Blog Archive - Page 13 of 13

Prof. Bobby Gaspar wanted to solve a big puzzle.

But he only had a few pieces in hand. He and his co-founders had some of the most exciting-edge gene therapy medicines-and clinical data showing they worked-but that wasn’t enough.

To turn these academic developments into actual medicines, he needed to create a biotech company that could bring the right people together, build the necessary regulatory and manufacturing infrastructure and have the business acumen to aggregate multiple rare disease assets from several academic counterparties through complex license negotiations.

He needed serious leverage.

Other investors had met with him but passed up the opportunity. F-Prime saw the potential of his vision and stepped in as his co-founder in Orchard Therapeutics and lead investor. We provided the founding operational team with the biotech industry expertise and the financing they needed to secure several licenses with other academic institutions and create the operational infrastructure.

This enabled Bobby, now Orchard’s Chief Scientific Officer, to create a category-leading biotech company. Orchard Therapeutics went on to raise $300M in private financing, and it took only three years to go from incorporation to NASDAQ IPO.

“I couldn’t have created Orchard without F-Prime.”

Prof. Bobby Gaspar, Founding CSO

Patients get care from many providers. When these caregivers don’t coordinate, it’s dangerous and expensive.

Could this be improved by solving a communication problem?

That’s what Jay Desai and David Berkowitz believed. So they co-founded PatientPing, a community of providers coordinating patient care through real-time notifications across facilities, networks, and even states. When we met Jay and David, they had recently founded the company and were sharing co-working space. We were immediately impressed with their industry knowledge, passion, and vision for improving provider coordination across the continuum of care. F-Prime led the company’s seed investment and welcomed Jay and David into our offices as they began to build the team, develop product, and close early customers.

During the following year of sharing space and snacks, we enjoyed being close to the company as it scaled to ten team members and prepared for their Series A, which F-Prime was pleased to co-lead with GV. Since then, PatientPing has rapidly built a vast national network that enables thousands of providers around the country to share information in real time and better coordinate patient care.

“Since early on, when F-Prime generously shared the office you see in the picture, the team has consistently and thoughtfully supported us. They’ve been a terrific partner.”

—Jay Desai, CEO

From the willingness to listen and the ability to innovate in the face of failure, a Boston unicorn is born.

Steve, Aman and Jon were at dinner when they realized the restaurant industry needed a serious tech upgrade. The three MIT grads had met at enterprise software company Endeca, and had been thinking of starting their own company in the mobile commerce space.

The first product they made was a customer-focused mobile payment app, developed in Aman’s basement and launched at a local Boston pub. It flopped.

But that didn’t stop them. They realized that the app was just adding to the restaurant operators’ woes on an already-busy Friday night; servers certainly didn’t need one more thing to juggle. The trio probed further, and discovered that what was really broken was restaurants’ central operating system: the POS. So they shifted gears.

This pivot was critical. Restaurateurs previously reluctant to discuss the mobile payment app would now talk hours about how much they hated their existing POS: they were difficult to operate, poorly serviced, and expensive to fix. Here, indeed, was a big problem worth solving.

Using their background in enterprise software, the team hired restaurant experts and relied heavily on early customer feedback to iteratively build a platform to manage all operations. The platform prioritized mobility, ease of data access and updates, and a better consumer experience.

The company virtually exploded overnight. Two years from being founded, Toast had signed over 1,000 merchants across the United States and grown to over 120 employees, requiring a space upgrade from 7,000 sq ft in Cambridge to 40,000 sq ft at the Hatch Fenway co-working space. In early 2015, Toast brought on Chris Comparato (Acquia, Endeca) as CEO.

Shortly after, they met F-Prime Capital which participated in their first round of institutional round funding, raising $30M; within three years, Toast raised $115mn in Series D funding, and its official unicorn status at a valuation of $1.4bn.

As the company continues to grow, it remains obsessed about customer feedback and hyper-focused about the entire restaurant experience, both cornerstones of its success.

Emil Kakkis has always been driven to solve difficult problems.

