How to fund scrappy biotech startups is foremost on Jeff Behrens’ mind. He was CEO of a startup that raised $20 million in funding but not one cent from VCs. An invaluable interview for anyone thinking of starting or investing in a life science company.
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Highlights include:
Jeff Behrens Studied Philosophy at Harvard but Stumbled Upon Entrepreneurship: Renaissance Man for the 21st Century
MIT/Harvard Medical School Collaboration, HST, is Discussed
Siamab Therapeutics
Siamab Pursues Therapies Based on the Work of Ajit Varki on the Weird Sugars on the Surface of Cancer Cells
Siamab Did Not Go the VC Route, I Took a Scrappier Approach to Funding from Other Sources
Ovarian or Pancreatic Cancers Are Tough to Fight; Siamab Targeted them Based on the Unique Sugars on the Outside of the Cancer Cells
Creating Lethal Molecules that Attack only the Cancer Cells
Standard Chemotherapy Is a Carpet-Bombing Approach, Doing Harm to Healthy Cells
Jeff Behrens Has Started and Run Companies but He has an Unusually Thoughtful Approach to the Work
VC Are Making Large Bets on “Big-Idea” Companies, Leaving More Targeted Startups Struggling for Funding
More Targeted Approaches May Be Promising but How Do They Get Funding?
The Early-Validation Trap
“So, I think there's an opportunity, there's some funding available, but I think there's a real need for more attention and more creativity around sort of those next stages of how we take those ideas forward”.
Sal Updates Us on Portfolio Company SQZ Biotech
How Jeff Behrens Went from Philosophy Major to Entrepreneur
“…my roommate said at the time, "You're really a business person. Why don't you just make this your thing."”
Built Telluride Group to 35 Employees & It Got Acquired by a Fidelity-Backed Group
“And we had enough money from that exit to be able to support that so I started thinking what would I be interested in learning about the life sciences…”
“…but in biology, it struck me, we just don't know what we're doing. It's just it's hard”.
“…who makes more money, drugs, devices, healthcare IT or other healthcare investments?”
Unusual PhD Program for Business People at Lausanne’s EPFL
“…how often do angel-funded companies go on to raise venture capital?... in tech companies that’s true only 8% of the time…”
“…only about 4 to 5% of biotech firms start in angel land and then transition on to venture land.”
Venture Capitalist in Life Sciences: “…have evolved their model dramatically from 10, 15 years ago. So, they're doing much larger rounds. They are syndicating a lot less. They're taking more of the early equity, and most importantly they're creating companies.”
“...companies that are born out of this model start... They are born with $50 million…”
Crucial Question for Biotech Entrepreneurs: “…how you get to that pharma exit without needing the venture money?”
Capital Efficiency Is Growing in Biotech
How LabShares Newton Came About
Tenancy in Shared Labs Has Low Turnover Since It’s Not Easy to Get Your Lab Up and Running
A Discussion of Meenta as Part of the Trend Towards More Capital Efficiency in the Life Sciences
Jeff Behrens Urges Entrepreneurial Postdocs to Spend Time in Large Companies to Learn How they Work, Before Venturing Out on Their Own
“One of the few ways you can get to know pharma is working at pharma for a while.”
Savran Technologies as an Example of a promising Life Science Startup
“…memo to founders. When you're offered money, take it. You will need more than you expect.”
Different Paths of Lives Well Lived – The Life of Joe Tosti
Getting into Business Alongside Your Spouse
“It's not easy working with your spouse…And you're never far away from the company and all those things.”
Having His Wife as His Co-Founder Was Key to the Success of Jeff Behrens’ First Company
“I think there is this unsolved problem of funding, not the first steps of an entrepreneurial scrappy biotech, but sort of the next steps.”
Transcript of “The Funding Gap in Biotech”
Guest: Jeff Behrens, Founder & scholar
Sal Daher: Welcome to Angel Invest Boston. I am your host Sal Daher, an angel investor who delights in the fascinating tech companies being built in Boston's singular startup ecosystem. Because of the unique concentration of great universities here, Boston is a massive exporter of great startup ideas and a huge importer of capital. The idea rich and capital poor environment that exists here gives me the opportunity to invest early in the companies that will be changing our world. Companies such as SQZ Biotech. I'll tell you a bit more about SQZ later. Now, I'd like to introduce my exciting guest today, Jeff Behrens, founder, CEO and much-sought-after board member. Jeff, welcome to our studios.
JEFF BEHRENS: Thanks, Sal. Thrilled to be here. Thrilled to chat with you about this topic and this ecosystem.
Sal Daher: This is tremendous. Jeff Behrens' career has taken him in and out of entrepreneurial ventures but with an interesting focus on understanding the process of building biotech companies. Jeff was CEO of Siamab which is developing an immunotherapy for ovarian cancer and was recently spun off to a strategic player. His intellectual curiosity is now leading Jeff to complete his PhD on the financing of life science companies. I'm pleased to say that Jeff has joined the board of a startup well known to our listeners of Savran Technologies. We'll get more to these topics later on but I'm just really excited.
Jeff Behrens Studied Philosophy at Harvard but Stumbled Upon Entrepreneurship: Renaissance Man for the 21st Century
Sal Daher: Jeff studied philosophy as an undergrad at Harvard and eventually got an MBA from MIT Sloan. He has also been a lecturer and course director for a required seminar series in MIT's vaunted HST PhD program that covers a mini-MBA, research ethics, biomedical research, global health and communications. I think of him as a Renaissance man for the 21st century. Actually, Jeff that HST program, that's the Harvard MIT joint... MIT doesn't have a medical school so if you want to be in the medical end of biomedical engineering or something like that you go to the HST program.
MIT/Harvard Medical School Collaboration, HST, is Discussed
JEFF BEHRENS: Exactly. So this was started about almost 50 years ago. They're celebrating their 50th shortly, and it was formed at a time when MIT was interested in helping their researchers get more close to patients, more involved in that translational process of translating great research into products that can help people. And Harvard Medical School was interested in having some of their doctors and some of the doctors were interested in or their med students really more deep research.
JEFF BEHRENS: And so instead of having MIT start up their own med school, this collaboration was formed. And so today about 20% of MDs through HMS are actually part of HST and spent time in MIT labs. And then there's a separate PhD program at MIT where all of those students spend a great deal of time at Harvard Medical School and the local hospitals.
Siamab Therapeutics
SAL DAHER: That's great. Let's start talking about Siamab therapeutics. Tell us what it's been doing and why it's so important.
Jeff Behrens: So the story of Siamab...
Sal Daher: Pardon the pronunciation, Siamab.
