Y Combinator ups the ante with bio startups for 2015

http://www.techiatric.com/latest/2015/3/22/ycombinator-ups-the-ante-with-bumper-biotech-batch

by loopj • 11 years ago

74 49 11 years ago

As a biologist with over a decade of experience in areas relevant to these startups, I appreciate the movement into biotech, but I'm unimpressed with the actual products.

While everyone might poo-poo academia, it would take little effort to find 100s of projects at universities across the world that are better versions of these projects.

As much as YC dominates software applications, they are woefully inferior in biotech/biomedical applications.

vqc2• 11 years ago

YC is telling us that there may be a lot of value in batching and accelerating these types of products/companies. Maybe we should start a biotech focused accelerator (as opposed to software) that turns post-doc chemists/biologists (as opposed to software engineers) into rockstar founders.

george88b• 11 years ago

Something like this is already being done. Indiebio just launched in SF and they are doing great work at bringing in pot-doc chemists and biochemists and de-risking their academic work and turning them companies.

Disclaimer, my company Pembient is in the first class.

jessriedel• 11 years ago

It's unfortunate that people are downvoting you since outside criticism is a lot more useful than a thread full of people cheering on YCombinator. (Unless you're a troll, as suggested by your user name.) Still, your comment would be more helpful if you were a bit more specific.

Could you point to a few of the University projects you're referring to? I think we'd especially want to know if they require similar levels of investment, since cheap long-shot approaches compliment, rather than are made obsolete by, expensive traditional approaches. (If you think cheaper approaches are hopeless, maybe you could expand.)

stochastician• 11 years ago

I want to take issue with "it would take little effort to find 100s of projects at universities across the world that are better versions of these projects", both as a trained biologist (neurobiology), current postdoc, and former entrepreneur.

I share your intuition, I really do. I even said similar things in grad school (and still do, sometimes). But the reality is that:

1. These are not supposed to be projects, they are supposed to be companies creating products. The gulf between "Nature paper" and "something someone will buy" is incredibly long and arduous. Plus, these are VC-backed, meaning there's an expectation of timeline (short) and return (high). These aren't "take $20m from darpa and engage in another four years of R&D" type endeavors. So while they might look trivial scientifically (although I do not think that they do), they have to be working sooner rather than later.

2. "Better versions" is also a tough thing to assess. The people involved matter a lot -- thus even technically superior solutions from very smart people might still not be "better versions". I know many grad students who are much more knowledgable than some of the top data scientists, who nonetheless would fall on their faces if they tried to do a data science startup. Similar for life sciences and biotech.

I think the people who poo-poo academia are largely setting up strawmen -- even Peter Thiel (whose first VC firm, Founders Fund, backed both of my startups) admits that there's a substantial role for government and academic activity in enabling long-term technical innovation.

As biologists, we know just how hard it is to make _anything_ work in this space. Most new drugs fail, most clinical trials fail, most pathways end up being hard to target, etc. etc. Often building a company in the biotech space is like trying to build a microprocessor company where we're still not entirely sure "how the silicon works".

The challenge for YC and other VCs is to identify technologies that are "almost there", and help turn them into companies and products. That's very hard, and I'm not really even sure that we (as academics) are any good at it either.

Will some of them fail? Sure. Will some of them leave the startup scene and maybe go back and do a postdoc or work for an industrial research lab or do another startup, much wiser? Of course. But that hardly seems like a horrible outcome, especially if the scientists learn a lot along the way.

foobarqux• 11 years ago

If these biotech and hard-science startups fail, backed by the best startup accelerator on earth, then the effect will be a hard-science investment winter. So there is more at stake than you let on.

refurb• 11 years ago

I guess it depends on what YC is trying to do. You have to remember a lot of investors shy away from biotech due to the huge capital investments that need to be made for new drugs or devices.

What I've noticed with the latest YC biotech start-ups is they tend to be much more focused on ideas that don't require a huge amount of capital (diagnostic platforms, biofuels, etc).

IndianAstronaut• 11 years ago

There is actually investment into the area of minimizing capital requirements.

paul3• 11 years ago

Care to give a few specific examples? Also, these are companies, not "projects" -- it's important to understand the difference.

untilHellbanned4• 11 years ago

I called them all projects.

