David Berry of Flagship Ventures on Funding Advice, Investment Themes, Trends in Biofuels

Xconomy Seattle — 

A rising star of the Boston-area venture capital scene is in Seattle today. He’s David Berry, a partner with Flagship Ventures, and he’s speaking on a panel tonight that will tackle a question on every young company’s mind, when it comes to financing: to VC or not to VC? The event is organized by the MIT Enterprise Forum, and the other speakers will include Jonathan Sposato from Picnik (a bootstrapped startup recently acquired by Google); Mark Ashida from OVP Venture Partners; Michael Butler from Cascadia Capital; and moderator Chase Franklin from Daptiv (the former CEO of Qpass).

Berry’s background is quite different from the other panelists—and from most VCs. He graduated in 2005 with an MD-PhD from Harvard and MIT, where he studied bioengineering under professors Ram Sasisekharan and Robert Langer. Flagship Ventures stole him away from an academic career to work on building new companies and developing technologies in energy and therapeutics. He has since co-founded LS9, a Silicon Valley-based synthetic biology firm developing new fuels and chemicals, and Joule Unlimited (formerly Joule Biotechnologies), a Cambridge, MA-based startup that’s using genome engineering to create other types of clean fuels. (Given the strong interest in biofuels and renewable chemicals in the Northwest, Berry has plenty of connections out here.)

When it comes to advising entrepreneurs, Berry is frank about the alternatives to venture money. “It’s unusual for a VC to say venture capital is not always the best choice,” Berry told me by phone yesterday. “But with venture capital firms folding, you have to know where your money is coming from. While money is fungible, long-term money isn’t.”

Here are a few edited highlights from my chat with Berry:

On his general advice to entrepreneurs:

“At some point you do need capital. There are ways where you can get government grants and so forth. In certain areas you can get some revenues to offset capital needs. As [entrepreneurs] think about where they want to go, the real question is who are the best partners to have along the way, to build the company. That means someone who’s not only trusted around the board table or as an advisor, but someone who will challenge you and push back and make sure you’re thinking strategically in the best way possible.

“From our end [Flagship], we invest in the beginning of a company—the two most important assets are its people and its IP. We care about having the best people around the table, entrepreneurial people who want to solve big problems. Also, people who have a very interesting approach to that—differentiated technologies that are IP protected, and that have some degree of validation.”

On alternatives to VC in energy and biotech:

“Venture has played a bit of a mainstay role as of late. In energy, there are sovereigns and private wealth holders which have played significant roles—Temasek, and Masdar has been quite active … Next Page »

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