Siamab Pursues Therapies Based on the Work of Ajit Varki on the Weird Sugars on the Surface of Cancer Cells
Jeff Behrens: No. It's sialic acid monoclonal antibodies. It's an invented word like we do in this field. And there's no obvious way to pronounce these things. Siamab came out of work in San Diego at an academic lab, founder and top-tier academic named Ajit Varki, and he had observed that sugars on the surface of cancer cells are strange and do strange things. And this is his area of glycobiology. And so the company was originally founded up there, staffed by several of his top students, funded by grants and then around 2010 a group of angel investors learned about the programs they were working on, the company, and put a little bit of money in, and that's the group that hired me in 2012.
Siamab Did Not Go the VC Route, I Took a Scrappier Approach to Funding from Other Sources
Jeff Behrens: I think it's a classic example of great academic science, but with an alternative funding path. So I think in in the world today where I think we're here very familiar in Boston with biotech firms being born out of the venture community and starting with 50 million or more dollars in an A round, this was definitely not that case. This is also a common story, but a scrappier story of a company that's starting with some great intellectual property, some really smart people and a modest amount of funding. I spent seven years with the company. We raised about $20 million, developed two drug programs both of which end up being partnered with large pharma, and so we've now exited the company with this most recent transaction.
Sal Daher: Excellent. Tell us a little bit about the problem that they're addressing.
Ovarian or Pancreatic Cancers Are Tough to Fight; Siamab Targeted them Based on the Unique Sugars on the Outside of the Cancer Cells
Jeff Behrens: Sure. So solid tumors are really hard to work with, where we do very well with many liquid tumors and we do okay with some solid tumors. But diseases like ovarian cancer and pancreatic cancer are still just very, very hard to work with and patients do relatively poorly in many cases, and so there's a real need. And this observation that there's something different about those cancer cells that their sugars on the surface were different creates this opportunity. It's what we call a target or a set of targets that are unique to the cancer cell, but potentially give us that chance to target that cancer cell and kill that cancer cell and spare normal tissue.
Creating Lethal Molecules that Attack only the Cancer Cells
Jeff Behrens: And so, we developed monoclonal antibodies, these are biologic molecules that are very, very, very specific in their binding. They bind only to these weird sugars. And then we arm the antibody with toxins. We attach to that antibody typically for super toxic molecules that if we just gave to a person sort of unbound would be very, very toxic. But because they're attached to the antibody and the antibody then finds that cancer cell, that strain sugar and binds directly to it, we can have a chance of killing those cancer cells and really making a difference for those patients while sparing normal tissue.
Sal Daher: Excellent, excellent. Progress in that direction is much welcomed. Some podcasts ago, I learned that the way the chemotherapy, standard chemotherapy works basically is targeting fast-growing cells.
Jeff Behrens: Exactly.
Sal Daher: Brute force.
Standard Chemotherapy Is a Carpet-Bombing Approach, Doing Harm to Healthy Cells
JEFF BEHRENS: It's a carpet-bombing approach unfortunately.
SAL DAHER: Horrific, yes.
Jeff Behrens: We've made a lot of progress with that in some cases, but the toxicity really limits things. So, I think the current generation of new therapies are really trying to find things that are unique to the cancer that we can then be a lot more strategic and targeted in the way we go at these drugs.
Jeff Behrens Has Started and Run Companies but He has an Unusually Thoughtful Approach to the Work
Sal Daher: Now, you're an operator. You've run companies, you started companies, but you're also a very thoughtful person who's studying these things. So you're seven years with Siamab. Can you distill for us some of the things that you learned there that could be valuable?
VC Are Making Large Bets on “Big-Idea” Companies, Leaving More Targeted Startups Struggling for Funding
Jeff Behrens: Well, I think that one of the opportunities and challenges that we see in life sciences and biotech in particular today is that with venture firms against starting big-idea companies with a lot of funding that is a terrific opportunity for those ideas and those people, and those entrepreneurial ventures. But there's then a whole set of other opportunities that are neglected effectively, that are not being funded by the venture community. They may be more focused. They may be more narrow. They may be a little less out of trend. And so, one, I think that creates an interesting opportunity or really a misallocation of capital, or an opportunity for the allocation of capital, and coupled with the fact that in many cases these are really exciting opportunities.
More Targeted Approaches May Be Promising but How Do They Get Funding?
Jeff Behrens: They may be more focused a single drug, a single molecule, a single disease. And one lesson is that there's this opportunity space. Then the question is, well, how do you develop companies in that space and how do you fund them? And I think a second lesson is that there's a potential trap early on in that, which is what I might call the early validation trap where you might have a postdoc coming out of a lab with an idea, an academic and an entrepreneur working on one of these spaces.
The Early-Validation Trap
Jeff Behrens: And in the early days with relatively short dollars, you can make some interesting progress. You can do work in the laboratory, you can use shared labs like LabShares. You can do early experiments with contract research organizations and get some data. And so you feel like things are going well, you might win a business plan contest, you might join an incubator at Techstars or something. And so you're feeling like you're doing well, but then you can get stuck because if you don't have access to ever greater amounts of capital, those kinds of ideas can stall, because unlike in let's say software where relatively quickly you get to a product and you start having to see if it can make it in the market.
“So, I think there's an opportunity, there's some funding available, but I think there's a real need for more attention and more creativity around sort of those next stages of how we take those ideas forward”.
Jeff Behrens: As we know in the drug world, it can be a decade or more before a drug idea becomes a product, and the capital requirements increase over time not decrease. So you've got, again, this potential trap that a great idea without venture funding that raises a little bit of money, starts to show some progress, but then can't raise more. I think a lesson is that's a problem and a challenge. We struggle with that at Siamab. So, I think there's an opportunity, there's some funding available, but I think there's a real need for more attention and more creativity around sort of those next stages of how we take those ideas forward.
Sal Updates Us on Portfolio Company SQZ Biotech
Sal Daher: Excellent. Coming up next, I will ask Jeff Behrens how he got interested in entrepreneurship. However, before we do that, I'd like to tell you a bit about an interesting company in which I'm an investor, SQZ Biotech. SQZ is a platform for transforming the function of cells effectively and at scale. SQZ is an outgrowth of MIT famed Langer Lab. Its CEO and co-founder, Armon Sharei was interviewed in our podcast, It's a really fascinating story. SQZ is about to start clinical trials for a therapy developed in a billion dollar-plus collaboration with Roche to activate the immune system to fight off cancers related to HPV. Cancers just too horrible to describe, horrific.
Sal Daher: SQZ has several other promising collaborations. Now, I mentioned this company and others like it to give you an idea of the opportunities I see as an angel investor in Boston's idea rich and cash-poor startup ecosystem. It's a little bit of what you're saying. The companies that have this initial glimmer of hope of the results work and so forth, and then getting cash for the next round. It's really tough. I see a lot of opportunities. Savran is another company sort of in that space, platform technology and so forth. In some ways comparable to this. And so as an angel investor, I love to put together syndicates that bring resources to these under-resourced companies that are massively, massively promising, but that languish because of lack of resources.