When he approached us, he was looking for an investor who would understand rare diseases the way he did. His vision was to build a mission-driven company to treat rare and ultra-rare genetic diseases—all the way from concept to globally-approved drugs.

The mutual trust between us was strong from the start. Emil demonstrated great leadership recruiting the team and hunting for drugs. Together we had to be opportunistic, and willing to go off-script and embrace a vision larger than “VC-101”-focused company building. We had to have the ability to support product acquisition, collaborations, and the additional investment that effort implied. Most small companies don’t have four clinical programs just three years after being founded. Ultragenyx did.

And in 2017—just six years in—Ultragenyx launched Mepsevii, a globally-approved therapy for Sly’s disease, an extremely severe and rare genetic disease that had remained untreated since it was first identified in 1972. 2018 saw the global approval of Crysvita for the rare bone disease X-linked hypophosphatemia.

It was a privilege for us to support Emil right from the beginning of the Ultragenyx story.

“F-Prime was a great partner, they understood the vision we had at Ultragenyx, and helped us make it a reality.”

—Emil Kakkis, CEO

Where Are They Now — Exploring Boston’s Iconic Startup Stories. Introducing Founders Diaries.

Do you remember VH1’s hit TV series Where Are They Now? It was kind of addicting. Each episode would chronicle the journey of a celebrity who had achieved greatness in the past, yet was no longer in the public eye. Well recently, that’s what we’re thinking about in our office at F-Prime.

Like many of you, we think a lot about the entrepreneurs who built iconic companies in Boston; such as, Mitch Kapor, co-founder of Lotus Development Corp, the forerunner to Microsoft Excel, and Amos Hostetter, co-founder of Continental Cablevision (one of our early investments). These entrepreneurs paved the way for many of us and built the foundation of today’s fertile entrepreneurial ecosystem in Boston.

We decided to do some research.

And long before the PayPal Mafia became famous, these Boston founders inspired their own future generation of entrepreneurs. Take Akamai — we lost count at 39, for the number of companies started by its alumni. Employees of Steve Papa’s Endeca (acquired by Oracle in 2011 for $1.0B) are just beginning to fan out and start new companies — 10 and counting.

But while we know where Mitch Kapor is most weeks — backing entrepreneurs making a social impact (and a co-investor of ours in FutureAdvisor) — we had no idea where Drs. James and Janet Baker were, Co-Founders of Dragon Systems, and pioneers in speech recognition.

What followed was a wonderful journey of our own. We analyzed the hard numbers — what are Boston’s biggest startup successes — and we delved into the soft stories of founders — how did they achieve such success? We even pieced together the web of startups formed by alumni of these Boston success stories.

The more we went down the rabbit hole, the more we thought other Bostonians would enjoy this as much as we do, so we decided to do two things.

For those who like data. We’ll start to share our research on the big startup successes of Boston with an initial post today. And if you enjoy this as much as we do, please help us with our research! Peering into founder journeys is a process of exploration and takes many contributors. We welcome additions and corrections from anyone in the community.

For those who like the stories behind the data: Founders Diaries. We also quickly figured out that listening to iconic founders tell their stories is a privilege. The tribal knowledge they share is a gift. We started inviting other entrepreneurs to join us and finally made it a regular event open to Boston’s startup community. It’s called Founders Diaries and we hope it will serve as an intimate forum for the current generation of Boston founders to hear the stories of Boston’s most iconic startups. It’s been a joy so far. A big thanks to Robin Chase, Founder of Zipcar, and Jeff Glass, Founder of m-Qube, for joining us at our last two events. We look forward to welcoming Mark McWeeny, founder of Rue La La and Michael Simon, founder of LogMeIn, who will share their stories at events in April and May (click on the links to request an invite).

So, on to some fun findings on Boston startup successes.