Haploid genetics[1] is just one example of a technology that is doing real, far reaching stuff in human genetics (sorry, SNPs). There's numerous companies being developed from discoveries using this technology.

I love YC (and huge props to you personally for all the amazing things you've contributed, I'm very honored to be speaking with you), but in talking to many colleagues, the money involved $100K or the hype machine involved in YC just doesn't move the needle in biology. So, you're unlikely to get any real players interested.

http://www.ncbi.nlm.nih.gov/pubmed/21866103

sama2• 11 years ago

The difference between companies and projects is huge. We look for companies.

srunni3• 11 years ago

Those projects are turned into companies if they have translational value: https://www.bio.org/media/press-release/report-shows-academi...

untilHellbanned4• 11 years ago

I called everything a project. See my response to Paul.

tikhonj• 11 years ago

I actually agree. Exactly the same is true for most software coming out of YC. But that's not bad at all: the point of YC is not to do cutting-edge research—although a few companies do—but to execute and take a product to market. It's a vital part of an idea's development, but at a later stage than academic research.

University projects are incredibly valuable, but only the rare exception produces something commercially viable much less supported and marketed enough to be relevant to consumers. Even in CS, an academic field with disproportionately strong industry ties, projects like this a rare exception (see how venerated Spark is); it's even rarer in other fields.

This is a different sort of work than raw R&D, but it's still difficult and relevant—just in a different way. I completely sympathize with not being interested in it, but that says more about you (and often me) than it does about YC.

If anything, the role YC plays is actually more important in biotech than in software because creating, deploying, marketing and supporting a software project is an easier problem with more existing support outside of YC. Software takes less resources, has less risks and has more buy-in from funding sources and other parts of the community than biotech. (At least, and especially, in SV.)

But, unless you're excited by an accessible version of something specific, none of this is going to be particularly relevant to you. Not only is this perfectly fine, but it bodes remembering for people in the startup community who tend to get so enamored with and immersed in what they're doing that they forget that it is not universal.

woah• 11 years ago

Yea I mean look at Airbnb. It is, (in software jargon) a "crud" app. Virtually any software project you could care to choose in academia today is more advanced than airbnb's tech.

bkolko• 11 years ago

I'm a YC founder (current batch; Shift Labs) and also a tenured full professor at an R1 university. I've got a pretty good view from both sides of this fence. I've spent over 20 years as a faculty member at research universities, produced PhD students, raised millions in grant money, written dozens of articles, yadda yadda yadda.

Universities are really great for many things. They are even really great at commercializing some kinds of technologies. But they are not great for all things, even all things related to bio or tech transfer. Sometimes crazy bets are the only way breakthroughs happen, and generally academia cultivates incremental more than transformational.

I started my company because I wanted to make affordable medical devices. The incentive systems for both med device companies and university commercialization offices are almost completely misaligned with building a business model that works for affordable medical devices.

So I went the entrepreneurial route.

Being in academic research is not the same thing as building a company. They're not the same skill sets, or even the same language. Lots of academics become technical advisers to startups built around their research. That's not the same thing as building a company. YC is about building a company.

I wrote about being a med device company in YC here: http://bit.ly/1LlmZjk, but I think really what I was writing about was being a researcher learning to build a startup.

untilHellbanned4• 11 years ago

This is great and all, but I'm not talking about academia vs. industry/YC. I'm talking about the actual products. They just aren't very good.

ndamiano• 11 years ago

We started our company out of the Stanford Biodesign fellowship and are part of the current YC batch. We are making an implantable medical device - the old school kind with no software involved.

Medical device innovation is broken. Companies developing devices like ours are taking 10 years and $100M to see revenue, and most people in the industry consider this time and cost inevitable. For that reason, investment in the space has plummeted. ROIs suck. The thing is though that it's not inevitable. The space is ripe for smarter and more efficient ways to bring products to market. This process innovation is not coming from academia, nor will it ever. Academics just doesn't think that way, and they're categorically not good at commercialization. This new thinking is coming from independent startups that embrace a hacker mentality and reject conventional wisdom. As we all know, that's very similar to the ethos of YC.