Sal Daher: So if you're an accredited investor and you want to consider joining a syndicate, I would invite you to go to our website angelinvestboston.com and fill out the syndicate form and join our investment syndicates. So, Jeff, please tell us how you went from studying philosophy, perhaps one of the college majors most dismaying to tuition-paying parents, to be an entrepreneur.
How Jeff Behrens Went from Philosophy Major to Entrepreneur
Jeff Behrens: It's quite an accident frankly. It wasn't something I was planning on doing and back in college, I was at Harvard College, I was thinking how to be a teacher, perhaps a high school teacher, perhaps an academic. And my senior year... I always had to work. I was on scholarships and had to work every year, every summer. And my senior year I was working at Harvard Business School in the library doing Lotus 1-2-3 spreadsheet support for the executive ed program that HBS was running at the time. And I was amazed. They were paying me 25 bucks an hour and I barely more than the folks I was helping. I could hide back in and read the manual and come out and figured everything out.
Jeff Behrens: And then I got another job. It was actually at the City of Boston Revenue Department or something, and I was just doing spreadsheets and things, and one day I wandered down to the IT department and said, "What else do you got for us to play with there?" They have this software tool, a database called Clipper that was a programmable database. So I said, "Great. Let's play with that." I started teaching myself that, solving some problems for that department. And then this is all while finishing up school. And then I saw a job posting somewhere on the student employment office I was seeing, wanted Clipper programmer for some part-time work. And it turned out he was an alum a few years older than me and so I applied. I really didn't know much but I figured I could learn. And all of a sudden, I was now helping him with his consulting business.
“…my roommate said at the time, "You're really a business person. Why don't you just make this your thing."”
Jeff Behrens: And then when I graduated, by then I had two or three of my own clients including very importantly a biomedical research lab at the Joslin Diabetes Center. They're working on type-2 diabetes. And they became an early client, an important friend to the PIs of that lab, Dr. Andrzej Krolewski. And so all of a sudden I had clients and they were paying me a hundred bucks an hour. This is 30 years ago or so, and I was like, "Wow, that's a lot of money." And six months into this, my roommate said at the time, "You're really a business person. Why don't you just make this your thing." I had never thought of it as a serious thing.
Sal Daher: You stumbled into this profession.
Jeff Behrens: Yeah. But there was clearly a need, right?
Sal Daher: Yeah.
Jeff Behrens: I'm thinking it was going on at the time, this was in the earlier days of local area networks and so the first-
Sal Daher: So this is circa when?
Jeff Behrens: Early '90s.
Sal Daher: Yeah, exactly. I mean, it was sort of like searching high and low for someone who could...
Jeff Behrens: Solve these problems, set up network. Again, I didn't really have a great plan here except that there were people paying me and then I started hiring people. So we ultimately grew the company over the course of the '90s to about 35 people, we called the Telluride Group. And it was a service model but we always had the ambition of trying to be a more productized service. So we charged these monthly subscription fees and annual subscription fees, and we really outsource the entire function and tried to figure how to do that efficiently. And that was called managed services back then, and that started to catch on.
Built Telluride Group to 35 Employees & It Got Acquired by a Fidelity-Backed Group
Jeff Behrens: We got lucky in 2003 when we were acquired by a rollup that was funded by Fidelity Ventures and it was called mindSHIFT Technologies. We're the first acquisition of about 15, they ultimately did across the East Coast. So I found myself in a 10 to 12-year accidental ride through the IT world where about a third or a half of our customers were both venture capital and biotech, given how much that was here. And so I had this touching exposure to this interesting world of life sciences, not really deep in it, but just saying these are great clients or clients companies like Immunogen that are around today and then at Cambridge Heart, and many others were early clients. And so I started to get a little exposure to the field.
Sal Daher: Wow. So you came into the life sciences via IT.
Jeff Behrens: Correct.
Sal Daher: It's usually the other way around. All these wet lab biologists trying to get-
Jeff Behrens: Yeah. I studied philosophy. I had taken, I think, the last bio class was back in high school. So I really didn't have the background. And after selling the company my wife and I were partners in that company, both agreed to take a year off and really try to take our time to figure out what... We're in our mid 30s or something. And I didn't want just jump in and do the same thing again. And we had enough money from that exit to be able to support that.
“And we had enough money from that exit to be able to support that so I started thinking what would I be interested in learning about the life sciences…”
Jeff Behrens: And so I started thinking what would I be interested in learning about, and life sciences just struck me as a place that we definitely don't have all the answers, there's lots of hard problems to solve where it seemed like in IT although there was interesting businesses for sure, a lot of the harder problems of engineering and so the physics of it was sort of figured out. It was now applying in marketing. And I felt but in biology, it struck me, we just don't know what we're doing. It's just it's hard. The human body and the human cell are just incredibly complicated.
“…but in biology, it struck me, we just don't know what we're doing. It's just it's hard”.
Jeff Behrens: I went back to that same lab at the Joslin, Dr. Krolewski.'s lab and offered myself up as a free intern. And I spent six months there trying to not break things and try to not cause more trouble than I was adding, and he was willing to let me hang out there. And so this is right at Harvard Medical School so I was going to lectures and just saying, "This is a cool place." But I'd realized there was something different about life science entrepreneurship than the IT entrepreneurship where it started. Critically, you didn't see a lot of young folks without experience starting companies, probably for a good reason. It complicates things.
Sal Daher: Well, the Theranos experiment.
JEFF BEHRENS: Right. So you don't see a lot of those probably for good. But on the other hand that is a troubling dynamic even today where you don't see a lot of even great postdocs coming out of labs starting companies. And so it struck me that I ought to go back to school and try to get some credibility, try to get some content. And I got very lucky because at the time there was this great program that I mentioned, HST that mostly creates PhDs and MDs. For about 10 years they were also running a master's program, and it was designed for business people that were interested in life sciences. And so I spent a year at Sloan and a year at Harvard Medical School and did that joint degree back in 2005 to 2007. And that's what started me off this direction toward life sciences.
Sal Daher: Fascinating. This is really, really fascinating. And I'm smiling too because my daughter started her career as a biologist at the Joslin, and she's now pivoted away. She went to software. I have very fond memories of it.
Jeff Behrens: It's a fabulous place and a fabulous research institution, and just really smart people and an amazing connection. That's a great example of an institution that's doing translation. They've got a phenomenal clinical program with all sorts of folks and they've got this phenomenal research program, and they're very closely tied to each other.
Sal Daher: I'm kind of jumping back and forth here, but tell us a little bit about this unusual experience that you've been having. You were CEO of Siamab for seven years, and at the same time you're doing four years, you started doing a PhD doing research on funding of life science companies. How does that work?
“…who makes more money, drugs, devices, healthcare IT or other healthcare investments?”
Jeff Behrens: Sure. When I was back at school at HST, part of what we have to do is write a master's thesis. And I worked with this fabulous professor at Sloan, Antoinette Schoar who does all this work in entrepreneurial finance generally. And so that thesis I was looking at, and asking the question, who makes more money, drugs, devices, healthcare IT or other healthcare investments? I was wondering where should I spend my time and I was wondering can you quantitatively try to ask and answer that question? That was my master's thesis. And then what venture strategies...