Boston’s Greatest Hits

There has been good research from folks like Jeff Bussgang on the current crop of Unicorns and Reindeers, so we looked back over the last 25 years for startups that built companies worth at least $400M (“Large Exits”).[1] Most achieved that valuation at exit (IPO or M&A), but some got there after going public — don’t you wish you had bought LogMeIn in 2009 when it IPO’d at $340M. It’s added $2.2B organically since then, and now sits at a $5.0B market cap following the recent merger with GoTo.

TL;DR Boston entrepreneurs rock!

200 startups with Large Exits producing $370B in total valuation. 60% were by M&A; 40% by IPO. The median exit valuation is $668M and the median valuation of the 66 surviving standalone companies is $1,318M. Check out the table below, but these points standout:

Boston keeps getting better. Exits among venture-backed startups tend to be cyclical, but Boston has generally produced more Large Exits — by number and value — every five years. From 71 startups and $157B value during the 15 years before 2005 to 129 startups and $213B value in the 11 years after 2005.

The rise of healthcare. For a long time tech startups accounted for the large majority of exits in Boston — 82% of all Large Exits were tech from 1990–2004; however, that is quickly changing. Since 2005, healthcare exits have been 53% of Large Exits (including several companies from our portfolio such as Blueprint Medicines, Ironwood Pharmaceuticals and FoldRX). It’s clear to anyone living in Boston that our city has become a world leader in healthcare.

Great companies do not stop with the “Exit.” ~30% of our Large Exits (66) are still public and operating as standalone companies, generating an additional $133B in net value since IPO. Not surprisingly 10 of them account for 65% of the value increase and the winner by far is Vertex (+$20.8B). Other top 10 include: Tesaro (+$9.8B), Akamai (+$8.4B), and Nuance (+$4.5B). And yes, we use ‘net value’ because some startups did suffer post-IPO, but it was nice to see 53 startups rise in value while only 13 fell.

Building big businesses takes time. Co-founders who were there ‘day one’ appreciate just how long it takes to build a big business. On the outside, success can look so easy and sudden! One of the things that has not changed in Boston is that it takes years of hard work to achieve a Large Exit. From 1995–1999 it took eight years on average from founding to exit and it took 13 years from 2010–2014. 12 years is the average over the last 25 years.

Say what you want, but Boston is not a Consumer tech town…yet. Of the 200 Large Exits over the last 25 years, only 13 (7%) were consumer focused. We defined that generously too, counting Nuance and Monster as consumer even though they derive significant revenue from business customers. On the positive side, 9 of the 13 Large Exits were in the last 10 years and Boston definitely rocks in online travel producing both TripAdvisor (TRIP) and Kayak (acquired by Priceline).

Success has many fathers…and many children too.

We started our research to learn more about the founders of these iconic Boston startups, but we came away equally intrigued by the alumni. Alumni say a lot about the founders themselves — the culture, support and inspiration they provided to their employees. The more we looked at this, the more we appreciated how much it said about the strength of the Boston ecosystem too.

For now, we’ll share our first pass at 10 startups that we were curious about — no particular prioritization other than our personal interest. You may be as surprised as we were. Akamai alumni have co-founded 39 startups! Nearly 30 each for Vertex and RSA Security. And check out Hubspot. Just two years after exit and already 25 alumni-founded startups. On future posts we will look at more of these alumni networks — it’s really fun to piece it all together. You should try it. No, really, we could use your help! We must be missing some and were wrong about others. We would love your help filling in the gaps.

And we will definitely look at the alumni of Rue La La and LogMeIn before our upcoming Founders Diaries event and welcome any contributions in advance. Please comment below or send us an email. And of course, we invite you to join us as well. Mark McWeeny, founder of Rue La La will speak on April 19th ( request invite here) and Michael Simon, founder of LogMeIn (NASDAQ: LOGM) will speak on May 18th ( request invite here). Both Rue La La and LogMeIn are extraordinary companies, with unique founders, journeys and outcomes. We hope you can join us.

[1] Sadly we excluded the hidden gems that have stayed private like Bose (estimated $3.5B revenue), Intex (THE financial modeling platform in asset-backed securities), and Bain and The Boston Consulting Group.

Originally published at https://www.linkedin.com on March 28, 2017.