The Index Asset-Centric Platform

Any biotech en­tre­pre­neur who’s ever spent time with their IT coun­ter­parts no­tices one thing in par­tic­u­lar; how young these guys are. It’s a fea­ture of the IT world that busi­ness tend to suc­ceed or fail quickly, which means that a tech­nol­ogy en­tre­pre­neur has sev­eral at­tempts at build­ing a suc­cess­ful com­pany over the course of their ca­reers.

This con­trasts with the life sci­ence busi­ness, es­pe­cially in Eu­rope, where in­di­vid­u­als typ­i­cally join com­pa­nies for the long haul. It’s by no means un­usual to spend >10 years in one com­pany, I did it my­self, but the odds are against any one of these com­pa­nies being suc­cess­ful. If you con­sider your pro­fes­sional ca­reer last­ing 20-30 years, this doesn’t give you many at­tempts at ‘the one’.

It’s per­haps no sur­prise then that Index Ven­tures, a mixed IT/life sci­ence firm, has come up with an IT-like plat­form for life sci­ence en­tre­pre­neurs. The as­set-cen­tric plat­form (ACP) is dis­cussed in de­tail [here, see link] but the key fea­ture for a life sci­ence en­tre­pre­neur is that it’s eas­ier and quicker to build and man­age a pro­ject than it is a fully built-out com­pany with all the trim­mings. Pro­jects that fail to live up to their billing are killed off quickly and the ex­pected life­time of a suc­cess­ful asset cen­tric com­pany is 3-4 years. This gives you way bet­ter odds than a full build­out op­tion. The cap­i­tal ef­fi­ciency of these en­ti­ties pay div­i­dends to en­tre­pre­neurs too.

Of course, it isn’t un­usual to have a per­sonal eq­uity stake in com­pa­nies. What is un­usual is an align­ment with your in­vestors that’s only pos­si­ble when you have a de­fined pro­ject with de­fined mile­stones and a re­duced cash dis­tance to an exit, short-cir­cuit­ing the usual load­ing of di­lu­tion and ever more strin­gent liq­ui­da­tion pref­er­ences at each round of in­vest­ment. Most en­tre­pre­neurs will have first-hand and bit­ter ex­pe­ri­ence of boards with mul­ti­ple agen­das and the use of liq­ui­da­tion pref­er­ences to im­prove VC re­turns at the ex­pense of their own. In my view, life is too short for this.

The cherry on the top is that these are fun com­pa­nies to run. Any­one who’s worked in a large or­ga­ni­za­tion will know how much of your day gets con­sumed in meet­ings, HR stuff, PR, IR etc., man­age­ment with a cap­i­tal ‘M’. And don’t get me onto the sub­ject of team-build­ing ex­er­cises, which I’ve come to hate with a pas­sion. In con­trast, as­set-cen­tric com­pa­nies are a breath of fresh air. They’re no walk in the park of course, you’re al­ways run­ning on a tightrope, but you re­ally are the mas­ter of your own des­tiny. In my ex­pe­ri­ence, peo­ple tend to con­fuse ‘pres­sure’ and ‘stress’; the biggest cause of stress is that of your fate being in the hands of some­one or some­thing else.

Your job in an ACP is very clear; take this pro­ject from here to over there, no mis­sion or vi­sion state­ments nec­es­sary. For the last 30 years my motto has been ‘do good, have fun, make money’ and I can think of no bet­ter place to ex­e­cute on that than in an asset cen­tric com­pany. Pan­Genet­ics, the pro­to­type ACP we put to­gether when we were ex­per­i­ment­ing with in­vest­ment mod­els bears this out. We were al­ways under pres­sure but it was good pres­sure, the sort you could do some­thing about. It was also a lot of fun, much like a full build­out com­pany in the early days, be­fore it got too big. Small teams, all hands to the pump, win or lose to­gether and no room for pol­i­tics. And it stays that way. This is worth get­ting up in the morn­ings for.

When I started hang­ing out with the peo­ple at Index Ven­tures in Geneva sev­eral years ago, the last thing on my mind was be­com­ing a VC. Be­fore start­ing my next com­pany, I was try­ing to un­der­stand how VCs win, based on pre­vi­ous ex­pe­ri­ence that the best deals were al­ways those where each party in a deal wins. After a few months it be­came clear was that there was no short­age of ideas or cash (lib­er­at­ing the lat­ter is al­ways a mis­sion, but there is no ac­tual short­age of it). The real rate lim­it­ing in­gre­di­ent, par­tic­u­larly in Eu­rope, was the sup­ply of se­r­ial en­tre­pre­neurs. I con­cluded that what Eu­ro­pean biotech needs was a ‘ma­chine’ for mak­ing se­r­ial en­tre­pre­neurs. The ACP is that ma­chine. This way, every­body wins.