Sal Daher: Do you have an answer?
Jeff Behrens: Well, I think what we saw was that the top drug investors really did very, very well. The healthcare IT at the time was very much out of favor and was not doing well, but I think that's changed a little bit in the last decade. And that companies that did a mixed strategy between, at the time, between doing a biotech investing and in tech investing for the most part had trouble with that strategy except for a few outliers and that's gone out of favor too. But look, it was a master's thesis. It was not a deep thing. It was a start, but I really enjoyed that process. And I've always had this fantasy of if I ever had the time doing some research, a PhD was fun. Three jobs later, I was working at a startup funded by Third Rock Ventures called Edimer.
Jeff Behrens: We were developing a drug for a very strange, very weird, very rare disease where boys are born without sweat glands. About one in a hundred thousand. And it's a very dangerous disease because those boys, if left outside in the Sun or in a warm car can die. They can die. And so turns out, it's a single gene and a faculty member in Switzerland, in Lausanne, Switzerland had developed a protein that would reverse the disease. At least in mice and in dogs, completely cure them if given to the baby puppy or the baby mouse.
Jeff Behrens: And so the hypothesis of the company was if we gave this to baby boys early enough, then we could switch that disease over. So not to get too caught up in that. That drug is still moving forward and showing some great results with lots of ups and downs, but I was going to Lausanne, Switzerland and a friend of mine happened to be the dean of the business school at a school there École polytechnique fédérale de Lausanne, EPFL. A very well-known tech university.
Unusual PhD Program for Business People at Lausanne’s EPFL
Jeff Behrens: He said then we have this external PhD program where business folks who are working full-time, and it's an unusual structure, but they allow this and they have a set of courses you can take for a week at a time or two weeks at a time. So I thought, well, gee, I'll see if I can make this work with my strange career. It was just purely for fun and a chance to go to Switzerland and a chance to think about this world a little differently. So I took my coursework, finished that up around 2014-2015, passed my generals and then I've been very slowly working on three papers that need to be created for me to finish this up. A little busy with Siamab and LabShares. But now that Siamab has exited I've got a little bit of time and I said, "I'm not going to jump into anything full-time until I finish this."
Jeff Behrens: But I'm now looking at these questions that have puzzled me around biotech and I think one of the puzzle frankly comes from Siamab. Although, I certainly tried to raise venture funding, I was never successful. We raised about 20 million again from angels, about 14 of that from angels and then the rest was from pharma and corporate. We have four different pharma companies involved and some grants too. Is it me? Maybe I'm just not the right CEO for venture funding. Is it the idea or the company? I was really trying to figure this out. And so one of the key questions I've been looking at in the research I'm doing is how often do angel-funded companies go on to raise venture capital?
“…how often do angel-funded companies go on to raise venture capital?... in tech companies that’s true only 8% of the time…”
Jeff Behrens: That's what we think. That's the sort paradigm you think of. Founders start in the garage, they raise some friends and family money, they raise some angel money, then they go on to raise venture money and then they go public. And it turns out that in tech companies that it's only true about 8% of the time, and that the vast majority of tech companies don't do that. They either stay in angel land or they go on to sort of a born in venture land to live there. And that in biotech it's much worse. Only 4 to 5% in the data set I looked at which is the last 20 years of companies, only about 4 to 5% of biotech firms start in angel land and then transition on to venture land.
“…only about 4 to 5% of biotech firms start in angel land and then transition on to venture land.”
Jeff Behrens: So, it seems like in general the path is you start and live in venture land or you start and live in angel land and you don't really crossover. And I think that's it's a profound point because it means that when we look at startups as investors or executives, particular on the angel side and say, "Hey, we're going to raise a little bit of money now, generate some more great data, and then with that data, go out and raise the venture round." That may not actually be a real path for the vast majority of companies. And so that forces one to then think, okay, if not venture, how else we're going to make this company successful? How else are we going to get this product funded and brought forward? And so that's a key part of what I'm researching right now.
Sal Daher: As part of helping companies get funded, I've had conversations with people who say they're interested in biotech. Boston biotech and so on. But in the end, it's just the VCS were obsessed with large-scale companies in the Bay Area. And when you talk about a biotech company, it's like you don't even have any growth numbers. It's all about spending money in a lab. Where are the statistics now? It's all putting money in a lab and getting results. And then you're going to hand it off to a strategic player because you VC don't have enough money to make this work.
Sal Daher: It has to be a really deep-pocketed pharmaceutical company to actually bring this to market. They don't understand. It's kind of a B2B play is the language. And they're not into B2B plays. They like B2C because we just see that it can scale and they have expertise, and getting people to know about the company and that kind of stuff. As it happens right before we did this interview, we interviewed Chris Selland of DipJar. DipJar is a company that could have that kind of appeal because it's something that's intuitively very accessible to people.
Venture Capitalist in Life Sciences: “…have evolved their model dramatically from 10, 15 years ago. So, they're doing much larger rounds. They are syndicating a lot less. They're taking more of the early equity, and most importantly they're creating companies.”
Jeff Behrens: Absolutely. I mean, I think what we're seeing in the East Coast is that there's a set of venture investors that have become quite successful in this space. So we're thinking of Third Rock Ventures and Atlas and Polaris and New York Apple Tree. And one of things were observing is that they have evolved their model dramatically from 10, 15 years ago. So they're doing much larger rounds. They are syndicating a lot less. They're taking more of the early equity, and most importantly they're creating companies. I had Dave Berry from Flagship speaking at my class at MIT and he said up front, "We don't take pitches. We are not interested in hearing about anyone else's ideas because we have so many ideas inside the firm that we are incubating, that we don't have time and aren't interested in what other people's ideas are. And they're going to give birth to an idea inside the firm. They'll build an ecosystem in the firm of entrepreneurs in residence, really smart PhDs and MDs, partners in the firm."
Sal Daher: What company is that again?
Jeff Behrens: Flagship-
Sal Daher: Flagship.
Jeff Behrens: ... is one example, but Third Rock, Atlas are also doing this.
Sal Daher: Interesting. That's a little bit like the PureTech model.
Jeff Behrens: Yeah. The early days of PureTech, they didn't have as much capital. They were doing some really innovative things, but I didn't think they had... They didn't seem to have the capital to bring it forward. They're doing a little better with that now. But I think the model was okay, if Third Rock is going to raise a fund of 400 million or Flagship, whatever, that they're going to take $50 million chunks of that and invest heavily in a handful of companies that are very big ideas, with the top leaders in the field and they're going to give birth to that sort maybe try four or five of these.
Sal Daher: So they're creating the enterprises themselves.
Jeff Behrens: Correct.
