Venture Capital: The Elusive Anti-Portfolio: A Rare Sighting

This is part of my Series on Venture Capital.

In that we were speaking of "negative" or "anti-portfolios" in this earlier post, just have a look at Bessemer Venture Partners' vaunted list below and the sometimes hilarious explanations they give for having passed on the opportunity. They've been in business since 1911 and obviously have the sort of self-confidence, sense of humor and terrific track-record to put some of these mammoth misses up on their own site. How many VC's would advertise the fact that they turned down the likes of Google, FedEx, Ebay, PayPal, Apple, Cisco and others of this ilk? ( Of course, just have a gander at their top 50 exits and you'll see why they feel as if they can).

My favorite line is the pass they took on PayPal: "Rookie team, regulatory nightmare, and, 4 years later a $1.5billion acquisition by Ebay." 

This one's pretty good too:  "Whatever the reason, we would like to honor these companies -- our "anti-portfolio" -- whose phenomenal success inspires us in our ongoing endeavors to build growing businesses. Or, to put it another way: if we had invested in any of these companies, we might not still be working."

		A123 Systems In 2004, Northbridge and Sequoia offered Rob Chandra an opportunity to invest in the A123 Series C financing. Rob thought the world would have to freeze over before GM and Ford would seriously support battery powered cars. Sure enough, in 2008 Lehman collapsed, the world nearly froze over, GM restructured itself and emerged from bankruptcy with an appetite for building an electric car. A123 went public in 2009 with a $1.3 billion valuation.
		Apollo Computer (acquired by Hewlett Packard) BVP's Felda Hardymon was offered a small position in the company's last private round, and waved it away: too small a position, he thought, at too high a price. In less than a year it was worth 17x.
		Apple Computer BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVP's Neill Brownstein called it "outrageously expensive."
		Check Point In 1994, Gil Schwed pitched his idea to BVP's David Cowan, who said that Gil would never get distribution in the US. The next year, Check Point got a huge Sun OEM deal and sold $25M of firewall software.
		eBay "Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass."
		Federal Express Incredibly, BVP passed on Federal Express seven times.
		Google Cowan's college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to "these two really smart Stanford students writing a search engine". Students? A new search engine? In the most important moment ever for Bessemer's anti-portfolio, Cowan asked her, "How can I get out of this house without going anywhere near your garage?"
		Ikanos Rob Chandra met these guys in 2000 at the start of the telecom meltdown, and remembers saying something like, "Rajesh, I like you a lot but do you really want to build a communications semiconductor business right now?" He looked at Rob in a sort of funny way and then raised money from Greylock, Sequoia and others. They are now running at a $60 million revenue run rate by focusing 90% of their effort on the telecom boom in China.
		Intel BVP's Pete Bancroft never quite settled on terms with Bob Noyce, who instead took venture financing from a guy named Arthur Rock.
		Intuit Along with every venture capitalist on Sand Hill Road, Neill Brownstein turned down Intuit founder Scott Cook. Scott managed to scrape together only $225K from friends, including HBS classmate and Sierra Ventures founder Peter Wendell, who personally invested $25K to get Scott off his back.
		Lotus and Compaq (formerly known as Gateway Computer) Ben Rosen, one of the founders of Sevin Rosen, offered Felda Hardymon the chance to invest in both Lotus and Gateway Computer on the same day. Says Hardymon: "Lotus wasn't proven yet, and I was worried about the situation there. As for Gateway, I told him there was no real future in transportable computers since IBM could do it."
		Paypal David Cowan passed on the Series A round. Rookie team, regulatory nightmare, and, 4 years later, a $1.5 billion acquisition by eBay.
		StrataCom (acquired by Cisco) Felda Hardymon: "[Sierra's] Pete Wendell asked if I'd like to look at Stratacom, which was doing a 'fast packet switch.' I gave him a blank stare."

A Sampling of Commercial Products Using Columbia University Technology

This is part of my Series on University Entrepreneurship.

 Above I’ve posted a graphic showing some of the many products that have been developed in whole or in part from the intellectual property emerging from Columbia University’s many labs. Almost all of these represent IP licensed directly to industry by my colleagues at Tech Ventures, Columbia’s Technology Transfer Office. One can see everything here from life-improving and sustaining drugs to BluRay technology to the technology behind the Iphone’s screens.  With an average of 50 industry licenses, 100 sponsored research agreements, and 12+ spinoffs per year coming from Columbia alone, one can see that university tech transfer across the country has had an enormous benefit to society. The original vision behind the Bayh-Dole Act is definitely working.

For Part Eighteen in this Series, click here

Some Examples of Private Sales and IPO's from Columbia University's Startup Portfolio

This is part of my Series on University Entrepreneurship.

 In the coming weeks I’ll be discussing the popular Entrepreneur Office Hours Program we launched at Columbia University’s Venture Lab some months ago. The program is open to anyone in the Columbia community and is scheduled on a rolling basis by appointment.

In the meantime, for all you fledgling entrepreneurs out there in universities around the country and overseas, I thought I’d begin to post some inspirational information on some of the successful exits Columbia’s portfolio companies have enjoyed over the years. Here are a few examples below. 

Aton Pharma (Acquired by Merck for $150 million; NYSE: MRK)

http://www.merck.com/

The company is developing cancer drug targets based on research from R. Breslow of Chemistry and Sloan Kettering technology. Lead candidate is in Phase I/II clinical trials. The company was acquired by Merck for $150 million on February 2004.