Stanford Biodesign has a stellar track record of producing medtech winners, and that's because its process works. The advice we've heard from the YC partners in the program has aligned very well with the advice we heard from the top forward-thinking entrepreneurs in the industry at Biodesign. They get it. YC partners may not understand the intricacies of healthcare as well as industry veterans, but it doesn't need to. They understand how to build a great company regardless of vertical. YC brings in top founders from industry, who already have the necessary expertise and connections, and encourages them to think big and think differently. I don't see how that's not a winning formula. Yes, healthcare is different, but it's similar to other typical YC verticals in more ways than you think.

comrade12• 11 years ago

There's a big difference between the 5 - 15 years and billions of dollars to product in biotech/pharma, and the few at most years and relatively cheap amount of money for the payoff in software.

And if you think there are shortcuts like uber and airbnb, there are not. Even 23 and me, a pretty innocuous idea, is essentially a failure.

dluan4• 11 years ago

That's a pretty large and unfair statement, and I'd like to know how you are measuring failure.

23andme has created an affordable market for personal genomics, single-handedly forced modernization in regulation and policy, built a mineable database of live genome data that is helping researchers find cures, and amassed nearly 1M paying customers.

I'd love for you to say that just because they aren't yet profitable means that they are a failure.

http://www.wsj.com/articles/23andme-to-use-genetic-database-...

dominotw• 11 years ago

I paid a fortune to get 23andme when it first came out and have gotten all the subsequent paid updates also.

So far its mere entertainment for me, nothing more.

comrade12• 11 years ago

They are not profitable and they are not able to fulfill their original mission due to FDA regulations.

coherentpony• 11 years ago

23andme has created an affordable market for personal genomics

Fair.

single-handedly forced modernization in regulation and policy

Personal DNA kits were not pioneered by 23andme. The NHS in the UK sends out personal kits to test for colon cancer. One rather smart child, Jack Andraka [1], devised a personal kit to test for pancreatic cancer. And regulation in FDA policy is constantly shifting and changing. A notable such shift is due to a club set up by Ron Woodroof in 1988 [2].

23andme may have helped push science further, but single-handedly? Hardly. Science and discovery is a collaborative effort. They couldn't have done it without shoulders to stand on.

built a mineable database of human genome data that is helping researchers find cures

The Human Genome project is a mineable database of chemical base pairs the make up human DNA. This has been an enabling technology used by researchers for drug and disease discovery since 1987 [3].

and amassed nearly 1M paying customers.

The article you link to claims the number is closer to 850,000. A claim of 1M implies a relative error of 17.6%.

I'd love for you to say that just because they aren't profitable means that they are a failure.

I agree that non-profitability does not imply failure.

May I ask what your affiliation with 23andme is?

[1] http://en.wikipedia.org/wiki/Jack_Andraka#Research_and_exper...

[2] http://en.wikipedia.org/wiki/Ron_Woodroof

[3] http://en.wikipedia.org/wiki/Human_Genome_Project#History

lvs• 11 years ago

Yes, you're absolutely right, and YC and other SV funders really have no clue what they're doing. It's a boon for biotech startups because the relevant VCs are very puckered up right now when it comes to biotech/pharma.

srunni3• 11 years ago

the relevant VCs are very puckered up right now when it comes to biotech/pharma.

There are some great posts on the LifeSciVC blog on this topic (and I highly recommend reading all the posts on there for anyone interested in biotech startups):

* Where Does All That Biotech Venture Capital Go?: http://lifescivc.com/2015/02/where-does-all-that-biotech-ven...

* Venture-Backed Biotech Today: Reflections On Exits, Funding, and Startup Formation: http://lifescivc.com/2015/01/venture-backed-biotech-today-re...

* Talent: The Biggest Issue In Biotech Boardrooms Today: http://lifescivc.com/2014/09/talent-the-biggest-issue-in-bio...

* Early Stage Biotech Venture Scarcity: Fitness, Fear, And Greed: http://lifescivc.com/2014/09/early-stage-biotech-venture-sca...

* Startups, Exits, And Ecosystem Flux: Bullish For Biotech: http://lifescivc.com/2014/09/startups-exits-and-ecosystem-fl...