Sal Daher: They're going on hiring the CEOs, they're hiring the scientific staff and all that. And they're also hiring people presumably to study, which is that the model that Daphne kind of used in early days at PureTech.
“...companies that are born out of this model start... They are born with $50 million…”
Jeff Behrens: I think that's right. So you couple great people with great technology and a lot of money, and again, that's terrific, but Third Rock can only do five or six of these a year maybe, Atlas, etc. So what that means is that some of the biggest ideas in our field, ideas like CRISPR which is gene editing and some of the cell therapies and things, those get a lot of funding. And these companies that are born out of this model start... They are born with $50 million and might raise a B round that's a hundred or 70 million and then they'll go public, and often relatively early.
Jeff Behrens: And they're a very broad play. They've got broad technology. They'll build up a broad pipeline with multiple drugs in the pipeline. And so it's not a binary story. So, again, that's a great model, but it does mean that if we're telling our young entrepreneurs raise a little bit of angel money and go pitch the venture folks, that's actually not how that world is working anymore. So we need to tell those young entrepreneurs in life sciences go ahead and raise your angel money, go ahead and win your grants, but recognize that you're going to have to get to an exit which is, as you point out, a pharma company almost always, pretty soon.
Crucial Question for Biotech Entrepreneurs: “…how you get to that pharma exit without needing the venture money?”
Jeff Behrens: And so, you need to start, how you get to that pharma exit without needing the venture money? And that's in general the path that I think can be done, so we did at Siamab, but it's not a trivial path, it's a challenging one. And there's one advantage we have that we can take advantage of is the progress in the field. This was true in tech 20, 30 years ago as software got easier to work with, servers got cheaper. All of a sudden, anyone in their garage can start writing great software and get it going.
Capital Efficiency Is Growing in Biotech
Jeff Behrens: Today in biotech, you're seeing more of that. You're seeing incubators, you're seeing shared equipment, core facilities, contract research organizations that can do a lot of this stuff on a fee-for-service low-cost basis. So it is possible to do capital efficiency in biotech more and more and that will help over the next decade I'm sure.
Sal Daher: So that gets us to... Let's talk about LabShares then which is what you're pointing out right now, a shared space for biotech companies. How did that come about? You're the founder of LabShares, Savran Technologies, got a golden ticket or whatever is the term.
Jeff Behrens: Launch at LabShares is what we call it.
Sal Daher: Launch in LabShares. So they got a free year to go there. That's a typical thing for worthy young startups. So tell us how it came about.
How LabShares Newton Came About
Jeff Behrens: Sure. I mean, I think back in my IT company days, in the Telluride days, we had built out an office that had 10,000 feet. You need to build up enough space for growth where we're 35 people. We have room for 50 or 60. So for a couple years, we were sharing space with some of my friends just because we had the space and it was helping out. So now fast forward to the early days of Siamab, and we needed a home for Siamab, and this was still in San Diego, and we moved into J&J's Janssen labs or JLABS in San Diego. And all of a sudden I was struck by, "Wow, this is amazing. They put all this money in there and there's 40 or 50 companies." And JLABS does this because J&J wants access to an insight into what's happening in the ecosystem. It gives them a unique perspective.
Jeff Behrens: And so back you when I move the company here to Cambridge and moved back to the Boston area where I live, we first put the company in a similar incubator in Cambridge. Cambridge Biolabs which was also terrific, low-cost, but Cambridge is getting tough. It's expensive. Look, it's wonderful. It's a phenomenal ecosystem. It's great restaurants. Lots of smart people. But the traffic is horrific, parking is a disaster, and space is basically completely taken more and more by large pharma coming in there, pushing out the littler companies.
Jeff Behrens: As we were growing at Siamab, we started to think about maybe we should look someplace else for space. We started to look in Newton where I've been before and near where I live, and found some space. Again, too big for what we needed. It was the minimum that made sense. We built a lab, but with the intention all along of again, sharing it with some friends as a side thing just to help pay the bills. And that worked incredibly well. We're basically full within three months and we didn't pay rent effectively as a startup biotech for the last three years of our life. And so instead of spending 20, 30, $40,000 a month, we were scot-free. So that's like free capital.
Sal Daher: So at the same time that you were CEO of Siamab, you set up this venture.
Jeff Behrens: But it wasn't a separate venture. It was just Siamab really.
Sal Daher: It was Siamab.
Jeff Behrens: It was Siamab owning the lease. Not office space but having the lease.
Sal Daher: Owning the lease, okay.
Jeff Behrens: And just it was a way that we could defer our occupancy costs or lab cost.
Sal Daher: So, the investors of Siamab, basically funded the lease.
Jeff Behrens: Right. But even from a Siamab point of view, it was a much cheaper story. It was much less expensive and more capital efficient because we had tenants in there.
Sal Daher: Instead of renting a broom closet lab in Cambridge, Siamab went out and rented a large space and shared it with a bunch of people. And it just became economic to the point where Siamab wasn't paying rent.
Jeff Behrens: Right. Siamab was a winner all the way through. But then we got to the point where Siamab no longer needed the lab. As we get near the end of, we call the preclinical stage of a drug, and we're moving into the human studies stage, you don't need your lab anymore for that drug. That drug is now going to be manufactured elsewhere in a clean room. It's going to be tested in hospitals. And so as we got to that point, and we had a longer lease, and so this became an interesting puzzle and as we started a contemplate an exit, we would want to terminate the lease.
Jeff Behrens: So Siamab wanted now be out of that business, although we had economically benefited from it, we didn't want to keep Siamab around just to run a lab, Siamab was exiting as a drug company. And this happened when at the same time some additional space became available to double the space, because it wasn't really enough to run an independent viable business on its own, a single floor, 6,000 feet, but when another 6,000 feet opened up upstairs it became a real opportunity to set up a new co, LabShares, acquire and do a sort of an arm's length transaction to acquire the space from Siamab, get rid of the liability on the books of Siamab of this long-term lease. So if Siamab once again benefited, and now we've set up a new co.
Sal Daher: So how long is the lease?
Jeff Behrens: So it's eight years eight.
Sal Daher: Eight years.
Jeff Behrens: With a five-year option, I think is what it was.
Sal Daher: Okay. One of the problems is thinking about the build-out that you have.
Jeff Behrens: Exactly.
Sal Daher: And make sure that's renewable. You have an option to renew.
Jeff Behrens: You're putting a lot of money in upfront, allot it on HVAC and other systems, and so absolutely. So, again, this was a way to sort of both help Siamab get to an exit successfully, and then leverage the space that we had there. And so we have a separate set of investors that are involved though also angels with a little bit of overlap with LabShares and that was launched formally a little over a year ago. We completed the build-out of the second floor just about six months ago, and we now have, I think 14 companies. So Savran is one, but we have a number of other companies there now. And we're about 60% full right now.