CallStreet (Acquired by FactSet for $7 million)

http://www.callstreet.com/

CallStreet is the leading provider of corrected and formatted transcripts of management conference calls to the investment community. Hundreds of leading firms rely on CallStreet for the most accurate, highest quality content available. The company was acquired by FactSet in May 2004.

Corixa (Acquired by GSK for $300 million)

http://www.gsk.com/

Corixa is a biotechnology company involved in the identification of novel genes. The company develops immunotherapeutics that treat and prevent autoimmune diseases, cancer, and infectious diseases by understanding and directing the immune system. Corixa was acquired by GSK for $300 million on May 2005.

CoTherix/Exhale Therapeutics (Acquired by Actelion Pharmaceuticals; NASDAQ: CTRX)

http://www.cotherix.com

CoTherix is a biopharmaceutical company focused on licensing, developing, and commercializing therapeutic products for the potential treatment of cardiovascular diseases. CoTherix went public at the NASDAQ for $30 million in October 2005 and was purchased for $420 million by Actelion in November, 2006.

Electro-Optical Sciences (NASDAQ: MELA)

http://www.eo-sciences.com

EOS is a medical device company focused on the design and development of a noninvasive, point-of-care instrument to assist in the early diagnosis of melanoma. EOS went public at the NASDAQ for $20 million in October 2005.

Memory Pharmaceuticals (NASDAQ: MEMY)

http://www.memorypharma.com/

Memory Pharmaceuticals, a biopharmaceutical company, is focused on developing innovative drugs for the treatment of debilitating central nervous system disorders, many of which exhibit significant impairment of memory and other cognitive function. The company went public at the NASDAQ for $35 million on April 2004 and was acquired by Roche in 2008.

Mycrocept (Acquired by Healthpoint)

http://www.healthpoint.com/divisions/surgical/

Mycrocept develops, markets, and distributes a variety of innovative pharmaceutical infection control systems, its flagship product being an antibacterial surgical hand scrub to the hospital market. The company was acquired by Healthpoint for an undisclosed amount in October 2005.

Nephros (AMEX: NEP)

http://www.nephros.com/

Nephros was founded in 1997 by Columbia University health professionals, scientists, and engineers to improve the quality of life for the end stage renal disease patient, while addressing the critical needs of the care provider. The company went public at the AMEX for $12.6 million in September 2005.

ParAllele Biosciences (Acquired by Affimetrix; NASDAQ: AFFX; Department-Genomics and Development, Eric Schon)

https://www.affymetrix.com/corporate/parallele.affx

ParAllele Bioscience is now part of Affymetrix. Not only does ParAllele bring innovative assay technologies to the Affymetrix technology portfolio, but working with their talented team of scientists, Affymetrix can continue to build on the underlying molecular inversion probe technology while expanding the applications capability of the GeneChip® platform. The company was acquired by Affymetrix for $120 million in October 2005.

Pharmacopeia Drug Discovery (LGND: NASD)

www.pharmacopeia.com

Pharmacopeia is a biopharmaceutical company developing small-molecule therapeutics to meet the needs of large patient populations suffering from significant unmet medical needs. Pharmacopeia's programs leverage the company's immunobiology expertise and are focused on diseases such as rheumatoid arthritis, multiple sclerosis, and psoriasis. The company was purchased by Ligand Pharmaceuticals in 2008.

Progenics Pharmaceuticals (NASDAQ: PGNX)

http://www.progenics.com/

Progenics is a biopharmaceutical company focusing on the development and commercialization of innovative therapeutic products to treat the unmet medical needs of patients with debilitating conditions and life-threatening diseases. Their principal programs are directed toward symptom management and supportive care, human immunodeficiency virus, or HIV, infection, and cancer. The company has four product candidates in clinical development and several others in preclinical development.

Renovis (NASDAQ: RNVS)

Renovis was a science-driven, biopharmaceutical company that sought to discover, develop, and commercialize therapeutics for major medical needs in the areas of neurological and inflammatory diseases. The company went public at the NASDAQ for $66 million in February 2004.

Sentigen (Acquired by Invitrogen; NASDAQ: IVGN)

http://www.sentigen.com/

Sentigen Biosciences, a wholly owned operating subsidiary of Sentigen Holding, has developed a proprietary drug discovery platform that has the potential to change the paradigm of modern-day pharmaceutical discovery and development. The company was acquired by Invitrogen for $26 million in September 2006.

SGX Pharmaceuticals (NASDAQ: SGXP)

http://www.sgxpharma.com/

SGX Pharmaceuticals is focused on the discovery, development, and commercialization of innovative cancer therapeutics. Its mission is to provide patients with life-changing therapies through the dedication, innovation, and excellence of its employees. The company went public at the NASDAQ for $24 million in February 2006 and was subsequently bought by Ely Lilly & Co. in 2008.

Skinetics (Acquired by Sirna Therapeutics Inc., which was subsequently acquired by Merck; NYSE: MRK)

http://www.sirna.com/

Based on technology from Dr. Angela Christiano's lab in Dermatology, Skinetics focuses on hair loss and growth. The company was acquired by Sirna for $2 million in December 2004, and was subsequently acquired by Merck.

System Management ARTS (Acquired by EMC)

http://www.emc.com/products/software/smarts/smarts_family/index.jsp

System Management ARTS is a leading developer of software to automate management of complex networked systems and identify network problems in real time. The company was acquired by EMC for $260 million in December 2004.

For Part Seventeen in in this Series, click here