An excerpt (italics added by me):

Why is biotech startup supply so constrained? First, there aren’t dozens of breakthrough biomedical ideas created every day; while substrate for startups is very rich, figuring out which are likely translate successfully into high impact medicines diminishes the viable number of big, attractive ideas quickly. Second, there are very few biotech venture investors still active today, and fewer still that are focused on early stage company creation. Third, and of critical importance, it’s not easy to start biotech companies, and in most cases requires entrepreneurs with decades of apprenticeship inside larger R&D organizations – navigating the drug discovery and early development process requires experience well beyond simply advanced degrees (MD/PhD).

* High-Performing Boards in Early Stage Biotech: http://lifescivc.com/2012/03/high-performing-boards-in-early...

Another excerpt:

The nature of the problems and people involved are very different [between tech and biotech]: Internet-enabled Tech startups launch products on tiny amounts of capital, led by Lean Startup Ninja’s and 22-year old soon-to-be-billionaires, these companies can iterate rapidly around things I don’t understand, minimally viable products, and real-time market feedback...Compare that to Biotech. We are trying to manage the challenge of science-based businesses: biology is full of “unknown unknowns”, drug R&D has long and unforgiving timelines, we face very high project attrition rates, we have to work in a highly regulated environment, capital intensity is typically higher, etc… The people involved are also different: the typical senior team has some grey hair and often collectively has 100+ years of experience in (or biases from) drug R&D.

Life science VCs see themselves and their industry as very different from the tech industry.

paul3• 11 years ago

I was also told by the HN crowd that Facebook is a fad that would never make any money :)

The best investments always take a long time. Fortunately we are very patient investors, happy to fund "crazy" things like nuclear fusion and cancer treatments.

sama2• 11 years ago

As I often said--it's a good thing we don't let HN make our investment decisions.

Gatsky• 11 years ago

23 and me is an example of the least ambitious thing you could do with genomics. Honestly, I think you are being needlessly negative. There is a lack of life sciences research funding and an oversupply of life science researchers. What's the disadvantage of more biotech startups? Public-private collaborations with small nimble startups sounds like a dream come true, compared to years waiting for the wheels to turn in collaborations with big pharma.

car2• 11 years ago

Regarding 23andMe, I'd reconsider that view.

They are sitting on a treasure trove of medical and genetic data. And they have begun to monetize this data, which I believe was their endgame all along.

More here: http://www.forbes.com/sites/matthewherper/2015/01/06/surpris...

toufka• 11 years ago

If you think that biotech = pharma, you're about 2 decades behind. Biotech = fabrics, materials, health, food, chemicals, etc.

Perfumes, flavors, spider silk, biosensors, glowing plants, etc. are all biotechnology that require the one thing cheaper than software on this planet - dirt. They copy code orders of magnitude cheaper than bandwidth - water & sugar & light.

The billion dollar tools developed by big pharma now are running in the thousands of dollars, and there are no shortage of million dollar problems.

EpicEng• 11 years ago

Having spent my entire career in biotech startups (mostly digital pathology and diagnostics) I can tell you that you are seriously mistaken. It does not cost anywhere near "billions of dollars" to develop, say, a diagnostic. We get by with ~10-30m funding rounds, perhaps 2-3 rounds. Not sure where you are getting your (mis-)information from. Of course, if you're looking to develop a new drug... yeah, that costs a boatload of money, but that's hardly the only area of biotech.

uptown• 11 years ago

Is there a full list of the companies participating in demo day?

lifeisstillgood• 11 years ago

What strikes me as a Non-US citizen (UK) is the surprising number of solutions to problems that look like US healthcare specific issues. Drug-peer to peer swapping because of prescription costs seems like it would have no demand in most other rich countries, and no supply elsewhere.

Not saying it's a bad idea, just interesting to see biases - and wonder how we overcome them.

cathalgarvey• 11 years ago

"Industrial Microbes" has a concept that really excites me, I'd have loved to help them develop that idea for IndieBio Ireland.

It's non-obvious ideas like "Why not use natural gas instead of refined sugar?" that are going to make Biotech explode in coming years..while simultaneously putting fossil fuels to more productive or even sequestering use than burning them!

mcmancini• 11 years ago

How does the requirement to relocate to SF work for companies with a wet lab or specialized capital equipment requirement? And outside of mentoring/networking (can YC provide in the biotech space?), how is YC a better deal than an SBIR/STTR?

Y Combinator ups the ante with bio startups for 2015

Related Stories