Sal Daher: That is really fascinating because I'm also a real estate investor, but multifamily. Recently there have been a lot of discussion like WeWork and so forth. But LabShares is… presumably the leases with the labs are one-year leases. You have a similar-
Tenancy in Shared Labs Has Low Turnover Since It’s Not Easy to Get Your Lab Up and Running
Jeff Behrens: Yeah. There's month to month agreements typically. Folks who are willing to commit for six months or close to a year, we'll give them a little bit of discount. But the reality is it's a pretty sticky business because to get someone to move a lab into a space, get all the equipment up and running, get everything validated, get the experiments working that's a process. And no scientist wants to do that frequently. So there's a certain amount of stickiness to this business which is nice.
Sal Daher: Yeah. So tenants like you, tenants like Raul for example with the studios and so forth have to remember there's a fascinating story from my days at Citibank. Citibank had a policy of not buying the branches that they operated in, and the needed to have a branch, I think was in Manaus in Amazon and Brazil, the capital of Amazonia, in Brazil. So they went into this branch and Citibank has this whole, very high standards about fire safety and electrical safety, and everything else. So they went in, they took this building that was a bank branch in Manaus, and they brought it up to Citibank standards.
Sal Daher: And they had like a standard eight-year lease and so forth. They came to the end of the lease, the owner said, "Well, this building now is worth a lot more." Because it used to be a very plain bank branch. Now, it's a bank branch that Citibank can use because it has all the fire safety and all the requirements. So it was like 10 times the rent and Citibank would have had to go out and spend a pile of money to go elsewhere because they had this building purposeful-
Jeff Behrens: They already put the infrastructure in.
Sal Daher: Exactly. So this is a lesson for people who are occupying spaces when you're negotiating the lease. Make sure you have a reasonable renewal option that'll hold water at the time that you renew otherwise consider buying the space.
Jeff Behrens: Absolutely.
Sal Daher: Because if you're going to make that kind of a build-out... And how much per square foot is the lab build-out?
Jeff Behrens: It varies a lot depending on the state of the space. You can spend upwards of 200 a foot or more to build out a lab and get it ready to go, and that may not even include the equipment because part of the model for LabShares and a little different, I think than some of the WeWork models is we have there's so much equipment that scientists need. So we spent about a million dollars now on laboratory equipment.
Sal Daher: Wow.
Jeff Behrens: Different instruments.
Sal Daher: Which all can be moved?
Jeff Behrens: Yeah. They're not fixtures, they're just equipment, and they become part of the offering. So if a startup is coming in and they need to access a flow cytometer and a PCR machine, and HPLC, they don't need to buy those things. We have them. And so they can share them and they can get up and running much more quickly without having to shell out that capital. And that's part of that capital efficiency.
Jeff Behrens: So an early-stage company with a small amount of money can just go jump right in and just buy the chemicals and reagents they need, the cells or whatever and then they just put the labor into it and start doing experiments.
A Discussion of Meenta as Part of the Trend Towards More Capital Efficiency in the Life Sciences
Sal Daher: Thinking of that, thinking of capital efficiency in biotech, you're doing one aspect of it which is the shared lab space. Are you familiar with a company name Meenta?
Jeff Behrens: No.
Sal Daher: M-E-E-N-T-A. I'm an investor. Gabor Bethlendy has been on this podcast. He's a founder and what they do is they have a platform for sharing lab equipment.
Jeff Behrens: Oh, interesting. I think I heard about this.
Sal Daher: Particularly a high-end lab equipment, next-gen sequencers, two, three million dollar pieces of equipment. And he's getting traction because actually he allows the hosts that are putting equipment to be used on the market. He allows them to use the platform to book their own stuff because their own machine is busy, they start using machines in other places and so forth. So, it's making much more efficient for someone to get their tests done instead of just owning a lot of capital equipment.
Jeff Behrens: I think that makes a lot of sense and the reality is that a flow cytometer or some heavy piece of equipment that's expensive may only be used by a particular scientist a couple hours a week. And then they're doing all their data out and they're doing other prep work. For most of the week, they're doing a little bit of work on these instrument and then a whole bunch of analysis. And that thing just sits there, the rest of the time. And so there's a real opportunity for sharing.
Sal Daher: And that gets me thinking, what's the interaction between a company like Meenta and the shared lab space companies?
Jeff Behrens: So I think we should learn about that and see-
Sal Daher: Yeah, I think that's something worth exploring.
Jeff Behrens: Absolutely.
Sal Daher: It's a really promising company and tenacious founder. He's a runner. So how did you fund taking LabShares arms-length? Did you fund that yourself? Did you have a group of investors?
Jeff Behrens: Again, I had a small group of angels, myself and my wife and a group of angels, and we acquired some of the equipment and things from Siamab, but also had to put a bunch of money into the next build-out.
Sal Daher: Sign me up in your list of potential investors the next time, if you're expanding or whatever.
Jeff Behrens: Thank you.
Sal Daher: Let me know.
Jeff Behrens: I will, absolutely.
Sal Daher: This is something that interests me because I think there's a lot to be done in the space of improving the efficiency of developing biotech.
Jeff Behrens: I agree.
Sal Daher: And particularly if somebody is so thoughtful who's really peered into all of this. So one of the questions I plan to ask you was really about you've worked in senior positions at prominent biotech companies, and so forth. And so basically, I mean, do you think there's anything that you derive there that you think would be valuable for the startups that you're working with now?
Jeff Behrens: I think, again, because biotech is such a challenging field. I went back to school as I talked about earlier as a way to make this transition, and initially I thought I'd pretty much go into entrepreneurship right away. But I, again, sort of lucked into a position at Biogen. So a very large multi thousand-person company initially as an intern. So I was in late 30s, I'm an intern.
Sal Daher: I love that. The willingness to be an intern in your 30s.
Jeff Behrens: Well, it's important. There's a broader point. When you think about our world today, many of us are working or many of us and our friends and peers are going to work well if they're 60, 70s, 80s.
Sal Daher: Exactly.
Jeff Behrens: And switching careers is maybe-
Sal Daher: It's become the norm.
Jeff Behrens: And so I think one of the challenges I find mostly coaching other folks and I was willing to do this is you may need to start over a little bit in a new field, and be willing to humble yourself and do crap work or start at a lower level, but of course interestingly I was an intern at Biogen, but I'm up here with a bunch of senior management from an age point of view with enough experience. So I'm having interactions at both levels and that ended up actually the first incubator I got involved is one I helped create at Biogen because the head of R&D who I gotten to know over coffee was saying, "We're really frustrated with internal innovation. We want to write a business plan for doing an external innovation incubator." I said, "I want to help you write the business plan, I just don't know anything about drug development. So team me up with someone."
Jeff Behrens: So that's where that sort of switching careers, learning new things. So again, that's one thing I think I learned was I spent several years at Biogen. I was at a company called Alnylam, sort of a smaller public company at the time, 2 or 300 people when I was there a decade ago and now, they're growing dramatically and doing great. And then I was at a startup funded by Third Rock Ventures, Edimer that rare skin disease story. But each of those experiences were incredibly important for me in the life sciences because it helped me understand from the buy side at Biogen, how does a big company evaluate opportunities. And how politically, and how sort of organizationally do deals get done?
