Why Biogen Idec Got Out of the Corporate VC Business
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through conversations like that, and they won’t be strengthened by going a step further and co-investing, Holtzman says. “I was just in a meeting in this room with [Venrock’s] Tony Evnin, one of the grandfathers of this industry. Tony invested in my first company in 1987, he invested in Millennium, and he invested in Infinity. I walked in here and we hugged. We hugged. That’s what it’s like with meeting most of them.”
3. “As a corporate VC, you can get a preferred seat at the table when it’s time to buy the new technology.” This is essentially a myth, or at least it should be, Holtzman says. “As someone who was a CEO of one of those startup companies, and had Novartis Venture Fund as an investor, you owe it to the shareholders, and you owe it to yourself, if you have something interesting, to go get the best deal that’s right for your company. Therefore, there are no preferred seats at the table.”
4. “There’s a need to support the life science innovation ecosystem now that traditional VC is declining.” This is a more recent argument in favor of corporate venture investing, Holtzman says. But there are other ways to support the innovation community than by making venture investments, he says. Specifically, Biogen looks to support the ecosystem by sponsoring what he calls “strategically important research at universities” and by entering into alliances with young biotech companies.
And even though Biogen isn’t technically making venture investments, Holtzman notes that it can always make equity investments in small companies when it forms a development partnership. Biogen can still add an equity component to the usual upfront, milestone, and royalty payment structures that companies use to share the risk and rewards of drug development, he says.