Allied Minds Aims to Forge Early Alliances with University Researchers
Anybody who reads this blog is familiar with the large number of venture capital companies ready to fund developing businesses, and there always seem to be more climbing aboard in Series B and C rounds as a particular business starts to look more likely to succeed. But one local company, Allied Minds, hopes to make its fortune by focusing on the very earliest stage, when a technology looks interesting but isn’t quite ready for prime time.
Allied Minds, based in Quincy, has identified a gap in technology development, says chief operating officer Marc Eichenberger. “Other people will call it ‘The Valley of Death,'” he jokes. It’s the point at which federal funding for university research stops, but where a technology hasn’t been developed to the point of commercialization. Allied Minds’ strategy is to team up with universities and national laboratories to identify the intellectual property that might make a promising product and provide what the company likes to call “pre-seed” funding. Someone may have a proof-of-concept, for instance, but no money to build a prototype.
There are angel investors, of course, that provide seed money to support promising university spinoff technologies, and we can point to a small set of Boston area venture firms with a focus on early-stage deals with academic researchers—Third Rock Ventures and PureTech Ventures to name two we have written about. And just about every VC firm has some university dealings. But Eichenberger says, “We don’t see a lot of people coming at it in the kind of structured and national way we do.”
First of all, the company forms formal, contractual relationships with technology transfer people at universities. At the moment, they’re tied in with 26 universities and two national laboratories. That makes it easier for universities to find funding for potential spinoffs so they can reap the income from licensing their IP.
Another difference: “We are not a fund. We are a company,” Eichenberger says. Allied Minds is funded and owned by a group of international investors. Funds tend to be life-limited, with investment money to be expended in a set amount of time and with an expected exit date for any companies started. Allied Minds is on no timetable, and its exit strategy is open-ended. Its companies, which it considers subsidiaries, could be sold, go public, or offer licensing deals to other businesses.
The company was founded in 2006 by a British entrepreneur, Mark Pritchard, owner of a private investment firm in London. He’d worked with university patents in that capacity, but thought the U.S. would be a much richer environment in terms of research. Eichenberger estimates that $45 billion of federal funds run through university laboratories. So Pritchard set up Allied Minds, with an office in London (where he lives) and another in Quincy, to tap into the U.S. university research stream.
“When Allied Minds was born, the hypothesis was that the market was in the middle of the country,” between the Rockies and the Appalachians, Eichenberger says. The thought was that universities on the coasts, the MITs and the UC Berkeleys, had plenty of experience with tech transfer and access to established VC firms. In fact, the first company … Next Page »