Jeff Behrens Urges Entrepreneurial Postdocs to Spend Time in Large Companies to Learn How they Work, Before Venturing Out on Their Own
Jeff Behrens: How does a big entity make this? It's not like there's a single brain there making all the decisions. There's this network of people and champions inside that organization are more or less successful at quarterbacking deals through that organization. I was in that role. And so now when I was at Siamab much later, I was able to sort of understand my interactions with pharma, I think at a different way. So that was very valuable. I'm not sure it's a lesson I can share or sort of distill down as opposed to saying to those young entrepreneurial postdocs that is an argument for spending some time in industry and learning how your customer thinks because we think of pharma as our customer in biotech understanding how that works. Know your customer.
“One of the few ways you can get to know pharma is working at pharma for a while.”
Jeff Behrens: One of the few ways you can get to know pharma is working at pharma for a while. So that's maybe a piece of general advice for a lot of PhD students that I talked to who are interested in the space that want to dive in and start a company which is great, and if they do, wonderful, but also understanding your customer is so important in this field and that's a hard customer to understand the large pharma organization.
Savran Technologies as an Example of a promising Life Science Startup
Sal Daher: Well, yes. I mean, those are very complex organizations. This is tremendous. Let's talk a bit about Savran, and what led you to join the board. By the way, I'm really grateful to our mutual friend Ben Littauer for putting us together. The introduction led eventually to getting you on the board of Savran where I think you could be really valuable. So what's your perspective. What do you see [crosstalk 00:40:44]
Jeff Behrens: I think it's a great example of a promising life science startup. You've got phenomenal science coming out of Çağrı Savran's lab at Purdue. He started at MIT where he was doing some of the early work now at Purdue where he's a faculty member. He's brilliant. The technology is a combination of hardware and biology that allows the isolation of single cells, which has really been sort of like a Holy Grail. It's a critical thing to do when it's hard to do. So for example, we know that in many cancers in the bloodstream, circulates cancer cells. Not a lot, but they're really important because if you ever could pluck those out, you could learn a lot about that solid tumor. So if it's a pancreatic cancer, but it's spitting out a few cells and with a simple blood test you could isolate those cells, you could determine what's happening with the cancer, what stage it's at. You might be able to figure out what treatment it might work. Another example is-
Sal Daher: And it's not amenable to a biopsy or something like that.
Jeff Behrens: Well, it's not that you couldn't do a biopsy, a biopsy is a painful, invasive, no one likes them, sticking needles into people as they get sicker. It's so much-
Sal Daher: It could lead to metastasis.
Jeff Behrens: All sorts of things. So being able to just work with blood as... No one likes a needle stick but at least there's no real risk there, and so you can learn a lot. Another set of applications outside of cancer is in maternal fetal medicine with a pregnant woman who has circulating cells that are fetal, and if you want to learn about, or diagnose, or understand what's happening and that developing fetus without being, again, invasive. Amniocentesis is risky, the CVS [chorionic villus sampling] is also risky. So there's a number of areas where isolating a rare cell.
Sal Daher: CVS?
Jeff Behrens: It's a test, a prenatal test similar to amnio. Take a bit of tissue from the placenta.
Sal Daher: Oh, from the placenta?
Jeff Behrens: Yeah.
Sal Daher: I also heard more recently of something where this swab of the cervix and so forth, but it doesn't...
Jeff Behrens: Yeah. I think there's a lot of... Look, I think that trying to understand the state of a patient in a non-invasive way is certainly a goal in this industry. It goes to Star Trek. We all had tricorders that we just wave over a patient, we could not hurt them and learn a lot. But that doesn't work yet. So I think this is a technology isolate single cells. We can do a lot with it. We can culture cells. We can sequence their DNA. We can test them in all sorts of ways. So it’s a platform technology? It's got some strong IP behind it, but it's also an early stage company. It's got thin funding. It's got technical hurdles to solve. As a board member, I'm observing, and I'm sure as an investor you've experienced this. The problems are a little harder than everyone would hope they would be. They're certainly solvable.
Sal Daher: Invariably.
Jeff Behrens: It takes more time and more money. So in spite of progress being made. Had a lot of interest already from big companies as partners.
“…memo to founders. When you're offered money, take it. You will need more than you expect.”
Sal Daher: One second, memo to founders. When you're offered money, take it. You will need more than you expect.
Jeff Behrens: Completely true.
Sal Daher: This is like every single time because founders think that angels tell them that because angels just want to get more of the company.
Jeff Behrens: Right.
Sal Daher: But they should know that it's like I've never heard of a founder who said, "Oh, I just raised too much money. This is too much." Ever.
Jeff Behrens: Absolutely. And I think that in life science is because these puzzles are so hard and biology is complicated, it's hard to predict. Again, in software today, if we want to write code to solve a problem, that's usually a pretty well-defined problem. You can figure out how long it's roughly going to take, how many person hours you need, and you can get there pretty. But in life science it's still a little bit of the unknown there.
Sal Daher: Tremendously, yeah. Now, Jeff. Tell me a little bit about your pre-Harvard days. So you grew up around here?
Jeff Behrens: So I grew up in Framingham. I went to Framingham North High where I graduated. I was local. So I've stayed pretty local my whole life.
Sal Daher: Excellent. So you grew up in Framingham and went to high school there and then to Harvard College. Do you remember a moment in your life where it clicked with you what you're going to be doing? What were you really put on this earth to do? Do you remember that?
Jeff Behrens: I still don't know. It hasn't happened yet. I think that I've been... For better, worse, I think fairly opportunistic and tried to not follow conventional wisdom, I guess. So in college although you've got Harvard, you can do recruiting and you can get great jobs working for great companies. I didn't want to do that. It just seemed like too easy, too conventional a path. I want to try something different. I, again, was thinking of being a teacher. And I still enjoy teaching as you mentioned earlier. I teach little bit at MIT still. But no, I don't think there was any sort of early insight into I want to do this entrepreneurial thing. I sort of felt like I fell into it and discovered I really liked it. And it's hard, it's a chance to keep learning and to go into these new areas and learn new technologies, and learn new skills meet amazingly smart people and try to figure out how to work with them.
Different Paths of Lives Well Lived
Jeff Behrens: So, I think that certainly the Telluride experience, the IT company back in the '90s was a lot of fun. We built a great company. We really build a great team and had a nice outcome to that. And then life sciences, it's been this whirlwind of learning because there's just so much to get up to speed on the technology, the development the companies, and I've enjoyed every step of it. Certainly, there's bumps along the way and in Siamab had many near-death experiences on the way to our exit, but I think as long as I can keep learning, I'm happy to try new things. And it may not be the most efficient way to do things, but it's certainly a fun way to do things.
