, in my opinion, the foundations are pushing at the stage that the entrepreneurs are ready to come out of the incubation with the foundations, they’re more pushing them toward VCs than the other way around.

So this is what my question is: Do you think we will come to a point to address this major issue insofar as the innovation in general is concerned, seeing more of the VCs actually bringing interesting and very promising projects that are early stage to foundations, because then they have an exit strategy, than the other way around? And if somebody would facilitate something like that, would you all be interested in partaking in that kind of a practice, that VCs will bring more of the interesting and promising projects to the foundations that do the early-stage funding, knowing that later on when they’re actually leaving the incubation of the foundations, the VCs will have, let’s say, the first right of investment in that particular project?

Fishburne: So it’s an interesting question and we’ve been dealing a lot with how to actually help with and potentially push foundations to actually engage with companies more. It’s not what most foundations are set up and comfortable doing, right? They’re typically arranged and organized and their legal’s very comfortable funding non-profits. They’re not very comfortable funding companies. I think where you see the most advanced, and to some degree that model you were talking about, is the disease foundations. So the disease foundations that have been successful pulling together their funding and also their patient populations are now presenting themselves as a real resource for VCs that are looking at a particular company or a particular indication they can pull their patient group together and accelerate a clinical trial in a dramatic way that saves money and increases that velocity to market. So I think that we actually have a somewhat healthy ecosystem building between disease foundations and the funders that want to pickup those programs that are coming out of the foundations afterwards.

I think outside of specific diseases and across advanced technologies, for example, when it’s not something that you have a strong advocacy group around, we don’t have a healthy structure built around that right now. And so there’s actually—I’m happy to follow-up with you.¾there’s a number of people that are getting together to talk about how foundations can actually engage more directly with companies, even outside of program related investments.

Gurney: Should we do one more question?

El-Fahmawi: Bassam El-Fahmawi, Mawi DNA Technologies. One of the things, of course, being venture capitalists, you’re exposed to a lot of proposals. And one of the things that is interesting to hear from you, are you seeing the number of quality going up year over year of innovation and caliber of entrepreneurs? Or are you seeing a decline or basically status quo? If you can speak to that.

Seidenberg: I imagine we’re all seeing an increase.

Gurney: An increase in quality or an increase in volume?

Seidenberg: Well it’s both. The quality continues to go up as we make progress in the biological engineering and computer sciences. There’s no question that progress is there in quality and entrepreneurs are coming in. We’re seeing some very good ideas because there seems to be less fear or fewer boundaries to stay in your area of focus or your area of training, and willingness to take that and move it over or port it to another area of interest. And some of the best ideas that we’re seeing are from what you would consider non-traditional entrepreneurs, you know, technology folks who are working in healthcare or biologists who are going into technology. And to me, that’s been just an interesting observation that we’ve seen more and more happening probably over the past short-term, like three years, you know, not five or ten. That’s been our observation.

Gurney: Would you guys agree?

Jurvetson: I think with a premise of accelerating change you would be inconsistent if the amount of innovation weren’t compounding. And I think sometimes from investors you’ll get a referendum about how they’re feeling about their portfolio, which is a backward-looking measure, and how enthusiastic they’re feeling in the moment, which is kind of bizarre. And when you look at the things we’ve seen this week, if I were to try to give you a quality judgment, well I may be wrong. I’ll invest in a tiny fraction of what I see and I don’t follow up, and I don’t know who failed and who succeeded, but most fail, and so the quality metric is harder. So if I use the proxy, like how many ideas are unlike anything I’ve ever seen before, that to me is a good innovation metric. And that seems to keep compounding and diversifying. So I started in this industry in ’95 and it was all software, healthcare, and semi-conductors. That was pretty much it. And then datacom and telecom and the Internet happened. But today, it’s agriculture, rockets, cars, drones, robots, AI. I mean it is a set of industries I never would have imagined would even be on the plates or the radar screen of any venture capital investor, because there was no historical precedent for being in these industrial industries of energy and like it’s just bizarre. Trillion-dollar industries, global industries. When I started we just looked at US businesses selling to US customers. It is so different today, just nineteen years later, which is like an eternity. That if we step back and look at the arc, it feels like exponential progress in the pace of innovation.

Gurney: Well that’s an exciting and encouraging note to end on, I think. Please join me in thanking our panel.