Partnering and Focus

N.B.- As a reminder, we are a seed-stage firm so our views relate to companies at that seed stage.

Many early stage founders balance seeking commercial validation while remaining product focused. Specifically, startups must juggle the need/desire to validate the platform through partnering/licensing a (lessor) component thereof against the need/desire to demonstrate the potency of the platform through the identification of a novel insight or mechanism of action.

As discussed previously, we have views on how to think about the structuring of the first partnership/license deal, but we didn’t touch on how to think about the quantity of partnerships. As we’ll explain below, we believe early stage companies benefit from developing one to two, meaningful (truly validating the potential of the platform) partnership than risking early validation by entering into multiple “kick the tire” paid research partnerships.

Too often, entrepreneurs overestimate the marginal value of an additional logo on their deck and/or website. While it’s never this simple, especially within biotechnology, more value accretes to those companies that solve one, difficult problem than those that have the potential to address a wide ranging set of problems.

Solugen proved it could manufacture a few specific petrochemicals more efficiently and more economically than traditional processes before diverting its focus to other orthogonal commercialization models and compounds. To draw on another portfolio company example, PathAI focused on a single indication prior to expansion across a multitude of pathological workflows and processes, allowing them to develop the logistical and technological muscle memory to expand rapidly across subsequent indications. In a world that seems to continue to value immediate validation, doing one thing very well, built on technology that can credibly be deployed across other chemicals/indications/targets, remains an underrated way to build a longstanding company.

In contrast, we’ve seen a number of early stage companies attempt to leverage a unique manufacturing technique to simultaneously develop a specific class of antibodies and inorganic compounds. Such absence of a focus not only complicates the company’s narrative (to both customers and investors) but strains the companies’ limited resources in a way that reduces the likelihood of success across both axes. It’s really hard to convince prospective customers to work with you (a largely unknown entity) over more established names. As the saying goes “no CIO has ever been fired for selecting with Microsoft”. Proving deep expertise in a specific space is the best way to overcome this obstacle.

Less obvious, we’ve found this level of focus helps to facilitate a cohesive culture. Fewer competing programs, fewer competing strategies, and fewer competing visions of the company make aligning the entire team much easier.

If you can boil the entire ocean simultaneously, more power to you. If you can’t, prioritize the development of your best asset/feature — especially when you’ve been able to validate a portion of that asset/feature.

While this may seem obvious to some, we hope it empowers some of you to focus on a specific problem, solve it better than anyone else, become the leader in the space (even if narrow) and then move horizontally.