Sal Daher: That is tremendous. It's funny that you mentioned Framingham just a few weeks back. I have a partner in some of the buildings that I own and he's from Framingham. His father is from Framingham. His grandfather grew up in Framingham. His father passed away recently and he started as a service center in Framingham, Tosti's Service Center for automobiles. And he's been in that business his whole life and his son got into real estate after that. And the funeral was attended by enormous outpouring of people in the funeral home, the enormous line. And this man had just a very simple life. He served his country in Korea and then he came back and got married, a big family, had a little business, nothing fancy. That's a really, very full life.
Jeff Behrens: Absolutely.
Sal Daher: And then I think like Joseph Schumpeter, the great economist. He's the guy who came up with the idea of creative destruction. He's done you know amazing work and he considered himself a failure at the end of his life.
Jeff Behrens: Oh, interesting.
Sal Daher: Joe Tosti, I don't think consider himself a failure. He really had a sense that he fulfilled the things. He had lived up to the obligations that he had in his life and it showed, getting a little philosophical, I think people have to have a sense of getting things done and in the end of the day, you cannot do everything because Schumpeter thought that he had then maybe half of what he should have done, and yet did a lot.
Jeff Behrens: I think it is true. One of the nice things about life sciences and biotech is... And one of the reason I'm moving into this space was this hope that you could really have an impact, that you could create a product that's not just an iPhone game, but could actually save a life. And the lead drug that we're working on in ovarian cancer and I have now partnered out, we hope that'll be in the clinic. In the next year 18 months, and that would be an amazing accomplishment for the team that spent so much time and money for those who invested and intellectual input for those who did that to create this thing that could really help people.
Sal Daher: You're still a young guy. If your life ended right here, you'll have done amazing stuff. I mean, it's just like [crosstalk 00:48:21].
Jeff Behrens: That trial needs to be run. But that's a really rewarding thing. And the other thing I think that I found generally rewarding is working with other people whether they're direct employees or more academic partners now, whether it's mentoring people or teaching or watching people grow and take on more responsibilities. So some of our early team from the IT company, my wife Laurie and I built this 35 person team at Telluride and we're still close and friends with a number of the senior management from that company. Almost all of them. There's one or two left of the company still over a decade later, but it's fascinating to watch their careers and feel like you may have contributed a little bit to some of those folks. That's another really rewarding thing.
Sal Daher: Would you be comfortable talking a little bit about your relationship with your wife investing at the same time in business?
Getting into Business Alongside Your Spouse
Jeff Behrens: Sure. She also had no interest in business early on and she had worked in federal government in human services. She went into the masters at the Kennedy School. We were classmates at college and then several years after. She started helping out with the Telluride Group back in the early days, really helped me in terms of building the teams. We started to grow the company and hire. She is a very high emotional quotient, EQ. I may be a little less so. And so she was really helpful sort of as a consultant. Then that just became more and more important. So ultimately she ended up joining the company and running it with me. And we split the responsibilities pretty cleanly. She was doing hiring and marketing, and sort of staff management issues. And I was doing technology and client-facing work. And so we did that for over a decade. It's not easy working with your spouse.
“It's not easy working with your spouse…And you're never far away from the company and all those things.”
Sal Daher: Oh, no, no. Sure.
Jeff Behrens: And you're never far away from the company and all those things. I think we agree that having done that once that was enough, we don't need to do that again. So since then, we haven't worked together formally. And she's continued to build her own consulting practice working with innovative startups, helping senior management, boards, sort of deal with issues also in the nonprofit sector. And I've gone on to the life sciences. Now, this came back a little bit when we decided to invest pretty heavily in LabShares. So she's now with me, one of the largest shareholders in LabShares so that's something she pays attention to, of course. But I think now our support entrepreneurial is helping each other more informally as opposed to formally day-to-day.
Sal Daher: Yes, because I've seen this. I've interviewed Dave Ciccarelli who was the founder of Voices.com. He and his wife started the business together. He was a sound guy and she was a singer. She's an opera singer looking for a studio and they started... It's now a very large business, voices.com and they run it together. And Steve Shapiro, CEO of FineTune, and his wife the two of them had a business together for a long time. So I'm always curious about that relationship.
Having His Wife as His Co-Founder Was Key to the Success of Jeff Behrens’ First Company
Jeff Behrens: Yeah. And I think there's super advantages. I mean, the advantage of having a partner who you really can trust. You're really aligned and sort of the long-term interest of... You're part of the equity in the company. It creates stress too is you got to manage through that. But it can be a very, very complimentary thing if you can make the relationship work, and it was super important with Telluride's success.
Sal Daher: So, Jeff, as we wrap up this interview, I'll invite you to address our audience of founders, people who work at startups and angels, maybe 20% angels, what would you like to say to them from the experience that's really valuable that you think might be valuable for them?
Jeff Behrens: One thing I would say is that I'm very grateful to the angels that I've gotten to know and work with. There's over on our cap table by the time we exited, over a hundred investors in the company.
Sal Daher: $14 million from angel investors.
Jeff Behrens: Yeah.
Sal Daher: As my old business partner would say Mazel Tov. Congratulations. That is quite an achievement.
“I think there is this unsolved problem of funding, not the first steps of an entrepreneurial scrappy biotech, but sort of the next steps.”
Jeff Behrens: Yeah. I know. Look, it was not all at once and it was over time and it was building... So I think one is sort of frankly, just gratitude. And I think angel investors play a critical role in our entrepreneurial ecosystem, and I think we wouldn't have the kinds of innovation and technologies today we have without them. So I think that whether they're doing it as part of groups or part of Techstars or on their own, I just think that it's a way of giving back in a really meaningful way. So that's certainly one thing. I think there is this unsolved problem of funding, not the first steps of an entrepreneurial scrappy biotech, but sort of the next steps.
Jeff Behrens: So, for example, Richard Anders who was one of the folks that I guess founder or co-founder of Mass Medical Angels, he and that group have been thinking about this puzzle in cancer. How do you continue to provide ever greater amounts of capital? So he started to think about doing a broader regional, even national angel network looking at oncology and cancer therapeutics. I think innovation needed at that interface or that transition point between angel and venture. How do you solve them? You call it the Valley of Death sometimes with funding. SO I think that's an interesting puzzle. I think there's opportunity there, there's challenges, and I'd love to see some of the forces of our ecosystem focused there because there's a great need for it.
Sal Daher: Yes. Jeff Behrens, founder, CEO, scholar of life science financing, scholar of life, thanks a lot for making time for this engaging interview.
Jeff Behrens: My pleasure, Sal. I enjoyed it very much.
Sal Daher: Tremendous. I'd like to invite our listeners who enjoyed this podcast to review it on iTunes. This is Angel Invest Boston, conversations with Boston's most interesting angels and founders. They don't get much more interesting than Jeff Behrens. I'm Sal Daher.
Sal Daher: I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme is composed by John McCusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.